A company’s brand is its identity. Branding elements – names, logos, colors, graphics, slogans – are how customers recognize a product or service as coming from a particular source. Done properly, brands can be as recognizable to consumers as a person’s face, name, and voice. In some cases, brands may be some of the most valuable assets a company may own. Protecting physical assets is common in the cannabis industry, but how do companies protect intangible assets, like their identity? Fortunately, there are bodies of intellectual property law designed to provide legal protections against others from using brand elements that are too close to your own. To take advantage of these protections, however, cannabis companies must understand how each one works and develop a branding strategy that leverages intellectual property laws.
This is the second article in a 3-part series about cannabis IP. The first article focused on patent law and can be found here. The series will culminate with a Q&A-based webinar on April 19th at 1:00 Eastern. Advance questions can be sent to paul@thalo.io.
Mechanisms of Brand Protection
Brands are protected most prominently by legal domains known as trademark and trade dress. Trademarks include a company’s name, logos, and slogans, as well as those of any individual products. In some instances, trademarks may also include recognizable elements like colors (UPS’s brown) and sounds (NBC’s chimes). Trade dress is a similar concept to trademarks, but applies to the distinct appearance of a product or its packaging. Trade dress can even be used to protect the unique look and feel of a retail establishment, such as a restaurant or dispensary.
Both trademark and trade dress is intended to reduce confusion in the marketplace as to the origin of a product or service. The idea is that the public is best served when they can reliably determine which company to associate with each product. Reliable product-company association increases quality accountability, facilitates safety controls, allows consumers to form powerful brand loyalty.
Companies that avail themselves of trademark and trade dress laws gain access to a set of tools to legally fence off others from using branding that is likely to confuse customers about the source of a product. And, unlike other forms of intellectual property, trademark rights can last indefinitely and even strengthen over time. Some of these rights arise automatically just by using a mark, others must be sought out through registration.
Principles to Consider When Selecting a Brand
Every company should consider trademark principles from day zero, when first selecting a name. U.S. trademark rights only apply to marks that are “distinctive,” meaning they are capable of distinguishing things bearing the mark from goods and services offered by others. The more distinctive a mark is, the stronger protections provided by trademark law. Names that merely describe the goods or services are non-distinctive and are typically not eligible for trademark protection.
There are five general categories along the spectrum of distinctiveness – fanciful, arbitrary, suggestive, descriptive, and generic – arranged from strongest to weakest.
Fanciful marks words that were invented specifically to serve as a trademark, such as Xerox or Nvidia. Because these words have no other meaning than to identify the source of goods or services, they are the most distinctive category of trademark and receive the greatest protections.
Arbitrary marks are the second most distinctive category of mark and include words that have alternative meanings, but only meanings in contexts unrelated to the goods or services being sold. These include Apple computers, Lotus cars, and Bicycle playing cards.
Suggestive marks are less distinctive than Fanciful and Arbitrary marks, but still considered sufficiently distinctive to receive trademark protection, though registration may be more difficult. Suggestive marks imply a quality or characteristic of the good or service the mark is used in connection with. Some examples of suggestive marks would include: Microsoft, a portmanteau of microprocessors and software; ChapStick, for a stick-shaped balm used on chapped lips; and Netflix, which is suggestive of an internet-based video service.
Descriptive marks simply describe the goods or services being offered and are, therefore, not distinctive. In some cases, however, descriptive marks can acquire distinctiveness and achieve a “secondary meaning” as a source-identifier through long-term use (usually +5 years), heavy advertising, or pervasive adoption. Examples of Descriptive Marks would include: International Business Machines (IBM Computers); Best Buy retail stores; and Sports Illustrated magazine.
Generic marks are terms that broadly identify the product or service being offered. Generic marks are so non-distinctive that they are not eligible for trademark registration, even if secondary meaning can be shown. The idea is that these marks are so fundamental to the product that it would be detrimental to consumers and the marketplace to allow a brand to have exclusive use of the term in connection with the goods. “Escalator” and “Dumpster” were once brand names but, because they were used widely to refer to all mechanized stairways and trash receptacles regardless of manufacturer, they lost all trademark distinctiveness.
Parody Does Not Apply – Avoid Famous Brands
A surprising number of cannabis companies have used trademarks that reference or parody famous brands. Gorilla Glue, Girl Scout Cookies, and many others have been used as names for cannabis products. Companies have used packaging that resembles well-known products such as Life Savers and Sour Patch Kids. This is a bad idea. While this practice seems to be increasingly limited to unregulated markets, a recently published (and ill-advised) application for the mark and logo MCWEED for apparel shows that not everyone has received the message:
Registration and Scope of Protection
Some trademark rights are established as soon as a trademark is used in commerce. But to obtain the full scope of legal protections available, trademark owners must register their marks, preferably federally. Federal registration stakes a claim to a nationwide priority date, increases protections available, increases potential damages, and embodies a definities property that can accrue value.
All trademark registrations begin as applications. Trademark applications must, among other things, identify the mark, the applicable dates of use. Applicants must also describe the goods and/or services the mark is (or will be) used with and select one or more classes from an international menu of product classifications. The classes selected and the description of the products can greatly affect the scope and validity of a registration, so it is important to consult with an experienced trademark attorney.
These applications are examined by the U.S. Patent & Trademark Office to ensure they meet the statutory requirements. Typically, the USPTO completes examination within about 6 months, but currently the office is experiencing some delays and it is commonly taking 7-10 months for an application to be evaluated. If the examining attorney identifies any problems, they may issue rejections, to which the applicant will have an opportunity to respond.
If the USPTO approves the application, it will be published for 30 days (expandable to 180 days) to allow other trademark owners to oppose registration of the mark. Sophisticated trademark owners can set up alerts to be notified when any similar applications are published that may be concerning. At the close of that period the mark is recorded in the federal register and the trademark registration is complete.
A qualified trademark attorney can help guide you through the process and provide counseling concerning how to maximize your chances of registering your trademark without prejudicing your rights. Trademark application fees run $250-$350 per class of goods or services and a trademark attorney will typically charge a few hundred to a few thousand dollars, depending on their experience and the level of pre-application clearance. While trademark mills and self-guided applications are available, there are many pitfalls to avoid while preparing and prosecuting a trademark application, and applicants should be wary of attempting to navigate the process without legal guidance.
Applicants should also be aware that many companies mine the USPTO database to send unsolicited offers to trademark applicants. While these offers can look official and typically include some deadline to respond, they are usually scams. Nevertheless, it can be helpful to have an attorney review any correspondence relating to the trademark application to ensure that no important correspondence from the USPTO is missed.
Embrace the Zone of Expansion
There are a lot of benefits to registering trademarks, but registration is not available in all instances. Under federal law, registrations cannot be issued that cover goods or services that are federally illegal. But the same mark can be registered for other, legal products, and the trademark rights will extend to a reasonable “zone of expansion,” covering products that the trademark owner could reasonably branch out to in the future. This allows a brand owner to obtain the benefits of federal trademark registration and use it to provide some umbrella protection for their cannabis brands.
One option is to sell branded accessory products, such as apparel or smoking accessories, for which a trademark registration will pass muster. It is debatable, however, whether cannabis products are within the zone of expansion of t-shirts.
Another option is to develop one or more low-THC hemp products under the same brand as high-THC cannabis products. At least one case is already working its way through the courts where a trademark owner is claiming that cannabis edibles are within the zone of expansion of a line of hemp-infused, low-THC edibles. Edible IP, LLC and Edible Arrangements, LLC v. MC Brands, LLC and Green Thumb Industries, Inc., (Case No. 20-cv-05840). Though that approach is also not without its pitfalls, as discussed below.
A final option that every cannabis company should consider is state trademark registration. State registration requirements are typically governed by state law and, therefore, state trademark registrations can often be obtained for cannabis products. State registrations are more limited than federal registrations, but can be a powerful tool in the current landscape of cannabis IP.
Products with CBD Can Be Trademarked, But You Can’t Trademark “CBD” Products
Companies that produce hemp products do not have the same problem with federal illegality as companies with high-THC products. Federal registration is available for trademarks that are used on hemp and hemp products. However, as most hemp companies should know, the advertising of cannabidiol or “CBD” is regulated by the Federal Drug and Cosmetic Act (“FDCA”), 21 U.S.C. §§ 321(g)(1), 331(d) and 355(a). Because CBD is the active ingredient in an FDA-approved drug (Epidiolex®), the FDCA prohibits marketing CBD products (absent a New Drug Application or Abbreviated New Drug Application). Though that may change. As of now, however, the USPTO will refuse to register marks that identify the goods as “CBD.” In re AgrotecHemp Corp., Serial No. 88979905 (issued Feb. 10, 2022) (finding that PUREXXXCBD for plant extracts should be refused registration).
Notably, the AgrotechHemp decision went further than previous USPTO decisions in that it also criticized the issuance of registrations for marks used on products “derived from hemp.” This may signal a crackdown on all hemp-related registrations, or it may be limited to registrations that explicitly identify the goods as containing “CBD.”
Where’s the Value in Trademarks?
It may come as no surprise that brands can be incredibly valuable assets. In some cases, a company’s brand can make up a significant portion of its balance sheet and brand-centric companies can fetch a premium when they are acquired, known as “goodwill.” Increasingly, specialized lenders are even willing to use secured IP as financing collateral. Nonetheless, the real value for many trademark owners is non-monetary.
When many people think about intellectual property, they recall headlines of jury verdicts with huge damages that can reach into the billions of dollars. The reality is that, absent intentional copying, trademark cases rarely result in large-dollar awards. More often, successful trademark suits result in an injunction preventing further infringement and some relatively minimal damages. The primary value of trademark rights is the ability to control your brand and how consumers perceive your brand in the marketplace. Trademark rights give you the tools to define your brand as a unique identity and preserve that identity in an increasingly crowded industry.
Video: NCIA Today – Thursday, March 24, 2022
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.
Continuing Conversations on Capitol Hill
by Madeline Grant, NCIA’s Government Relations Manager
The National Cannabis Industry Association (NCIA) held its very first Virtual Mini Lobby Days with NCIA’s Evergreen Roundtable members. Before the pandemic and closure of our Nation’s Capital, the Government Relations team planned an in-person annual fly-in every spring, the Annual Cannabis Industry Lobby Days, for all NCIA members. For our first Virtual Mini Lobby Days, it was important to facilitate conversations between our Roundtable and Capitol Hill offices. The Evergreen membership tier is for leading businesses looking to make a meaningful investment in shaping policy for the cannabis industry. Evergreen members receive exclusive access to private briefings from members of Congress, inside information from NCIA’s government relations team, and many more opportunities to participate in the national conversation around cannabis policy.
Now more than ever we’ve seen more comprehensive legislation being introduced at the federal level, on both sides of the aisle, so we wanted to focus on meetings with our cannabis champions but also educate all congressional offices on Capitol Hill. We were able to meet with representatives, senators, committee staff, office staff, and much more. Evergreen members were able to share information, stories, and data to Hill offices.
The NCIA team, Monica Gray with Nice Guys Delivery, Khurshid Khoja with Greenbridge Corporate Counsel, and Christina Hollenback with The People’s Ecosystem meeting with Congressman Dave Joyce (OH-14), a co-chair of the Congressional Cannabis Caucus.
As we hopped on our zoom calls, our main focus was education. The Evergreen Roundtable was able to share stories from their personal experiences in the cannabis industry and directly relate these experiences to the importance of cannabis policy reform. The dichotomy around incremental versus comprehensive cannabis policy reform was a central focus in discussion. As around thirty meetings took place throughout the week, the Government Relations team and Evergreen Roundtable caught up with friends, gained valuable insight, and continued to educate Congress. We took this opportunity to show our support and gratitude for all the representatives and senators who constantly support cannabis policy reform. Furthermore, we educated congressional offices with data, testimonials, and research to highlight the necessity for cannabis policy reform at the federal level. There is no doubt that reform is needed for the cannabis community and NCIA will continue to be a resource to all congressional offices.
NCIA’s 9th Annual Cannabis Industry Lobby Days in 2019 May 21-23 2019.
As we monitor the full opening of Capitol Hill, stay tuned for updates regarding NCIA Lobby Days. The Government Relations team is looking forward to our next Mini Lobby Days later this year for all Evergreen members. If you’re interested in learning more or getting involved in our policy work please feel free to reach out to Madeline@TheCannabisIndustry.org.
Member Blog: Trends in Cannabis Technology – Data Mining And Compliance
Cannabis businesses are looking for the best practices to enhance operations, with a primary focus on optimization and growth. So whether you are in the cultivation, production, manufacturing, or selling and marketing section of the cannabis industry, you need technology to steer your business into the future.
The cannabis industry is still growing, albeit faster than anticipated, with an increasing demand for products that continue propelling innovation. Data is driving this innovation because it’s the differentiating factor for long-term success and sustainability.
Today, cannabis is a $25 billion business in the U.S. In fact, the 2022 Leafly Jobs Report found the legal cannabis industry supports 428,059 right now, a 33% increase over the 280 new jobs created per day, on average, last year.
We know all of this because of data, and it’s a critical decision-making factor in this industry. Without access to real-time information, cannabis companies can’t know where to invest or improve to remain competitive and compliant.
Here are the top 4 data and technology trends transforming the cannabis industry to keep in mind.
Laws and Regulations Software
Cannabis compliance is one of the most challenging yet vital factors to consider in the cannabis industry. Government mandates demand that cannabis companies provide cultivation, production, shipping, and sales information to help monitor the entire distribution process.
This makes sense because lack of transparency in other industries has caused several crises, likethe vaping crisis or theromaine lettuce E.coli outbreak of 2019. But collecting, tracking, and monitoring data is challenging for businesses, so is understanding the government regulations and ramifications.
With the emergence of cloud-based cannabis software, cannabis companies remain updated with these tight data restrictions. This software collects the appropriate data and analyzes business operations by checking the right boxes to ensure compliance.
With these industry-specific software solutions, cannabis businesses can establish and implement a standard of operations that comply with cannabis regulations. As an added benefit, these solutions offer convenient avenues for cannabis employees and business owners alike to understand the rules and regulations of the industry. Some also provide security against potential threats like cybersecurity threats.
Artificial Intelligence (AI) and Machine Learning (ML)
Cannabis plants usually require significant attention and fixed schedules because of their temperamental nature. As such, AI and ML are taking effect in the cannabis industry. Machine learning gathers data and provides suggestions on what farmers can change in the growing process.
The detail in machine learning makes it possible to collect, monitor, and track the growing cycle every hour, meaning cannabis farms use machine learning to improve these plants’ growing environment significantly.
For instance, farmers are using agricultural sensors to manipulate the growing environment to suit the needs of the cannabis plants. This is achieved by connecting the environment to growing systems with humidity sensors and controls, thermostats, and temperature controls.
These sensors ensure that cannabis is continually growing in optimal conditions. As such, the products cultivated continue to be of high quality.
Also, the machine learning sensors and tracking IDs make it easier to track cannabis products from seed to sale.
Artificial intelligence then automates these processes to make the entire growing experience easy for cannabis farmers. For instance, AI helps to automatically control the humidity levels as per the settings given by the farm moderator.
AI also automatically changes the light in the growing room since it affects the temperature needed for the plants to grow optimally. This continued innovation and adoption of AI and machine learning in the cannabis industry will lead to increased crop production and reduced manual labor.
Hybrid Cloud-Based Storage
Video data is a significant investment in the cannabis industry right now. Some government regulations outline the need for cannabis companies to have immediate access to video surveillance footage and on-demand. This need is driving the demand for storage spaces for the video footage.
While many cannabis businesses store data on-site, it is unpredictable and expensive. This is where hybrid cloud-based storage technology comes in. The technology is enough to hold video data until it is needed, like in the case of a cyberattack and the subsequent investigation.
It also gives cannabis businesses the choice to store data on-site and in the cloud. This enhances the flexibility, accessibility, and security of business files. Cloud platforms also make it easier to access business information from any location.
Blockchain Technology
Traditionally, the cannabis industry is a cash transaction industry, especially in dispensaries where the majority of the cannabis sales take place. Additionally, many cannabis businesses find it challenging to work with banks since most aren’t legally allowed to work with companies in the industry.
There is also the matter of making secure payments and tracking transactions successfully. In a word, the cannabis industry is adopting blockchain technology for cryptocurrency payments and transaction tracking.
Blockchain is secure, and it has processes that make it easy to track and monitor transactions. But because using blockchain as an alternative to traditional payments methods is a relatively new trend, there is still the challenge of getting cannabis companies to agree on solutions that can standardize the trend.
In conclusion
Every business industry is now leveraging data by defining connections between the different data points and gathering actionable insights on processes. As such, you can optimize, strategize, plan, report, and identify problems using business data.
You can also better understand the consumer using data insights like your consumer consumption preferences. As such, data is crucial for determining where to invest, improve, and remain competitive and compliant in the cannabis industry.
FAQs
What is the future of the cannabis industry?
The future of the cannabis industry is very bright… The cannabis industry is expected to grow by about 20 to 30 percent every year to a value of $50 billion by 2026.
How is technology influencing the cannabis industry?
Technology is propelling the growth of the cannabis industry quickly. Cannabis businesses use innovation and technology to identify downtime in workflows, streamline processes, and identify opportunities for success and growth.
What is the role of data in cannabis manufacturing?
Data is critical for improving all the cannabis processes from seed to sale. Decisions driven by data significantly improve the quality of the cannabis operations from cultivation through to marketing, sales, and customer satisfaction. As such, data is now an integral part of cannabis manufacturing.
Joshua Gilstrap is the Marketing Manager for e2b teknologies, in addition to his marketing responsibilities Joshua leads business development for e2b teknologies emerging Canna Suite product line. A business graduate with a focus in marketing from Miami University in Oxford, Ohio, he joined the e2b team in the Fall of 2019. Josh brought with him a wide array of business and practical experience in planning and execution. Since coming aboard he has led multiple project’s including website hosting and theme standardization company wide, marketing automation streamlining the efficiency of the customer journey, and sales automation where he is changing the conversation from promotion to education, from pitching to catching, and from push to pull in order to keep up with the shifting tides of a digital transformation.
Member Blog: FDA Cites Multiple Violations for Selling CBD as Supplement, Food, Cosmetic, or Animal Food Ingredient
The FDA’s position on the use of CBD in dietary supplements and foods is steadfast. In 2021, five warning letters about CBD-containing dietary supplements and foods went out – three based on website reviews and two based on facility inspections. All cited violations relate to pain relief claims. The products are therefore unapproved new drugs. Two warning letters emphasize the FDA’s position that CBD does not meet the definition of a dietary supplement, from which it is excluded due to the authorization for investigation as a new drug.
In November 2019, the FDA published 15 warning letters in a “catch-all” effort regarding cannabidiol products. The products range from articles sold as dietary supplements, conventional foods, cosmetics, and animal food. The FDA sent out the 15 warning letters to companies in a number of states, including California, Texas, Oklahoma, Colorado, Oregon, New York, Florida, North Carolina, Arizona, and Kentucky based on the content of websites and social media sites. This was not the first time the FDA had sent warning letters regarding cannabidiol [CBD]. The first seven CBD warning letters were issued in March 2019, so attentive manufacturers could have been aware of t the FDA’s position and that enforcement actions might be taken.
In the 2019 warning letters, the FDA states that CBD in products sold as dietary supplements does not meet the definition of dietary ingredients in the Federal Food, Drug, and Cosmetic Act (321(ff)(B)(i)(ii)). This provision clarifies that a dietary ingredient cannot be a substance that has been approved as an active ingredient in a drug. The FDA has confirmed that CBD is an active ingredient in the approved drug Epidiolex.
Products containing CBD and sold as conventional food often worry the FDA even more, because they are often advertised for toddlers and infants. FDA clarified that CBD does not have an authorization as a food additive. Food additives need to be pre-approved by the FDA and there is no such regulation for CBD. CBD also is not a GRAS substance. This is based on the FDA’s review of publicly available data, which shows that CBD is potentially harmful and may cause liver injuries and interact with other drugs. Furthermore, studies in animals have shown that it might impair sexual behavior in males.
Similarly, the FDA states in relevant warning letters that CBD is an unapproved new animal drug because of the disease claims. The products are also adulterated animal foods because there is no animal food additive regulation that authorizes the use of CBD and there is no basis to conclude that CBD is GRAS for use in animal foods.
Besides the illegal status of CBD as a dietary ingredient, the warning letters regard the products as unapproved new drugs, because they claim that CBD cures, mitigates, treats, or even prevents diseases. Most warning letters are very long because the manufacturers cite numerous diseases for which CBD might be helpful. CBD is often depicted as a “cure-all.” Some of the popular disease claims involve pain relief, anti-inflammatory, diabetes, acne, anxiety, depression, and cancer. For example, one warning letter cites 45 diseases. Simultaneous to being unapproved new drugs, all products are regarded as misbranded drugs.
Most 2019 warning letters were signed by three FDA compliance directors from Center for Drug Evaluation and Research, Center for Veterinary Medicine, and Center for Food Safety and Applied Nutrition. In some of the earlier warning letters, the FDA also involved FTC – Federal Trade Commission – because of unsubstantiated claims. Both agencies are concerned that some of the efficacy claims may not be substantiated by competent and reliable scientific evidence.
There are clearly more than 27 companies in the market selling CBD. My thought is that the FDA has picked some of the worst offenders with respect to claims to establish impressive examples. Throughout the years in articles and press notifications, the FDA has always stated the regulatory position that CBD does not meet the definition of a dietary ingredient. This position has been challenged by industry and is a controversial topic. Some plaintiffs’ lawyers have initiated class-action lawsuits on the basis that clients were harmed by buying an illegal product and paying too much for it. It appears that the FDA is currently only enforcing against CBD products with disease claims. So far, the FDA has not written warning letters solely because a dietary supplement uses CBD. All of the mentioned warning letters could have been written to any dietary supplement making obvious disease claims.
So, what can be learned from the FDA’s actions? The first and most important step for manufacturers would be to “clear” all web pages, social media pages, and third-party referrals of disease statements. A second approach should be to not use CBD as a food ingredient or as an animal food ingredient. As a regulatory strategy, this may buy some time until the controversy about the legality of use in dietary supplements is clarified. For dietary supplements – in a conservative regulatory approach – a next step could be not using CBD as a dietary ingredient, because it is an approved drug.
A possible alternative legal ingredient is a full spectrum hemp extract which contains all hemp components – not just isolated CBD. Hemp-derived ingredients are eligible for use as dietary ingredients by virtue of being “botanicals.” However, hemp-derived substances must submit a New Dietary Ingredient notification 75 days prior to first marketing the hemp supplement. A less conservative regulatory approach for dietary supplements could be to wait and see what the FDA decides under the pressure from industry and consumers. Hopefully soon, the FDA will clarify the legality of use in dietary supplements.
Gisela Leon brings in over 33 years of experience in international labeling. She is well-experienced in USA labeling requirements of food, dietary supplements and cosmetics, in European food laws and multi-language labeling. As a regulatory consultant, she focuses on a concise review process, having reviewed hundreds of labels for U.S. compliance and helped international products to come into compliance with U.S. regulations. Her international labeling background allows her to point out differences or similarities with other countries.
After receiving her Master’s degree in Food Technology Engineering, Ms. Leon received her DGQ Audit-Specialist Certification from the German Institute for Quality, and her Master’s in Business Administration from George Mason University. For over 20 years she worked at Schöller Lebensmittel GmbH & Co KG as Director of Quality Management and Labeling Compliance. Ms. Leon speaks English, German, and French.
EAS Consulting Group, as part of the Certified Group of companies, merged with Food Safety Net Services, (FSNS), to become the global leader in testing and regulatory solutions for the FDA and USDA regulated industries.
EAS’ network of 200 independent advisors and consultants enables us to provide comprehensive consulting, training and auditing services, ensuring proactive regulatory and quality compliance for food, dietary supplements, pharmaceuticals, medical devices, cosmetics, tobacco, hemp and CBD.
The merger of FSNS (FSNS.com) with the Certified Laboratories group of companies, (certified-laboratories.com), has created a leading, national testing and regulatory consulting platform. EAS can assist with your regulatory and quality requirements and challenges, while offering access to a robust scope of testing services to meet your organization’s sophisticated needs.
From regulatory strategy, auditing, training, FDA inspection preparation, 483 & Warning letter remediation, quality system implementation, labeling compliance, preparation of technical submissions such as GRAS, Food Additive Petitions, DMFs, NDIs, 510(k)s and more; to FSMA compliance, expert witness services and due diligence assessments, EAS offers the expert knowledge and experience your company requires to ensure compliance through accurate and timely assistance. With our vast expertise in FDA’s and USDA’s policies and enforcement, EAS is the proven choice for assistance with product testing and other regulatory and quality consulting solutions. easconsultinggroup.com
Member Blog: 5 Must-Have Features for Your Cannabis eCommerce Website
As the cannabis industry goes mainstream, eCommerce is increasingly becoming a necessary part of cannabis retail operations. But with a plethora of dispensary eCommerce solutions available, not all of these can help you build an online presence. With intense competition in cannabis retail, there are some things that you must not compromise on as a dispensary owner. The following five must-have cannabis eCommerce features will help you grow your dispensary business, differentiate yourself from competitors and establish yourself as a formidable brand in the online cannabis space.
Independent eCommerce Platform
When deciding how to sell cannabis online, retailers can either use a third-party marketplace or have their own eCommerce website. Using a marketplace may be the easier option, but in the long run, you will certainly benefit more from owning an independent eCommerce platform. Having your own cannabis eCommerce website gives you complete control over the design, product information, and branding, unlike a third-party marketplace that offers little room for customization. Another valuable benefit of an independent cannabis eCommerce platform is that you can market it directly to online visitors and existing customers and build brand loyalty.
Data Ownership For Building Relationships
To market your online cannabis platform directly to your target demographics, it’s essential to have access to their contact details, which is not possible when you use third-party marketplace platforms. With an independent eCommerce platform, you will not just own your website but also all customer information and other relevant data to help you create innovative marketing campaigns and offer a more personalized online customer experience. Through email marketing and loyalty program communications, you can keep your customers regularly engaged with your brand and grow your business by building long-lasting relationships.
Mobile and SEO-friendly Website
These days, consumers regularly use their smartphones to search the web and make online purchases. Hence, your eCommerce website must function properly not just on desktops but mobile devices as well. You must avoid using an iFrame embedded menu, employed by many third-party marketplaces, as Google won’t crawl or index your website. To ensure that your online cannabis store is discoverable, use an advanced native eCommerce solution that aids in building SEO authority. If your chosen solution offers the ability to create content, you can also capitalize on SEO best practices to improve the flow of organic traffic to your website.
Age-Gating and Compliance Features
If you’re selling products online that have legal age restrictions, then an age-gate on your website is a must. This is not just a compliance requirement, but it also demonstrates your commitment to not exposing cannabis to minors. Many regulatory authorities in the U.S. and Canada are mandating more robust online age-gating measures beyond a simple “Are you 21+ yes or no” pop-up, and it’s essential to choose a solution that offers the functionalities for you to comply with the laws. Your cannabis eCommerce store also must-have features that allow for compliance with legal purchase limits and any other online regulations within your state or province.
Integration with POS and Cannabis Ecosystem
Most importantly, your chosen eCommerce solution must integrate seamlessly with your POS system for efficient inventory management, transactions, and payment processing. Ensure that you are using an advanced cannabis POS system that syncs with leading cannabis tech ecosystem solutions so that you can streamline your online business and maintain a recurring revenue stream from it. For a seamless shopping experience, your customers should be able to browse the website, place an order, pay online and request for pickup or delivery.
Gary Cohen is the CEO of Cova Software, the fastest growing technology brand in the cannabis industry. Cohen’s focus has been driving the company’s overall strategy, including its vision, go-to-market plan, and strategic development. Since joining the cannabis industry in 2016 and launching Cova commercially in 4q17, Cohen has led Cova to dominate the enterprise sector for dispensary Point of Sale, while forging client relationships with hundreds of single-store retailers across North America.
With Cova’s cannabis POS and its excellent integrations with eCommerce and delivery services, the online order automatically pops up for the budtender to tender the sales, and the POS system updates inventory once payment is approved. Cova offers multiple eCommerce solutions to choose from, as per your needs and budget, and you can legally sell cannabis online stress-free while staying compliant with strict government regulations.
Committee Blog: Social Equity Perspectives on Interstate Commerce – Part 1
As the debate heats up on “how” rather than “if” cannabis legalization will happen, social equity and comprehensive reform are at the forefront of the minds of national legislators and advocates. Historically, people chose to legalize cannabis as a method of legitimizing the illicit cannabis market. Beyond the message that “Black Lives Matter,” the issue of the federal legalization of marijuana means, fundamentally, that the federal government must spearhead meaningful policies in diversity, equity, inclusion, and social justice, to balance the scales of injustice during prohibition and early legalization efforts by the States.
Further, the Biden Administration’s priority of respecting the sovereignty and self-governance of tribal nations means federal trust and treaty responsibilities may finally be met by regularly having meaningful consultations with tribal nations to create federal policy. Thus, the inclusion of tribal nation’s representatives is imperative when creating federal policy to ensure their rights are secure and there is parity amongst states and tribes.
Any descheduling or legalization framework must hold a social equity objective that is clear at the core of its function: To create as much NEW generational wealth for the most number of those disparaged from participating in the legal cannabis industry because of the socioeconomic impacts of more than 80 years of federal marijuana prohibition and due to the barriers to entry created amid state regulatory regimes.
Sadly, as written currently, all proposed federal bills fail to meet this critical objective.
As soon as the federal government deschedules marijuana, it falls under Congress’ constitutional purview to regulate interstate commerce. Marijuana included. This is likely the ONLY opportunity available for those impacted by the war on marijuana to balance the scales of historic injustice, by providing an opportunity to participate in cannabis business ownership in a meaningful and valuable way.
If social equity is not adequately addressed in a federal act, it would require a secondary bill to tax and regulate interstate commerce activities. This would waste precious time and open a door to unregulated and taxed activities until congressional consensus and control are established. We have seen mistakes like this lead to disaster already amid state markets who leapt before ensuring a safety net. It also would NOT guarantee that social equity would be addressed in a second bill under new congressional, senate, or executive purview.
More importantly, the projected market cap of the U.S. cannabis industry is projected to be $85B by 2027 and was $18B in 2020. To put that number in perspective today, the largest tobacco company’s market cap is $95.6B – that’s over 5x the market cap of the whole cannabis industry. Similarly, the largest beverage distribution company has a $45.5B market cap – or over $2.5x of the current cannabis industry cap.
Both of these “big businesses” are in the cannabis industry already and they are preparing for federal legalization. The moment cannabis is de-scheduled, it quickly becomes an “extinction event” for social equity unless guardrails are put in place in the first Federal Act to offer social equity a fighting chance.
To avoid needless delay, to leverage effective taxation and regulation, to protect social equity from rapid market consolidation and control, and to spearhead well-thought-out and innovative ideas to address the inequities of the cannabis industry, the National Cannabis Industry Association’s Diversity Equity and Inclusion Committee (DEIC) presents these considerations to amend any proposed federal act – in order to preserve key concepts central to addressing interstate commerce and the short-falls of previously enacted social equity programs.
The Problems with Current Social Equity Programs
In analyzing the social equity programs undertaken at municipal and state levels so far, the NCIA’s DEIC has found multiple shortcomings in achieving the goal of generating new generational wealth for as many people who have been systematically discriminated against during the prohibition era of cannabis.
Namely, the following major issues continue to prevail:
Social equity applicants who are unqualified or do not participate meaningfully in the ownership or operation of the cannabis business. This can be because of the following reasons:
A lack of experience or expertise in business skills necessary to operate
A lack of experience or expertise in regulated cannabis operations
Fear of continued persecution and distrust related to trauma from being victimized by the war on drugs.
Based on the fact cannabis arrests have and still disproportionately affected BIPOC community members.
This causes many traditional, large, and privileged Multi-State Cannabis Operators (MSOs), in addition to established market entrants (Tobacco and Alcohol) as well as Special Purpose Acquisition Funds (SPAC’s) – collectively referred to as “mega players” – to decide to “take the wheel and drive” the cannabis licensing process and to put the social equity operator in the proverbial “back seat.” Another issue that remains unaddressed and underlies challenges in successful social equity programs is that:
Social equity operators do not have access to financing to meaningfully contribute to capital or operating expenditures to partnerships with cannabis companies who have capital and expertise.
This is certainly in large part due to generational prohibition and lack of access in being underprivileged.
Prohibition also impacts financing which systematically discriminates against the disprivileged; regardless of their interest to participate in the cannabis industry.
These individuals were prohibited from entering the legal market (when barriers were lower) and were initially labeled as “undesirables” because of past criminal history. This gave the cannabis industry and culture away to people who never suffered a day in the war on drugs.
The lack of access to education, experience, and wealth often drives the existing “mega players” who “hold the keys” to expertise and wealth, to justify operating agreements that contain provisions that make the social equity licensee’s position dilutable in the event they cannot meet their operating or fiduciary duties. Which brings up the third underlying problem in social equity programs which is connected to the above factors:
2. Attracting and grooming social equity candidates to qualify for licenses only to then leverage the applicant out of the licenses, is often how “mega players” skirt around social equity provisions. The justification in doing so is due to the above two factors and is justified as “what is best for business” by traditional operators expanding their footprint through social equity licensing.
In the social equity conversation, these partnership agreements are often referred to as “predatory operating agreements” which refer to the manner in which many “mega player” operators, knowing social equity applicants cannot bring education, experience, or money to the table, systemically target and groom qualified social equity applicants into delusions of wealth participation in cannabis only to obtain a license and then proceed into diluting the social equity partner – rather than educating them, providing them experience, or helping them obtain the wealth to contribute as equals.
Mega players, multi-licensed cannabis businesses, and vertical cannabis businesses may also engage in “social equity colonialism” in which they create “incubator programs” to educate, train, possibly fund, or partner with social equity entrepreneurs only to have them compete against one another in “pitch competitions” in which the mega player can cherry-pick the most controllable or affordable operator or otherwise leverage them to benefit including using taxpayer funds granted by the state or through discounts on licensing and/or taxes. Too often, the intent is to “tokenize” social equity operators, rather than empower them as equals.
Whether intentional or not, the impact of reducing social equity applicant participation after using them to obtain social equity licensing is a commonplace practice and shortfall of the programs analyzed by the DEIC.
To solve these problems, the DEIC acknowledges that the motivation for those in power to remain in power does not incentivize them to provide a truly equitable partnership simply because a program exists to do so. To address these diluting agreements, we recognize that the Government must play a role in addressing the underlying factors which justify the behavior driving “predatory operating agreements” and “social equity colonialism”.
Indeed, federal legalization and the regulation of interstate commerce with social equity at the forefront may be the last opportunity to address the harms caused by prohibition nationwide and the inequity of governments refusing to address social equity in cannabis. Similar to the Civil Rights Act of 1964, the victims in the war on cannabis cannot depend solely on state and local governments to address social equity.
Over the next two parts of this series, we will outline a framework of components that may be amended or included in a federal legalization bill to resolve the problems in social equity identified and to provide a comprehensive reform for permitting interstate commerce and addressing the inequity prevalent in the cannabis industry.
Read more in Part 2 and Part 3 of this blog series.
Equity Member Spotlight: Euphorium Oakland
NCIA’s editorial department continues the Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
Tell us a bit about you, your background, and why you launched your company.
Euphorium Oakland is a Black-woman owned, Black family-operated delivery-only concierge service founded by mother and son duo & HBCU graduates, Tee Tee Brown and Bryce Savoy in 2016. Having over 20 years of experience in pharmaceutical sales, my mother wanted to use the skills she acquired over a couple of decades to help heal people.
As a single mother and primary caretaker for her mother, she saw an opportunity to further her purpose of service. For me, being an independent rapper and Founding Member of Bay-Area-based non-profit organization, The Black Neighborhood I saw an opportunity to create a pathway to generational wealth, as well as be able to empower and uplift others, which is at the heart of everything I do.
What unique value does your company offer to the cannabis industry?
Euphorium offers superior customer service and an unparalleled family touch. With her prior background in sales, my mother offers a wealth of knowledge to anyone looking for advice and direction about which products to purchase for their specific needs.
Our primary offerings are that we have high-quality products at affordable prices, which cover all cannabis categories, serve the local community through our philanthropic endeavors, and ensure anyone who does business with us feels like family. We also strive to go above and beyond to make sure our clients’ needs are met. Anyone who shops with us can feel reassured knowing that they are spending money with a fully Black-owned company, that epitomizes what it means to be Oakland natives.
What is your goal for the greater good of cannabis?
Our goal for the greater good of cannabis is to create a blueprint for other Black people looking to enter the industry, at any level. With so few of us being business owners, it is not enough for us alone to thrive; we want others who look like us to also have a seat at the table.
What kind of challenges do you face in the industry and what solutions would you like to see?
Like many of us who are small business owners understand, access to consistent capital is everything. With customer spending habits fluctuating now more than ever, consistent revenue is for and far between. However, maybe even more important than that is being able to market and promote our business/services in effective ways to gain new clients. Being that this is the first business that my mother and I have operated, there are a lot of things we had to learn by trial and error. Having proper incubation/business consultation would help us tremendously. All in all, a solution we would like to see is city and county agencies truly being intentional about providing equity businesses and entrepreneurs with the tools and resources to become successful in an ever-changing industry.
Why did you join NCIA? What’s the best or most important part about being a member through the Social Equity Scholarship Program?
“Equity is not a competition, it’s a community.” – A quote from a gentleman I heard at the March 10 Power Hour session. This is the exact reason why we joined NCIA. We have found more often than not, equity business owners tend to operate in silos: for one reason or another, we do not communicate with each other, although we are almost always experiencing the same challenges.
The best part about being a member of the Social Equity Scholarship Program thus far is the opportunity to build relationships with people from all walks of life and sectors of the industry. Also, from the information we gathered in the short time we have been a part of the program, our success is not predicated upon our popularity. We are looking forward to what is next!
Omnibus Leaves Industry Hanging
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Photo By CannabisCamera.com
Since 2014, federal funding bills, or appropriations bills, have included provisions restricting the Department of Justice from using tax dollars to prosecute or penalize state-legal medical cannabis businesses and patients. Since then, NCIA and others have worked diligently to expand those protections and enact cannabis reform through the budget, with some efforts being more successful than others. Another issue making matters more complicated: the federal appropriations process requires this provision to be approved by congressional process annually, so introducing, lobbying on, and enacting these provisions has to reoccur every year.
Last week, Congress passed the most recent omnibus appropriations bill, which is increasingly used to group together the budgets of all departments in one year. Keep reading to find out what provisions related to cannabis were included (or weren’t!) and why it matters:
PROTECTIONS
If you’ve been in cannabis for a while, you might remember when medical cannabis protections were first enacted in 2014. Back then, the provision was known as the “Rohrabacher-Farr Amendment,” named for then-Reps. Dana Rohrabacher (R-CA) and Sam Farr (D-CA). This amendment forbids the Department of Justice (DOJ) from spending money to prevent the implementation of state-level medical cannabis programs, in addition to removing funding for federal medical cannabis raids, arrests, and prosecutions in states where medical cannabis is legal. To put it simply: the DoJ can’t use any of its money against state-legal, compliant medical cannabis businesses.
So, the omnibus had some good news and some bad news regarding protections for cannabis businesses from the Department of Justice. Good news? Those protections for medical cannabis businesses, patients, and programs remain in place. Bad news? Congressional leaders declined to expand those protections to include all cannabis businesses, despite the fact that the House has voted twice in the past to do so.
WASHINGTON, D.C.
For decades, Congress has used its power and jurisdiction over Washington, D.C. as a bargaining chip and test subject for various policies, and cannabis is no exception.
Washington, D.C. voted to legalize adult-use cannabis via Initiative 71 in 2014. However, because the Constitution gives Congress jurisdiction over the District of Columbia, Washingtonians have been, and continue to be, unable to implement the taxed and regulated sales of cannabis for adults. (That hasn’t stopped a flourishing gray market, but that’s a topic for another blog!)
One Congressman, in particular, has obstructed D.C’s cannabis market: Andy Harris, the lone Republican in the House from the state of Maryland. The “Harris Amendment,” which prevents legal sales from occurring in D.C., has been included in every appropriations bill since – again, despite the fact that House Democrats have voted to strip the language multiple times.
The inclusion and maintenance of this provision – especially while Democrats control both chambers of Congress – is simply unacceptable and inexcusable. To that end, NCIA recently signed on to a letter urging leadership to remove the language. It’s also critical to point out that Washington, D.C. is one of the places where disparate cannabis arrests occur at an alarming rate, making the need for reform even more dire.
EXPUNGEMENTS
A new appropriations amendment that NCIA supported was also included in the most recent omnibus. The language, championed by Cannabis Caucus Co-Chair Dave Joyce (R-OH), would allow JAG funding to be used for the cost of state and local cannabis expungements and record clearing. This is a small but incredible reform that we hope will be the first step in providing justice to individuals impacted by the War on Drugs.
VAPING
The omnibus also included report language related to cannabis. Report language is non-binding and essentially encourages an agency to do something. In this case, Congress is urging NIDA (the National Institute on Drug Abuse) to conduct interdisciplinary research on the relationship between the vaping of tobacco and marijuana, with an emphasis on risk perceptions, decision-making, and neuroscience.
Interestingly, the appropriations process for FY2023 is beginning to get underway already. NCIA will be working with appropriators and other allies in Washington, D.C. to maintain provisions that protect cannabis businesses and consumers while stripping those that deny opportunity and justice to others. Interested in learning more about appropriations, or working with our team on an amendment? Learn more about our Evergreen Roundtable and committees by visiting our website!
Video: NCIA Evergreen Members Lobby Congress Virtually
Due to ongoing COVID-19 and Capitol security restrictions, efforts to lobby Congress on cannabis policy issues have been challenging. Though logistics prevent us from hosting our traditional annual fly-in event in D.C., with hundreds of cannabis industry professionals navigating the halls of Congress, members of Congress themselves are still able to hear from their constituents through virtual means. Recently, NCIA’s Government Relations team worked with our Evergreen Members to guide them through the process of meeting with members of Congress to continue to tell our stories and share our concerns for our industry.
Hear more about their experiences in this video with insights into how those meetings went.
NCIA’s Evergreen membership is for leading businesses looking to make a meaningful investment in shaping policy for the cannabis industry. This premium membership plan provides your company with a seat on NCIA’s Evergreen Member Roundtable, with exclusive access to private briefings from members of Congress, access to NCIA’s lobbying team, invitations to political events, special membership concierge service, and more.
As customers become more sophisticated and discerning about the fast-growing cannabis extract market, from vapes to dabs to infused pre-rolls, the need to routinely produce consistent, quality extracts at scale is becoming doubly important for processors. Compounding the issue, the potential for federal legalization will bring significant growth opportunities but also increased federal oversight, including the need for Good Manufacturing Practices (GMP) and other onerous standards that will challenge unprepared operators.
Future-Proof Extraction Operations Through Data
To overcome these twin challenges, processors should start developing (if they have not already) a framework to capture, review, and analyze data at every stage of production to produce consistent, quality, and compliant products.
That framework should examine every aspect of the extraction process, starting with the type of material harvested from farms, including how it is stored and handled, through to the final, packaged retail-ready product.
It should also be tied to specific goals and clear objectives. Capturing data simply to capture data within a given framework but without a clear idea of how that data will be used can lead to analysis paralysis, or worse, endless trial-and-error that wastes time and material, eating into expected profits.
Leverage Design of Experiments Methodology
Design of Experiments, or DoE, is a scientific methodology that can help guide processors in determining the key parameters they want to track and how those parameters interact. This starts with assertions that map to specific goals or objectives, such as investigating the yield of a specific terpene with the goal of blending it with a distillate-based vape cartridge. From here, processors can design and set up experiments with varying inputs from temperature to pressure, to biomass composition, all to understand how the yield of a specific terpene is influenced throughout a given process.
When these learnings are applied at production scale, the framework developed through DoE methodology provides a guide for creating consistent products, but also to better manage and rectify issues that may arise. With specific goals in mind, processors can then determine what data they need to capture and analyze.
The Four Steps of Data Capture
Step 1: Chemical Makeup – When selecting or determining what plant material to use for extraction, processors first must examine the chemical makeup of the cannabis biomass. This can include the profiles of cannabinoids, terpenes, and the fat/wax/water content.
The exact chemical makeup of cannabis biomass can be difficult to determine because of its nonhomogeneous nature. Imagine closing your eyes and selecting a random sample from a container of bulk biomass. Maybe you grab a sugar leaf or flower, high in THC-laden trichomes, or maybe you grab a fanleaf with little to nothing to contribute to a high-quality extract. The chemical composition will look significantly different depending on how one selects the sample. So it’s important to be cognizant of what and how biomass testing is conducted, and often a single sample isn’t the answer. Knowing the approximate chemical makeup of the feedstock material will guide the processor to determine what type of recipe they will use for extraction and post processing and, ultimately, what end products are most valuable for a given input.
Once the chemical makeup has been determined, the processor will know the inputs of the material, such as the associated THC, CBD, terpenes, etc. They can then use that data to determine what will (or should) come out of the extraction process at its conclusion. This is the mass balance of the production process. It is difficult or impossible to optimize any process if one doesn’t know exactly what goes in and what comes out. Of course, this is much easier said than done given the nonhomogeneous nature of biomass.
Step 3: Identify and Maintain Key Process Parameters – Depending on the recipe and desired end product as determined through the above steps, the extraction process will need to maintain specific temperatures, pressures, times, and flow rates, among other key variables, to ensure a consistent, quality product. This is where a DoE or other similar process can add significant value. Analytical tools, such as the DoE, can help determine what process parameters need to be precisely controlled, and what parameters can have looser controls or can be ignored altogether. Compliance comes into play here as well. The ability to track and record these key data points is crucial to achieving GMP compliance as well as creating a consistent product that customers expect.
Step 4: Post Process Review – In order to understand how recipe parameters affect the end product, the processor needs to know its chemical composition as well as the composition of any waste materials (e.g., biomass, fats, waxes), or impurities that have been filtered out. Capturing this data is vital as it offers the critical clues to why a particular batch did not turn out as planned, for example, so the processor can investigate potential causes and corresponding solutions.
Step 5: Recording Data Between Each Process – What happens between each process is nearly as important as what happens during the process. Storage conditions can have an impact on quality and consistency, issues that may not be readily evident within the data capturing during processing. Those data points to know, among others, may include monitoring the freezer temperature where biomass is stored, measuring the humidity of the environment, documenting when and how equipment is cleaned, or even tracking how long material sits between extraction and placement in a vacuum oven.
Decision Making Via Data Analysis
After the data is captured and analyzed, managers may need to enact decisions if the data shows deviations from the expected outcomes. For example, as part of post-production lab tests (step 4), are acetone traces appearing in the finished product? If so, the organization may need to change its equipment cleaning practices (step 5) to ensure unwanted trace chemicals are not seeping into finished products.
Although enacting a program to better capture, review, and analyze data can appear to be a daunting task, doing so will provide the processor a significant competitive advantage. Not only will it help ensure consistent production while future-proofing the organization against coming regulations, it may also enable processors to experiment with and develop novel or proprietary extracts derived from a repeatable, scientific method that can’t easily be replicated by competitors.
Jack Naito is President of Luna Technologies, where he oversees operations, strategic growth, and R&D for the company he co-founded in 2016. Jack entered the cannabis industry after time spent as a Materials, Process, and Physics Engineer for aerospace giant Boeing. Jack obtained an Economics and Business degree from Colorado College and a Master’s degree in Mechanical Engineering from the University of Washington.
Luna Technologies engineers state-of-the-art extraction equipment for cannabis processors. The meticulously designed, automated equipment empowers operators to process fresh-frozen or cured plant biomass with stress-tested hardware and built-in failsafes to foster a superior level of workplace safety while also lowering labor costs. Luna’s Earth-conscious engineering approach helps decrease energy consumption while setting the industry standard for safety, quality, consistency, and customization in support of creating clean, consistent cannabis concentrates with medical and social benefits. Learn more atwww.lunatechequipment.com.
Video: NCIA TODAY – Thursday, March 10, 2022
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.
Committee Blog: Protecting Innovations in Cannabis Technology
The Role of Patents in the Industry, Now and in the Future
Paul Coble is an intellectual property attorney and Chair of NCIA’s Cannabis Manufacturing Committee; Scott Seeley is an intellectual property attorney with Eastgate IP and is Organizer of the Cannabis Manufacturing Committee
Competition in the cannabis industry has always been fierce. To date, most competition has focused on securing licenses and sales territory. But, as markets saturate and the green pastures are all claimed, the battlefronts must shift. Cannabis companies now look to collect non-geographic assets, such as market share, profitability advantages, and a durable brand presence.
Intellectual property law provides mechanisms to capture and monetize these intangible assets. Assets that give a company a competitive advantage can build value into a business beyond its balance sheet. Well-crafted IP portfolios not only deter freerider copying, but are also valuable assets that can be sold, licensed, or provide incentive for investment or acquisition by larger entities. Businesses with a strong IP strategy are able to maintain their edge over their competitors by protecting their investments in technology and marketing to discourage competitors from utilizing their newfound developments or improperly capitalizing on their brand recognition.
Ignoring cannabis IP not only leaves this value on the table, but exposes the business to unnecessary risk. As in all other industries, cannabis companies must recognize that competitors have IP portfolios that may need to be avoided or licensed. Modern competition requires solidifying your own rights as well as understanding the rights of others.
Intellectual property is often broadly broken out into four major categories. Each category is tailored to protect different forms of intangible assets:
This blog post overviews patents, and how patents can be used by cannabis businesses to protect their technological advancements. This is the first of a 3-part series about cannabis IP. The series will culminate with a Q&A-based webinar on April 19 at 1:00 PM ET. Advance questions can be sent to paul@thalo.io.
What are Patents?
Patents protect technological advancements and can be used to exclude others from making, using, importing, or selling a claimed technological innovation.
Patents are often used by businesses to build walls around technologies they develop to temporarily prevent competitors from using the same advantages. Companies also use patents to build portfolios of technology that can be sold or licensed like any other asset, or used to bolster their valuation for acquisition or investment opportunities.
But patents are not just used to block competition, they can also be a tremendous source of information about technological developments in the field. While patent discovery tools are admittedly lacking at the moment (GooglePatents is a good place to start), the details in a patent can often short-circuit months or years of work. Of course, depending on the patent claims, you may need to license the patent in order to use that information. But that type of information-for-licensing-rights exchange, with the right mentality on both sides, is the foundation of an efficient industry.
Here are just a few examples of the cannabis technology that may be patent eligible:
Cannabis Strains
Formulations for Extracts, Topicals, Tinctures, Vape Liquid, Edibles
Vaporizer Design
Cartridge Design
Extraction Methods
Manufacturing and Processing Methods
There are three types of patents that can be used to protect cannabis technology: Utility, Design, and Plant. These types of protection are not mutually exclusive and sometimes can be combined to form a more comprehensive protection strategy.
Utility Patents
Utility patents are the most popular type of patent, offering the broadest and strongest form of protection. Utility patents last 20 years from the date of filing and are good for protecting nearly any new technological innovation including formulations for extracts, topicals, tinctures, or edibles, new vaporizer designs, new improvements to processing or manufacturing methods, and similar developments. Utility patents can also be used to protect new cannabis genetics, at least theoretically. As discussed below, however, there are several practical barriers to patenting cannabis genetics.
A significant benefit of utility patents is that they can protect the actual function of an innovation, rather than just the outwardly recognizable features or the specific implementation. This aspect of protection sets utility patents apart from other forms of protection like design patents and copyright, which are limited non-functional aspects.
Design Patents
Design patents protect an item’s unique ornamental appearance. Design patent protection is sometimes easier to obtain than utility patents because design patents only protect the look of an item, not how it works. So design patents do not protect against someone selling a functionally identical device with a different outward appearance. This narrower protection also lasts only 15 years instead of 20.
Nevertheless, design patents can be a strong tool to protect products that have a novel and distinct design aesthetic. They can cover the visual appearance of vaporizer batteries or cartridges, retail packaging, even unique dispensary displays. In some cases, design patents can be effectively combined with trademark and trade dress protections to create a highly defensible brand style.
Patenting Cannabis Strains
The most common questions about cannabis patents usually relate to patenting strain genetics. Newly developed strains can be protected by both utility and plant patents, with varying rights and requirements. Cannabis strains may also, theoretically, receive pseudo-patent protection under the Plant Variety Protection Act of 1970 (“PVPA”). As noted below, however, current practical realities make PVPA protection unattainable for most cannabis strains.
Both plant and utility patents can protect cannabis strains, but they do so very differently. Utility patents cover newly invented compositions of matter and, therefore, can be used to prevent copying a novel genetic sequence. These patents literally cover specific sequences of DNA base pairs. A key requirement of utility patents is that the applicant must enable others to make and use the same invention once out of patent. While it may be possible to meet the enablement requirement with a transgenic breeding or CRISPR gene editing, the more common method of enabling plant gene patents is with a biological deposit of seeds or other propagation material with a public organization. So long as cannabis remains federally illegal, it can be difficult or impossible to make the deposit within the U.S. Some applicants have had success making the seed deposit at foreign centers, but the growth of cannabis genetic patents has been slowed by these requirements. When cannabis is eventually descheduled, the practical barriers to genetic patents will fall and that may trigger a rush by more companies to seek patents for their proprietary cannabis strains.
Plant Patents
Another form of patents, plant patents, can protect new plant varietals that have been reproduced asexually. Although cannabis plants are relatively easy to reproduce asexually via cloning or cutting, one disadvantage of this form of protection is that plant patents only cover genetically identical copies, reproduced asexually from the claimed plant. That means to infringe a plant patent, one must physically clone the patented plant–a narrow base for an infringement claim.
Plant Variety Protection Act
The last vehicle that can protect a new cannabis strain is the Plant Variety Protection Act that was designed specifically to protect sexually reproducing plants, such as cannabis.
The PVPA, however, comes along with a strict requirement that at least 3,000 seeds of the claimed plant species be deposited with the U.S. Department of Agriculture in Fort Collins, CO. The USDA will not accept any deposits for plants that are classified as controlled substances, including cannabis. Meaning that, for the time being, PVPA protection is unavailable for cannabis plants that do not qualify as hemp (less than 0.3% d9-THC).
The Process – How to Get a Patent
All patents start as applications which must be examined and approved by the U.S. Patent & Trademark Office (“USPTO”) to become granted patents. The application process, from start to finish, can last 1-5 years and cost anywhere between a few thousand to tens of thousands of dollars.
The examination involves a review of the patent application, as well as related literature published before your application was filed (also called “prior art”). An examiner with technical expertise in the application’s field will search for prior art and determine whether the application meets all statutory requirements. Most notable of those requirements are that the invention must cover eligible subject matter and be sufficiently inventive to warrant a patent.
The prosecution process typically involves letters back-and-forth between the inventor and the Patent Office. It is often thought of as a negotiation — nearly all patent applications receive at least one rejection. The applicant is given an opportunity to change what the patent covers or explain why the rejection was wrong. Only if and when the Examiner is satisfied that all statutory requirements are met will the application be allowed to issue as a patent.
How will Patents Shape the Cannabis Industry?
Like it or not, patents are rapidly becoming a major force in the cannabis industry. The cannabis industry is in a unique position to determine the role intellectual property will play, but one thing is certain: cannabis IP cannot be ignored. Some companies, like Canopy Growth, Nextleaf, and various pharmaceutical companies, are aggressively developing patent portfolios and high-stakes patent litigation is already underway. Additionally, holding companies known as “non-practicing entities” have been formed to purchase valuable patents covering key aspects of cannabis cultivation, manufacturing, and consumption.
But these forces do not have to dominate the industry. Patents were originally designed to promote scientific advancement, not inhibit it. When the IP rights of others are respected and technology is licensed widely at reasonable rates, intellectual property can cut years and millions of dollars from research budgets. Some industries have found success with patent cooperatives and similar pooled-patent arrangements. The future may see some combination of patent licensing with blockchain technology, NFTs, or decentralized autonomous organizations (DAOs).
We will continue the discussion as to what an enlightened approach to intellectual property could look like in the cannabis industry in our webinar scheduled for April 19 at 1:00 PM Eastern. Please send any advance questions to paul@thalo.io.
Member Blog: Hemp Cultivators and Processors Get a Head Start in New York Adult-Use Cannabis Industry
While the Garden State and Land of Steady Habits are convincingly in the lead of the tri-state dash towards adult-use cannabis sales, new legislation passed last week at least gives the Empire State a burst of energy.
There has been much anticipation since the Marijuana Regulation and Taxation Act legalized cannabis in New York for adults last year. But only medical patients in the state can legally purchase products right now. New York’s slow start to recreational sales has reportedly led to even more unregulated products flooding the marketplace, including delta-8 THC — which is banned under NY state law though widely being sold throughout the state.
By Governor Hochul signing Senate Bill8084A into law on February 22, 2022, the legal cultivation, processing, and distribution of cannabis in New York should be accelerated. Specifically, the new legislation permits hemp cultivators and processors to apply for growing and processing adult-use cannabis, and aims to promote certain equity goals in the process. It creates two new temporary license categories: (1) conditional adult-use cultivator licenses; and (2) conditional adult-use processor licenses. These licenses must be issued by December 31, 2022, and will be valid through June 30, 2024.
Among other requirements, applicants seeking conditional cultivator licenses must be prepared to demonstrate they are authorized hemp growers in good standing. Although they must only show good standing since December 31, 2021, applicants must also show proof of growth for two of the last four years.
Cultivators must also comply with geographic restrictions for growing and are limited to outdoor or greenhouse settings. Outdoor facilities may have a maximum of 43,560 square feet of flowering canopy. Greenhouse canopy may not exceed 25,000 square feet, and can use up to 20 artificial lights. As expected, licensees must also comply with any environmental standards and requirements mandated by the Office of Cannabis Management.
For those seeking conditional processor licenses, licensees must hold an active cannabinoid hemp processor license. This license must have been granted before January 1, 2022. And, as a condition of licensing, transfer of ownership will be restricted through the end of the conditional period. The processor license will allow the acquisition, possession, processing, and sale of cannabis, along with enabling the licensees to engage in blending, extracting, infusing, packaging, labeling, branding, and preparing cannabis products.
In addition, all conditional licensees must enter into a labor peace agreement, participate in an environmental sustainability program and social equity mentorship program. Licensees must also, among other things, become operational within six months from the day they receive the conditional license.
Hemp farmers and processors are no doubt getting a big nugget from the Big Apple. While more regulations on adult-use licensing are anticipated soon, a trail is now blazed for certain New Yorkers in the hemp industry and social equity participants.
Charles J. Messina is a Partner at Genova Burns LLC and specializes in Franchise & Distribution, Agriculture and Cannabis Law. He teaches one of the region’s first cannabis law school courses and devotes much of his practice to advising canna-businesses as well as litigating various types of matters including complex contract and commercial disputes, insurance and employment defense matters, trademark and franchise issues and professional liability, TCPA and shareholder derivative actions.
Jennifer Roselle is a Partner at Genova Burns LLC and specializes in Cannabis Law. She has unique experience with labor compliance planning and labor peace agreements in the cannabis marketplace. In addition to her work in the cannabis industry, Jennifer devotes much of her practice to traditional labor matters, human resources compliance and employer counseling.
For over 30 years, Genova Burns has partnered with companies, businesses, trade associations, and government entities, from around the globe, on matters in New Jersey and the greater northeast corridor between New York City and Washington, D.C. We distinguish ourselves with unparalleled responsiveness and provide an array of exceptional legal services across multiple practice areas with the quality expected of big law, but absent the big law economics by embracing technology and offering out of the box problem-solving advice and pragmatic solutions.
Our firm is proud of its proven track record of assisting multiple clients with being awarded medical licensure in New Jersey, and continuing to counsel clients on the dynamic federal and state regulatory landscape, as well as with corporate transactional, labor/employment, real estate, land-use and other issues.
Given Genova Burns’ significant experience representing clients in the cannabis, hemp and CBD industries from the earliest stages of development in the region, the firm is uniquely qualified to advise investors, cultivators, processors, distributors, retailers and ancillary businesses.
The cannabis industry has grown exponentially as an increasing number of states have relaxed state law prohibitions on the use of cannabis for medical and recreational purposes. However, under federal law, cannabis remains classified as a Schedule I controlled substance under the Controlled Substances Act (CSA). This means that the production, distribution, and possession of cannabis remains illegal on the federal level.
Schedule 1 Status of Marijuana: State-Legal Cannabis Businesses and Application of Internal Revenue Code Section 280E
Cannabis businesses are treated differently from many other businesses for tax purposes. Under Internal Revenue Code (IRC) §280E (“280E”), which applies to a federal income tax filing, denies deductions and credits for amounts paid or incurred in carrying on the trade or business of cannabis. Cost of goods sold is allowable because it is not considered a deduction, rather it is a reduction of gross receipts (revenue) to arrive at gross profit.
A report published in March 2020 by the U.S. Treasury Inspector General for Tax Administration examined California and found that over 50% of marijuana companies had likely underpaid the IRS under IRC§ 280E. The report confirms the IRS is preparing to increase marijuana industry audits nationwide in response.
Currently, the method by which cost of goods sold may be deducted for producers is to use IRC §471(a). This provision discusses how to clearly reflect income by using an inventory method. Therefore, cannabis producers have less of a 280E problem than retailers and distributors.
After the passage of the Tax Cuts and Jobs Act (TCJA), effective for tax years beginning January 1, 2018, a provision was passed in the IRC §471(c). There are various opinions with advisors in the industry on whether this code section and method can be used for retailers and distributors. The idea behind IRC 471(c) is that “certain small businesses” can meet the gross receipts test of this subsection for any taxable year in which the corporation’s or partnership’s average annual gross receipts do not exceed $25,000,000 for the 3-taxable-year period ending with the taxable year that precedes such taxable year. Pursuant to IRC §448(c)(1), this type of small business may be able to use a “books and records” method for deducting all costs – rather than being limited to cost of goods sold only. In other words, if one uses 471(c)(1)(B) as an accounting method, in theory, they may also be able to deduct selling expenses and all other costs that were previously not allowed as deductions.
Assembly Bill 37, codified in §17209 of the California Revenue and Taxation Code
Each state in the U.S. is autonomous in that it has the authority to decide whether its income tax laws conform to §280E or not. On October 12, 2019, Governor Newsom signed into law AB 37, which overrides §280E through the following provision:
For each taxable year beginning on or after January 1, 2020, and before January 1, 2025, Section 280E of the Internal Revenue Code, relating to expenditures in connection with the illegal sale of drugs, shall not apply to the carrying on of any trade or business that is commercial cannabis activity by a licensee. – (CAL. REV. & TAX CODE § 17209 (2020). CAL. REV. & TAX CODE § 17209 (2020).
However, AB 37 only applies to state filings with the Franchise Tax Board and is currently only available until January 1, 2025. AB 37 has no impact on federal tax filings, which is where a majority of cannabis entities pay their income taxes with effective tax rates as high as 25% for corporate taxes and up to 37% for individuals.
The IRS Lacks Guidance for Cannabis Tax Payers
The IRS has not published nationwide guidance to taxpayers and tax professionals in the cannabis industry. In addition, cash-intensive business issues unique to the cannabis industry such as IRS §280E and banking limitations will remain unresolved unless and until there is uniformity through federal legalization. As a result, compliance-related issues continue to grow and negatively affect cannabis business owners who operate legally under individual state law.
Kaveh Newmen is an associate at Edlin Gallagher Huie + Blum who handles cannabis law general litigation, and trucking and transportation matters. Kaveh was admitted to practice law by the State Bar of California in 2021. Kaveh earned his J.D. from the University of San Diego School of Law in 2020, where he was a board member of the Criminal Law Society, the Immigration Law Society, the Middle Eastern Law Student Association, and served as an intern at the school’s Immigration Clinic. He is a first-generation Iranian-American and speaks Farsi.
SAFE Banking, Hemp, and SCOTUS Update
Photo By CannabisCamera.com
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Since I last provided an update from Washington, D.C., not much has changed in terms of cannabis reform. That being said, there are still a few short developments that we’ve been keeping an eye on that we want to bring to your attention! Keep reading to learn the latest:
SAFE Banking
SAFE Banking passed the House for the sixth time in February as part of the America COMPETES Act. More recently, a stakeholder meeting was held with lead champion Congressman Perlmutter that NCIA was proud to have participated in.
During this stakeholder meeting, Rep. Perlmutter reviewed where the bill is at, the hurdles it must clear in order to pass, and reiterated his commitment to passing the bill before this session is over. Congressman Perlmutter also talked extensively about a recent hearing that the House Financial Services Subcommittee on Consumer Protection and Financial Institutions held titled “Small Businesses, Big Impact: Ensuring Small and Minority-Owned Businesses Share in the Economic Recovery.” Chaired by Rep. Perlmutter himself, the subcommittee heard testimony from the Minority Cannabis Business Association’s (MCBA) Executive Director, Amber Litteljohn, on the economic barriers federal policy has created within the burgeoning cannabis market.
Hemp
A few weeks ago, the United States Department of Agriculture’s (USDA) National Agricultural Statistics Service (NASS) released the results of the 2021 Hemp Acreage and Production Survey in its National Hemp Report. This is a massive, first-ever survey of its kind to be done at the national level, and is set to provide a “benchmark” analysis of the economic impact of the burgeoning newly legal market.
The survey collected data for hemp grown in the open and hemp under protection. Planted area for industrial hemp grown in the open for all utilizations in the United States totaled 54,152 acres. Area harvested for all utilizations totaled 33,480 acres. The value of U.S. hemp production in the open totaled $712 million. The value of production for hemp that was grown under protection in the United States totaled $112 million. Area under protection totaled 15.6 million square feet.
SCOTUS
The Supreme Court has officially asked the highest lawyer in the land, the solicitor general, to weigh in on cannabis.
Justices were asked whether or not employees seeking workers’ compensation for medical cannabis after being hurt on the job should receive the assistance, but before they do, they want the broader government to comment. They have requested that the solicitor general submit a brief on the topic. For more details, check out this great piece our friends at Marijuana Moment published.
While this week’s update was another “hodge-podge”, NCIA’s government relations team continues to work hard at passing reform this Congress. We continue to meet with offices to elevate the need for SAFE Banking – primarily for small and minority-owned businesses, discuss the decimation that 280E is wreaking, and highlight opportunities for restorative justice. Interested in becoming more involved with lobbying and our government relations efforts? Contact Stefan at stefan@thecannabisindustry.org to talk about becoming an Evergreen Member today!
Video: Voices of NCIA’s DEI Scholarship Recipients
Laws and regulations need to be designed and implemented with equity and fairness in mind. NCIA’s Diversity, Equity, Inclusion Committee is focused on recommendations that will create access to opportunity for those most adversely affected by cannabis prohibition.
A more diverse cannabis industry means a more prosperous one. We aim to foster a more equitable industry where participation and success are possible regardless of the numerous factors that have historically held many people, businesses, and communities back.
At the core of NCIA’s Diversity, Equity, and Inclusion Program is our Equity Scholarship Program, which provides our Equity Members one year of complimentary membership to NCIA. Hear from some of the business owners who became a part of NCIA’s DEI Scholarship Program in this video.
If you share our vision for a more inclusive and equitable cannabis industry, please support NCIA’s DEI program through sponsorship. DEI program sponsors not only help us continue to provide complimentary memberships to equity operators, but it also comes with benefits! Click here to learn more about the program.
Equity Member Spotlight: YS Cannabis Delivery Services
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.
Originally from Ecuador, Yadira Elizabeth Silva Leon, I came to the United States when I was only 16 years of age. I graduated with honors from Sheridan High School and Arapahoe Community College in Colorado. Then I graduated from the American Intercontinental University online, with a BA in Business Administration. I own my construction clean-up company, officially named YS Construction Clean Up Services.
As a single mother of two and minority business owner, I started to become more involved in the world of cannabis after two separate accidents, leaving me with a damaged spine. Doctors prescribed medications and pills that began to damage my nervous system and I started to lose sensation in my legs, inhibiting me from taking care of my children. It was around this time that Colorado legalized cannabis, and after becoming legally accessible, I decided to take advantage of the medicinal benefits of cannabis to calm my pain. Cannabis inspired me to begin a new career in the cannabis industry. Serving people who are in pain by bringing their medicine in the comfort of their home in a timely fashion became an interest and passion of mine.
What unique value does your company offer to the cannabis industry?
The health and safety of our patients, customers, and employees is our top priority. We see the future where our company impacts the wellbeing of our drivers and the life of our planet. That is why YS Cannabis Delivery Services was created.
We specialize in transporting cannabis products business to business and business to customer. We also collect empty containers from customers to recycle properly, and return clean, disinfect, and sterile containers for businesses.
What is your goal for the greater good of cannabis?
Securing the life of carriers, and our environment. We are working on a new security system where we use AI (Artificial Intelligence) and VR (Virtual Reality) to deliver cannabis from business to business with efficiency and security. While we are expanding security to protect cannabis shippers and vehicles against prohibited intrusions, we are also making sure plastic containers get to the right place and be recycled properly.
What kind of challenges does the industry face, and what solutions would you like to see?
COVID-19 created many challenges for most industries, but the cannabis industry faced more threatening challenges such as violence and robbery. What we would like to see is the safety of cannabis employees become a priority. That is why we are looking into virtual reality as a security measure.
Why did you join NCIA? What’s the best or most important part about being a member through the Social Equity Scholarship Program?
I joined the National Cannabis Industry Association to collaborate in the development of my company at a national and international level. Because of NCIA, I was able to receive access to the resources my business needed to grow and thrive. I was able to speak with leaders, consultants, and other like-minded professionals.
Member Blog: Diversity and Inclusion Emerge as Major Themes in Cannabis
While MGO put together its annual Cannabis 50 Impact Report of organizations and individuals pushing the cannabis industry forward, we were able to acquire new insights from some of the most influential leaders in the industry, like Kim Rivers, founder, chairman, and CEO of Trulieve; Berner, co-founder and CEO of Cookies; and Troy Datcher, CEO of The Parent Company. A clear trend that emerged in the report is the number of honorees focusing on social equity. Those who are contributing to the social equity community are bringing awareness, fostering inclusion, increasing diversity and expunging criminal records for cannabis convictions.
Diversity Where it Matters
Visual artist, hip-hop pioneer, and filmmaker Fred Brathwaite aka Fab 5 Freddy wasn’t wrong when he told us, “The biggest obstacle is making sure we’re all focusing on social equity and inclusion so people of color can benefit from the [cannabis] industry, as they’ve been the most victimized for being a part of it.” At this point, the industry at large is starting to acknowledge the debt it owes people of color.
Because underrepresented populations have borne the brunt of cannabis prohibition and many are not reaping the economic benefits of legalization, the logical step is to increase people of color ownership in the industry.
One of the biggest barriers in the industry is the cost of entering the market. Launching a dispensary or cultivation business requires anywhere from $750,000 to $1 million, and acquiring licenses isn’t easy. State and local governments must even the playing field, and although some states have incorporated social equity programs into cannabis legislation, many say the programs are falling short.
Building a Backbone Through Programs and Government Uniformity
So where do we go from here? Some organizations, like The Parent Company, are focusing on discovering the industry’s future entrepreneurs of color, providing the capital and mentorship necessary to build a more equitable and diverse industry.
If we let it, cannabis can be the new economic backbone for many communities, be it on the city, county, or even state level. Troy Datcher, the CEO of The Parent Company, notes where things need to progress. “There’s still so much work to do collectively to improve regulations, taxation policies, and safety,” he said. “But most importantly, we must work together to ensure the industry remains committed to inviting a diverse community to participate as the landscape takes shape.”
The industry is also supporting organizations and programs focused on dispensing education and support to budding minority entrepreneurs — some of which are mentioned in MGO’s Cannabis 50, like Our Academy presented by Our Dream. Hilary Yu, founder of Our Academy, told us, “We have this unique opportunity to carve out generational wealth opportunities for the communities who have been harmed by cannabis legislation,” and she knows building and supporting new leaders is key.
Making a Change
MGO is enthused to see so many organizations and individuals making tangible progress toward social equity and inclusion. If you’re interested in learning more about the honorees in this year’s Cannabis 50 report, click here. For those building a better future for the industry, read the section “Doing Good.”
Morgan Stinson is a social impact manager, leader of the MGO Diversity, Equity & Inclusion program, and co-creator of The Future Game. She combines a professional background in accounting and finance with a passion for developing actionable solutions for creating professional and educational opportunities for minorities and persons from disadvantaged backgrounds.
Allied Association Blog: Cal NORML Fights Ongoing Discrimination That Hurts Cannabis Businesses in California
Assemblymember Bill Quirk has introduced two bills sponsored by California NORML in this year’s legislative session that address ongoing human rights issues that are stumbling blocks for industry.
A pair of online surveys being conducted by California NORML is finding that up to 33% of respondents have been denied employment due to testing positive for cannabis, 19% have been denied prescription drugs by their doctor due to cannabis use, and up to 60% have stopped using cannabis because of drug testing by their employer or doctor.
This means as many as half of businesses’ potential customers aren’t buying cannabis products in California because of current laws. In addition, many Californians report they are underemployed because of their cannabis use, giving them less purchasing power at cannabis retailers.
The first bill to remedy this situation is AB 2188, which would end discrimination based on cannabis metabolites testing by California employers.
Testing or threatening to test bodily fluids for cannabis metabolites is the most common way that employers harass and discriminate against employees who lawfully use cannabis off the job. Cannabis metabolites are the non-psychoactive substances that can be detected in a person’s bodily fluids (mainly, urine and hair) for up to several weeks after they have consumed cannabis.
Testing positive for cannabis metabolites has no scientific value in establishing that a person is impaired on the job. When employers use cannabis metabolites tests to discriminate against employees or prospective employees, they are most likely discriminating against people who consumed cannabis when they were not at work.
Five other states (NV, NY, NJ, CT & MT) have passed laws in recent years protecting adult-use cannabis users’ employment rights, and 21 states protect those rights for medical marijuana users. Philadelphia, Washington D.C., and Atlanta also protect the rights of workers in their cities who use cannabis.
As in other states, the proposed California bill has exemptions for employers who are required to follow federal drug-testing mandates. Assemblymember Quirk’s bill does not bar employers from requiring that employees not be impaired on the job, and it does not prohibit other forms of testing, such as performance-based impairment testing or testing for THC, which may establish that a person has consumed cannabis in the past several hours.
Studies have shown that off-the-job cannabis use is not positively associated with elevated rates of occupational accidents or injuries, and that liberalized cannabis laws are associated greater labor participation, lower rates of absenteeism, declines in workers’ compensation filings, and higher wages.
The cities of Oakland and San Francisco have passed resolutions in favor of the employment rights bill’s language, and Cal NORML has been busy reaching out to unions and other stakeholders for support.
The second Cal NORML-sponsored bill to benefit California cannabis consumers — and the industry — is AB 1954, which seeks to protect the right of patients to medical treatment if they use medical cannabis, and the right of physicians and clinics to treat them.
Many physicians are under the mistaken impression that they can’t prescribe medication to patients who test positive for cannabis. The Quirk bill would clarify that physicians cannot be punished for treating patients who use medical cannabis, notwithstanding its illicit status under federal law.
A great many studies have shown cannabis is effective for pain and can help patients reduce their use of opiates. Cal NORML’s survey shows that 24-30% of respondents have increased their use of opiates or other medications due to drug testing by their doctor or employer. With an opiate overdose crisis continuing to affect California, we need to end policies that drive patients to use more dangerous and addictive drugs.
In Cal NORML’s membership polling, we have found that tax reduction is the #1 issue among our members. We are following and acting on 30-40 bills this year, including the various tax reform bills and other business-oriented proposals that have been introduced in the CA legislature this year, from a consumer rights standpoint.
Cal NORML has begun a Capital Campaign aimed at cannabis companies who do business in California to take us over the finish line on these important bills in 2022. We also offer business memberships with many perks, including discounts on NCIA memberships. We are always interested in hearing from our business members on how we can work together for cannabis consumers’ rights in California.
Ellen Komp is the Deputy Director of California NORML. Founded in 1972, Cal NORML is a non-profit, member-supported organization dedicated to reforming California’s marijuana laws. As the state chapter of the National Organization for the Reform of Marijuana Laws, we lobby lawmakers, promote events, publish newsletters, offer legal and consumer health advice, and sponsor scientific research. Check out our website at www.CaNORML.org.
Committee Blog: An Introduction to Minor/Novel Cannabinoids
In our rapid advance in cannabis science through recent years with the easing of restrictions of handling and experimenting on cannabis and cannabinoids via legalization and regulation efforts across the country, we have discovered and re-discovered cannabinoids that hold potential for great advancement in cannabis chemistry and potential for many beneficial health and wellness benefits along with identifying via production methodology, the safe and cost-effective means of producing these cannabinoids themselves.
We define these new cannabinoids, different from the standard ones identified and required to be noted on regulated cannabis products (i.e. THC-A, THC, and CBD) in a number of ways, all being used in this article to define Minor/Novel cannabinoids. Minor cannabinoids are simply defined as every other cannabinoid that is found in cannabis besides THC and CBD. Science has identified over 100 outside the two standards, and more are discovered each year. Defining “Novel” cannabinoids; we look at five major classifications; Classical, Non-Classical, Hybrids, Aminoalkindoles, and Eicosanoids. Finally, we use the term “Synthetic” cannabinoids to define compounds related to cannabinoids, but not naturally found in any concentration in the cannabis plant or related plants themselves. Realistically, the term Synthetic could be replaced by Novel, Classical Synthetics, and Non-Classic Synthetic compounds. For the sake of this article, we will be defining and discussing the basics of the generalized “Minor” cannabinoid family along with touching briefly on possible “Synthetic” compounds of interest in the future.
It would be easy to dismiss all these compounds outside THC and CBD as so rarely found in the natural cannabis plant, that they would not impact the industry or growth/focus on regulatory affairs in the space for discussion. However, one thing that these compounds have been found to cause is not only true intoxication in individuals, but also potential workarounds between State and Federal law regarding restrictions around classic cannabinoids THC and CBD, which have been the main focus of lawmakers and regulators in the past. One of the most prevalent and important that has made its way into many small gas stations and head shops across the country would be a compound such as Delta-8-THC. Often described as “THC light” Delta-8 has been produced through semi-synthetic means to achieve intoxicating effects while still skirting around the laws regarding Delta-9 THC. Delta-8 is not a new compound, having been known for years in the organic chemistry field and now being produced via widely available and federally legal CBD isolate. Compounds such as “Delta-10” and others are now becoming available to market in a large way and generalized knowledge of the substance and its effects are becoming widely discussed.
Overall, the compounds themselves have years of real research behind them, showing that when produced correctly and tested for efficacy, there are real potential benefits to use in the human body for a variety of reasons or conditions. Many more years of research are to be done to learn proper testing methodology based on production methods, but overall, we are seeing many potential benefits of these compounds for human use.
The human body internally operates and relies on what is called the endocannabinoid system. The system affects the human body’s ability to heal/regenerate, regulate body temperature, and many other positive background systems in the body. Humans are built to process and use cannabinoids and the deficiencies of those can lead to imbalance in the body’s systems. One effect of cannabinoids in the human body is also that of intoxication. Scientists rely on various interacting chemistries in the body and brain to determine the concept of intoxication. There is no doubt in the argument against any intoxication, however, we tend to view intoxication through a negative light while simultaneously ingesting a cup of coffee in the morning for the intoxicating effects of caffeine. Looking at intoxication through this light, down to the way in which a cup of tea can calm, soothe, rejuvenate, or stimulate; we seek to define and examine the potential benefits of these minor cannabinoids in the human experience while studying and researching their potential uses in the future.
Taking a brief look at overall results from studies around minor cannabinoids, we find a variety of effects and use in minor cannabinoids that far outstrips the standard belief of what THC or CBD can do for the body. THC-V, for instance, that is found in higher concentrations of strains from specific parts of the world, including the south part of the continent of Africa, has been shown to work towards appetite suppression and could potentially be a lesser harmful compound in the quest for weight loss in individuals. Looking at the compound CBG, it has been shown in studies to improve focus and cognition, a very different outcome than its relative THC. THC-O has even been shown to have a greater intoxicating effect than Delta-8 or 9 due to the ability of the human body to uptake the compound more efficiently. Finally, one compound that is making waves in the field of sleep science is CBN, an oxidized molecule of CBD that could help people find non-habit-forming relief in the quest for better rest. While all of these compounds are and can be created from various forms of THC and CBD, much more research is needed (and thankfully finally becoming allowed in this country) to judge their effectiveness and side effects.
All these modifications via organic chemistry with existing cannabinoids, while yielding beneficial results in the lab and clinical research; should be examined and tested like any other regulated product being consumed by humans. One very real potential danger is not only the continued prohibition and extreme regulation of research into cannabinoids leading to clandestine production methods in markets that do not require testing (i.e., “Bathtub” Delta-8 production using strong and dirty acid compounds) but the continued chasing of new compounds outside the current regulatory structure that exists with the DEA here in America. Cannabis has been through this struggle before; with THC highly regulated and tested for in individuals in the military, probation, transportation, or heavy equipment operation; there was a desire to still feel the effects while “complying” with the strict THC ban. These compounds were developed at a rapid rate, leading to “Synthetic THC” or “Spice”-type compounds. While the legislation was aware of the issue, the methodology of banning a single compound led underground chemists here and around the world to tweak the molecular structure to have a similar effect while essentially testing their new blends on the unsuspecting masses, resulting in many injuries and developing long-lasting negative effects in individuals.
One of our biggest tools to combat another “Spice” development cycle that outpaces the research done on these compounds is to deregulate and lessen the difficulties in studying these compounds in highly regulated scientific settings (i.e., universities and scientific institutions). Following that initial change, there needs to be significant development through those institutions regarding establishing long-term studies and testing methods to examine the effects on the human body. Regarding final product testing; in the regulated market, all cannabis products sold through licensed dispensaries from licensed producers need to undergo stringent testing for potency/solvents/heavy metals contamination/microbial contamination, and other potential hazards before the product are deemed safe to sell to customers. Allowing other minor compounds, such as Delta-8-THC, to be sold to consumers via untested pathways and through unregulated channels opens the possibility of harm either through incorrect dosing or contamination via shoddy production methods or less-than-clean packaging standards. Labs need to continue to modify and develop their means to accurately test these compounds and regulators need to hold manufacturers accountable in following the health and safety testing requirements as are currently being done in the regulated cannabis markets across the country.
Not only do these compounds have a significant potential for health and human wellness but could even assist in the development of significantly cleaner production methodology for the main cannabinoids like THC, allowing for lower costs of production and for much more market competitiveness and development by lowering hurdles like highly regulated cannabis agriculture. If you do not need to spend valuable resources to grow the plant itself and the compounds can be safely produced with higher consistency, it will be a boon to manufactured products that require them for their formulations.
In no way should we shut the door on the potential future of these compounds but embrace the study and research to re-invigorate the development and growth of the use of a plant that has been part of the human consciousness for over 3,000 years. While the names sound scary and different, we are just cracking the code on the depth of this plant and what it can do after so many years in the shadows.
The Cannabis Manufacturing Committee focuses on reviewing existing business practices and state regulations of concentrates, topicals, vaporizers, and edibles, ensuring the manufacturing sector is helping shape its destiny.
Member Blog: 9 Standard Operating Procedures Every Dispensary Should Have
by Tommy Truong, Director of Partnerships at KayaPush
Standard Operating Procedures (SOPs) are the documents, protocols, systems, and procedures that your cannabis dispensary should have in place to manage day-to-day operations. SOPs help dispensaries in many ways: From optimizing proper employeemanagement systems such as dispensary payroll and onboarding to ensuring compliance with regulations are consistently met, and more.
What are the top dispensary SOPs to use?
There are hundreds of dispensary SOPs that could be created, and they should constantly be evolving as your store grows.
Overall the goal of dispensary SOPs is to increase efficiency and help you become more profitable in the long run. That being said, these are the 9 types of dispensary SOPs we recommend you start with as you build and scale your dispensary store.
1 – Opening & closing procedures and SOPs
All brick and mortar retail stores should have SOPs in place for opening and closing the store. But especially stores that require high-security measures like cannabis retail stores. Opening and closing checklists for this special breed should include the following: Opening checklist:
Vibe check: Turn on lights, music, temperature, put out signs, clean.
Check for any signs of a break-in or forced entry every morning.
Make sure that all products in the display and stores are accounted for.
Put away any orders.
Review inventory.
Turn on and start up all software systems.
Ensure you are in dress code (if applicable)
End of day checklist:
Check that the security cameras are working.
Lock all the doors and display cabinets.
Check and report any obvious security threats/ logbook.
Generate sales and compliance reports.
Cash-out protocols.
Closing the cash registers and POS system.
Turn off lights, music, bring in signs.
Clean and sanitize the store.
Lock all doors and perform security checks.
2 – Customer check-in procedures and SOPs
Many cannabis dispensaries violate their customer check-in procedures and end up facing fines and license suspensions by regulators. Due to this, it is crucial that you implement customer check-in SOPs to ensure compliance.
Customer check-in procedures include:
Proper budtender training on protocols beforehand.
Screen every customer entering the store to ensure they are of legal age.
Ensure customers have a valid license to purchase cannabis.
Scan the customer’s ID to make sure it is genuine and valid.
Check the customer’s age, and enter these details into your customer database or tracking system.
Check the system to ensure the customer has not already gone over their purchasing limit at a different store.
Follow proper serving protocols.
3 – Sales transaction process and SOPs
Sales transaction processes are crucial to the business because this is how the company generates its revenues. Keeping track of these is key. Do you have the following sales SOPs? Sales transaction processes could include:
Greeter procedures (first customer contact),
Boxing and packing procedures.
Cashier procedures.
Answering customer product questions.
Recording product sales information into tracking systems.
Recording shipping information.
Processing various forms of payment.
Gathering sales tax to submit.
It would help if you integrated your SOPs with the technology you’re using, like cannabis-compliant POS systems.
4 – Delivery procedures and SOPs
Cannabis deliveries can get complicated as they tend to include strict guidelines around logistics. This is why it’s essential there are SOPs built around these logistics.
Delivery procedures could include:
Packaging and shipping guidelines with regards to the different types of products.
Procedures in place to pack and mark fragile deliveries — like glass bongs — clearly to ensure safe delivery.
Details and SOPs around third-party deliveries.
Sop’s around management tools or software.
Inputting data into the tracking software or POS system.
Proper accounting and documentation of the aforementioned.
5 – Security, accounting, and cash management protocols and SOPs
Cannabis retail stores face many challenges when storing and moving cash from the store to the bank. Since dispensaries are not legal at the federal level in the United States of America, they are limited in the services they can receive from banks. As a result of those limitations, dispensaries struggle with large amounts of cash being stored on the dispensary’s premises, so tight SOPs surrounding how to navigate these challenges are crucial.
Security and cash management protocols could include:
What employees are allowed in sensitive areas like stores and cash safes.
How long to keep security camera recordings and how to report a robbery.
How often armored trucks can pick up cash.
Who gives the cash to the trucks.
How the cash is stored while at the dispensary.
Who is keeping track of accounting and line items?
Who is keeping track of inventory management?
How are taxes being filed and accounted for, and by who?
6 – Track-and-trace & inventory management and SOPs
Track and Trace SOPs are important for every cannabis dispensary. In order to comply with the regulations, you have to adopt track and trace SOPs into your inventory management system.
These track and trace SOPs should cover:
Inventory management processes like procurement.
Transportation to store.
Product transfers.
Audits.
Track and trace software procedures that comply with local regulations.
Given how important track and trace SOPs are for compliance, you should automate this process if possible. Track-and-trace automation software can help you define the roles for each activity and integrate compliance checks.
7 – Quality assessment SOPs.
Quality assessment SOPs will make sure your product is up to the required standard by the regulators and that you are not violating any laws over what ingredients can be included in your products and how they are made. Failure to comply with these SOPs or pass a quality assessment could leave a dispensary owner at risk of losing their license. Quality assessment SOPs could include:
Purchasing products from verified sellers.
Ensuring products are tagged within tracking systems.
Ensuring you are selling products that you can legally sell within your geographic location.
Product feedback requests.
8 – Product recalls and emergencies and SOPs
Product recall SOPs will come into play when a defective product needs to be recalled from the market. This can be stressful for the team as it will lead to customers complaining, and management concerned about losses being recorded. One of the most valuable assets to have in this situation would be SOPs that guide your team on how to act in this situation without losing their cool or professionalism.
Recall SOPs could be:
How /who contacts purchasers.
Who is on top of product updates (do you have a compliance manager?).
Product recall script.
9 – Employee Management SOPs
Previously, these SOPs have been focused on inventory and store management, however, managing your staff is another large part of any dispensary operation.
When managing your staff it is recommended that you use employee management software to alleviate the stress of manually running operations such as dispensary payroll, scheduling,onboarding, ortime clock adjustments. Using software alone can eliminate the need for some of these SOPs but if you do choose to go the manual route you should have SOPs for the following procedures. Employee management SOPs could be:
How do you onboard employees?
Who manages their forms and licenses?
Who writes and manages the schedules?
How do employees swap shifts?
How do staff clock into shifts?
How runs payroll?
How are staff paid?
How are taxes paid?
How are employees’ performances reviewed, and by who?
Conclusion
These are the major SOPs that we believe you should have in place before opening or scaling, but don’t forget that enforcing them is just as crucial as implementing them!
The best way to run a compliant, systematic, and streamlined dispensary is to use great technology to help you succeed! Consider using a project management tool to help you stay on top of all your tasks, a people management solution for payroll, HR, time tracking, and scheduling, and a dispensary POS solution that integrates with track and trace technology and people management solution for the best results. By using the tools paired with standard operating procedures your dispensary is sure to succeed.
Author Tommy Truong is the Director of Partnerships 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.
Equity Member Spotlight: Toni Brands with Toni Scott
NCIA’s editorial department continues the Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
Tell us a bit about you, your background, and why you launched your company.
I grew up in Connecticut in the 70s and was repeatedly reminded of the cannabis stigmas, witnessing others partake in regular consumption, yet never noted any of the proclaimed stigmas; in fact, it appeared the exact opposite.
I’m a Master’s prepared Registered Nurse and Certified Yoga teacher, working in the healthcare industry for over 30 years. As a child and well into adulthood, I suffered from debilitating eczema, anxiety, and depression, treated with high-dose topical steroids, sedatives, and antihistamines, eventually leading to overuse. In the mid-’90s, I smoked my first joint; I also began pursuing my first nursing degree.
A few years after graduation, I began working as a travel nurse in Newborn Intensive Care Units across the U.S. Although I was very aware of the relief cannabis brought to my physical and mental wellness, I utilized it with underlying shame, guilt, and fear of a positive urine drug test, a legal pre-employment requirement for nurses.
By the early 2000s, I suffered a traumatic professional burnout; at the time, my health was poor, my stress-induced eczema exacerbations left me with painful cracked skin on my face, hands, arms, and legs. I was prescribed the highest dose of topical steroids and antihistamines with no resolve; I was a mental and emotional wreck.
Unfortunately, that wasn’t my first time feeling defeated in my skin; as a child, I ingested various prescribed medications. I can vividly recall feeling like a walking science experiment, constantly misdiagnosed and prescribed drug after drug. Nothing worked; in fact, the treatments left me worse off; it wasn’t until the professional burnout that I decided to take charge of my physical, mental and emotional health. I stopped taking ALL prescribed and over-the-counter medications; instead, I began to intentionally utilize yoga, meditation, dietary changes, and cannabis for self-care.
I began to dig deeper into the plant, educating myself about the endocannabinoid system phytocannabinoids, researching the history, and regular visits to local dispensaries. It was during the dispensary visits that I identified a massive pain in Gen X and Baby Boomer populations. Stigma, fear, and uncertainty keep many in this demographic away from reaping educational and wellness benefits of a healthy balanced endocannabinoid system, incorporating phytocannabinoids, physical movement, stillness, and creative expression.
I launched my brand to become the sought-after wellness thought leader, educator, and advocate for cannabis health equity in communities most affected and continue to be affected by the war on drugs.
What unique value does your company offer to the cannabis industry?
I bring my personal experiences of the therapeutic effects I’ve received from cannabis. As a nurse, I understand human anatomy and physiology, including the endocannabinoid system. Through continued education, I’m well versed in the relationship between endocannabinoids and phytocannabinoids and the effect they have alone and together on human wellness. I understand how incorporating movement and stillness practices in partnership with cannabis can provide many health benefits.
What is your goal for the greater good of cannabis?
I have three primary goals for the good of cannabis.
Wellness Thought Leader – As an aging woman who utilizes many Eastern wellness practices, my goal is to share with others a new approach to aging, using my handcrafted CBD-infused topical skin products, yoga, meditation, and creative expression practices.
Education – Cannabis stigma is a significant barrier between acceptance and usage in Gen-X and Baby Boomer populations. It’s my goal through easy to comprehend education, storytelling, retreats, and practice to begin breaking these barriers. Including educating our community leaders, political figures, dispensary owners, and religious leaders.
Advocacy – Cannabis health equity is not something Black and Brown folks should need to beg for; it’s my goal to be a voice for the voiceless, actively work towards better health and wellness in communities that are often overlooked when it comes to education, yet flooded with legal and illegal access to cannabis without any instruction or understanding. The lack of economic, social, and political health equity in these communities is a recipe for failure as adult use becomes legal and the impending federal legalization. We can’t afford to wait and see this out; we must address cannabis health equity now.
What challenges do you face in the industry, and what solutions would you like to see?
Unfortunately, being an African American woman in this industry is a challenge. My personal experience with the plant, professional education, and long-standing career in preventative wellness doesn’t seem to hold much weight. The industry is more vested in the marketing and sales of cannabis, touting social equity along the way for good measure. That’s not enough; cannabis health equity, education, resources, and sustainable outcomes must be provided. I’d like to see multi-state operators hire diverse directors of health services to their c-suite. A diverse leadership team can provide a balanced focus on cannabis social and health equity that serves the industry and the end-users.
Why did you join NCIA? What’s the best or most important part about being a member of the Social Equity Scholarship Program?
I joined NCIA for the opportunity to meet, learn, grow, and collaborate with other industry professionals. The membership fees can be steep for those bootstrapping, and I wanted to see what NCIA was about and if they walked the talk before committing to a full membership. It’s been a fantastic journey so far. I’m on the Education Committee, its retail sub-committee, and health equity working group. Our weekly social equity “Power Hour” is highly beneficial, a safe space to collaborate and support each other. It’s also been a great resource, and I appreciate the educational webinars, complimentary conference tickets, and business development support.
Member Blog: Will 2022 Be the Year for Cannabis Consumption Lounges?
Key Questions & Considerations for Those Looking to Ride the Next Big Wave
In the ever-evolving and fiercely competitive cannabis industry, consumption lounges (a.k.a. social or smoking lounges) are generating big buzz. Innovators and proponents for their legalization see it as a prime opportunity to better compete in a saturated market, attract new customers and grow market share. Opponents throw up a heap of red flags, including drugged driving, crime, and the health risks associated with smoke exposure.
Whether this new retail business model blows up in 2022 or not is anybody’s guess. Nevertheless, our industry must prepare for this next big wave in cannabis consumption. As an insurance broker who specializes in the cannabis industry and works with a wide variety of cannabis, hemp, and CBD businesses in every state where marijuana laws are established, we’ve done a deeper dive into the opportunities, and risks versus rewards for businesses looking to ride the potentially next big wave in cannabis.
The Opportunity
The concept of a cannabis consumption lounge is nothing new, really. Similar to a bar that serves alcoholic beverages, consumers at least 21 years of age can not only purchase flower, edibles, etc. from a budtender but also consume these products in a social gathering place. Amsterdam’s “coffee shops” serve as the inspiration and model for cannabis innovation in the U.S. In the Netherlands, however, coffee shops operate in a legal grey area with their products being supplied by an entirely underground cultivation market. Of course, here in the U.S., the burden falls on individual states since marijuana remains illegal at the federal level.
Analysts predict cannabis consumption lounges will be a budding business in states where recreational and/or medical marijuana is legal. This emerging business model is particularly attractive to states with more mature cannabis laws, like California and Nevada. Alaska became the first U.S. state to allow consumption lounges in 2019 and Nevada is the latest to announce plans for the first state-sanctioned lounges by mid-2022. In all, seven states including the aforementioned, as well as New Jersey, New York, Pennsylvania, and Illinois, are forging ahead with their plans to allow for consumption lounges in 2022. These states will likely serve as a blueprint for other states as their popularity grows.
Risks versus Rewards of Cannabis Consumption Lounges
State regulatory bodies are grappling with how to develop, implement and enforce the rules surrounding social consumption lounges. For example, what will the laws around consumption lounges look like? How will business mitigate the myriad of risks? From an insurance perspective, will there be a need for new products? Should coverages be similar to Bar/Restaurant/Lounge insurance (DRAM Insurance), as both types of businesses face similar risks?
They will also need to carefully address questions and concerns about public health implications. Could public consumption spaces cause people to over-consume? Will there be limits on how much cannabis a person is allowed to consume at a lounge in one visit? What is a “single serving” of cannabis anyway? These are all questions surfacing to the top.
Many see the potential benefits of licensed social consumption lounges as ways to curb the illicit market, regulate public consumption, ensure consumption in a safe space and bolster the economy. A “Designated Consumption Establishment License” is particularly attractive to entrepreneurs looking to enter the cannabis market, but aren’t interested in growing, processing, or operating a traditional dispensary. Furthermore, cannabis consumption lounges are particularly attractive for their potential to attract tourism dollars. The masses of tourists buying cannabis products in states that have legalized recreational marijuana have nowhere to smoke it legally — not on the sidewalk and not in their hotel rooms.
What Lies Ahead?
In order for the cannabis industry to continue to thrive and expand, new retail models must be considered. We believe it is highly likely that social consumption lounges will become increasingly common, especially in major U.S. cities with legal adult-use cannabis programs.
If you’re thinking about opening a cannabis consumption lounge, it’s important to stay on top of your state’s specific laws since they do vary from state to state and are likely to change and evolve. It’s equally important to make sure you have the right insurance policies in place. Many insurance companies have exclusions in their policies that prohibit onsite consumption, meaning your lounge would not be covered if an unexpected event like a theft, fire, data breach, product defect, accident, or any other type of lawsuit occurs. It’s important to examine your current policies and make adjustments, if necessary. It all boils down to the THREE P’s: being “Proactive, Prepared and Protected.”
Eric Rahn, Managing Director of S2S Insurance Specialists, is a highly specialized insurance broker and risk management professional with over 30 years of experience providing C-Suite executives strategies and solutions that protect and safeguard their businesses.
A graduate of Babson College School of Entrepreneurial Studies, Eric has held several executive positions in the maritime and casino/gaming industries, including CEO of the largest privately own casino concessions company operating on cruise ships around the world. Eric transitioned his knowledge of corporate business practices in highly regulated industries into the burgeoning cannabis space, establishing S2S Insurance Specialists in 2017.
Eric has served on the National Cannabis Industry Association’s (NCIA) Risk Management Insurance Committee since 2016. He is also a national speaker on cannabis insurance and author of NCIA’s Risk Management and Insurance’s “Introduction into Cannabis Insurance.”
Partner Blog: Lessons To Be Learned On Both Sides Of The Atlantic Ocean
Momentum for cannabis policy reform has never been greater than it is right now since the start of international cannabis prohibition. That is particularly true in the United States and the European continent where a growing number of states and countries are legalizing cannabis for adult use.
Cannabis is now legal for adult use in nearly 20 states in the U.S., and Europe recently witnessed its first country passing a national legalization measure when lawmakers in Malta passed a measure late last year. More legalization is expected in the U.S. and Europe in the coming years.
The cannabis industry has enormous potential in both the United States and the European Union, and collaboration opportunities will be abundant. Canada’s legal industry may have beat the U.S. to the European continent, however, there are still many policies yet to be reformed and dust left to settle on both sides of the Atlantic Ocean.
A Patchwork Of Laws And Regulations
Canada was the first G-7 nation to legalize cannabis for adult use, and the second nation to legalize cannabis on the entire planet only behind Uruguay. That may lead some to believe that Europe should look to Canada for lessons to be learned from rolling out a legalized adult-use industry.
While there are certainly some aspects of Canada’s industry to monitor, what is going on in the United States is far more applicable in many ways to what is going on in Europe due to the patchwork of laws and industry regulations in both regions.
Just as there are some legal states in the U.S. operating simultaneously alongside states that do not have legal industries, the same is true in Europe where cannabis policies and regulations vary widely depending on the country. The need for entrepreneurs to know the nuances between jurisdictions is extremely important as they scale their operations, along with the need to push for sensible, consistent policies and regulations across borders.
Superconference Coming Back To Barcelona
The International Cannabis Business Conference is coming back to Barcelona on March 10th and once again will be teaming up with Spannabis to form the world’s largest cannabis superconference. The conference is co-sponsored by Bhang Inc and Grow Glide, and the event’s after-party is sponsored by Juicy Fields.
Aaron Smith, Co-Founder and Executive Director of the National Cannabis Industry Association, will be a featured speaker on a panel dedicated to keeping legacy cannabis brands alive as corporate cannabis continues to gain a foothold in the industry.
The most entertaining man in cannabis, Ngaio Bealum, will serve as the International Cannabis Business Conference’s Master of Ceremonies in Barcelona. Additional speakers include:
Dr. Juana Vasella – Attorney of Law, MME Legal Zurich
Joan Simó Cruanyes – Coordinator of Cananbis Hub UPC
Albert Tio – Founder of Airam and President of Fedcac
Lisa Haag – Founder, MJ_Universe
Juanma Fernández – CEO, Easy CSC Group
Patricia Amiguet – Founder of Pachamama Cannabis Association and President of CatFAC
Zeta Ceti – Founder and CEO, Green Rush Consulting
Ruben Valenzuela Moreno – CTO, Valenveras
Over 80 countries will be represented at the superconference this March in Barcelona and will include representatives from every sector of the industry as well as leading international cannabis policymakers and industry service providers. Attend the superconference in Barcelona to network with investors, entrepreneurs, industry regulators, and international policymakers and take your industry pursuits to the next level.
The International Cannabis Business Conference also has additional upcoming events in Berlin in July 2022 and Zurich in September 2022. You can secure tickets now and take advantage of the early bird pricing discount.
Alex Rogers is the owner and CEO of the International Cannabis Business Conference series. Rogers is a serial entrepreneur and world citizen with a passion for building businesses that create, support, and sustain culture and community.
Video: NCIA Today – Thursday, February 10, 2022
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.
February Hodgepodge: An Update from D.C.
Photo By CannabisCamera.com
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
It may only be February, but the NCIA government relations team has been busy at work this year advocating for you and your business! Just over the last month, the SAFE Banking Act passed the House for the sixth time, we held our first mini-virtual lobby days, and Majority Leader Schumer provided an updated timeline for the Cannabis Administration and Opportunity Act (CAOA). Keep reading to learn the latest:
SAFE Banking
Last week, Congressman Perlmutter (D-CO) followed through on his promise to attach SAFE Banking to any viable legislative package when he filed it as an amendment to the America COMPETES Act, which is a large manufacturing bill. Now, the bill is headed to a “conference committee” – a term for when House and Senate leadership, as well as committee chairs and other members of Congress get together to negotiate differences in the two chambers’ bills.
Congressman Perlmutter and the other lead offices of SAFE Banking are currently talking with leadership about the importance of enacting the provision, however, Leader Schumer and Senator Booker have been clear about their opposition to passing SAFE without broader equity provisions. During early February, keep your eyes on the news to see if SAFE Banking makes it into the final, enacted language!
Virtual Lobby Days
Due to NCIA’s Evergreen members’ investment in shaping policy for the cannabis industry, we have been able to take our Government Relations work virtual by hosting our first ever Mini-Lobby Days! As we continue to represent a value-driven, responsible industry, our main goal is to educate congressional offices on all aspects of cannabis policy reform, including social equity, banking, 280E, scientific data, and much more.
During the first week of February, NCIA’s Evergreen Roundtable members participated in more than 30 virtual congressional meetings, including time with Sen. Cory Booker (D-NJ), Sen. Jeff Merkley (D-OR), and Rep. Dave Joyce (R-OH). Members also met with relevant committee staff and communicated the importance of holding hearings and markups on cannabis policy issues, as well as enacting reform while Democrats hold the majority in both chambers.
Sound interesting? Get in touch with Maddy Grant (Madeline@TheCannabisIndustry.org) to learn more about becoming an Evergreen member today!
Latest on CAOA
Back in September, NCIA and other stakeholders submitted responses to the Cannabis Administration and Opportunity Act (CAOA) discussion draft, led by Leader Schumer (D-NY, and Sens. Booker (D-NJ) and Wyden (D-OR). Since then, the Senate’s focus has been primarily on passing President Biden’s Build Back Better Act, which has significantly slowed progress on the CAOA. While the bill hasn’t been formally introduced yet, the sponsoring offices have slowly continued to have conversations with committees of jurisdiction to tee things up behind the scenes.
In a recent press conference in New York, Leader Schumer announced plans to introduce the CAOA in April. Can anyone say 4/20?
This update just represents a small snapshot of all that NCIA’s government relations team has been working on in D.C. – make sure to keep an eye on the blog, find us on NCIA Connect, and follow us on our social media channels to learn the latest!
NCIA Board of Directors Selects 2022 Officers
by Aaron Smith, NCIA’s CEO and Co-founder
On Monday, February 7, NCIA’s Board of Directors conducted its first meeting of the year and gladly welcomed Michael Cooper of Madison Jay Solutions and Peoples’ Ecosystem CEO Christine De La Rosa as newly-seated members of the leadership team.
A longtime member of NCIA, Christine also serves as chair of the association’s Diversity Equity & Inclusion Committee. Michael is Chair Emeritus of NCIA’s State Regulations Committee and current Policy Co-Chair. Both have joined 13 other incumbent board members and will be serving during the 2022-24 board term.
NCIA commends Christine and Michael for their leadership and dedication to building an industry we can all be proud of.
The board also selected its slate of 2022 officers. By unanimous vote, the following directors have been appointed:
Along with CEO Aaron Smith, the board officers make up the governing leadership of the largest trade association representing the cannabis industry. NCIA is proud to be a member-led organization that looks out for what’s best for all legal cannabis businesses – large and small.
Gain access to the latest information, trends, and data. DOJ compliant, unbiased, and ready for use.
The Cannabis Compensation Survey is back in action for its third year and is open for respondents thru mid-March of 2022.
Produced by FutureSense LLC & Marijuana Business Daily, the project will continue to be supported by Green Leaf Payroll & Business Services and is endorsed by the National Cannabis Industry Association. This year, the team has also added Western Management Group – a global leader with decades of experience in designing, developing, and executing compensation and benefits surveys – to assist with data management, calculations, and survey development.
Participation in the survey is vital. Individuals and organizations throughout the industry are realizing the value these results provide. Providing data benefits employees, employers, and the industry as a whole. Participation is easy and confidential – this survey follows all DOJ guidelines regarding confidentiality and anonymity to ensure unbiased results.
To comply with DOJ antitrust regulations, we welcome organization-wide submissions only and cannot accept individual submissions from sole employees. HR, payroll, and compensation department employees will have access to this data, as well Executives and Owners. Please contact us if you need help with coordinating participation from your team.
This year, the survey will also be focusing on the most critical and unique positions in the cannabis industry. While we recognize that all data is valuable, there are readily available survey sources for certain non-specified or non-industry-specific positions. We aim to produce the most robust and accurate look at the positions that matter most.
Enrollment is open through March 2022. Data submission kits will be sent out starting mid-February 2022 and due back by mid-March 2022. The final results will be published in May 2022.
Improved Data Submission Kit (DSK) – we have redesigned the DSK, making things easier to provide data and match jobs. We will also have job descriptions and leveling schema ready to assist with the job matching process.
Focused benchmark job title list – we are honing in on the most critical and unique jobs in the industry. With other survey data readily available for non-industry-specific jobs, we hope this will make things easier and more efficient for all participants to provide their data. The final report will have clearer and more established benchmark job titles and corresponding descriptions.
The addition of Western Management Group expands capacity to field, aggregate, and analyze data
Brand transition – FutureSense will be dropping its cannabis-forward brand BlueFire Cannabis by FutureSense, simplifying any naming confusions
FutureSense® is a consulting firm specializing in the areas of organization and people. FutureSense provides holistic people strategies that improve business performance. Our specialties include business strategy, motivation and rewards, executive, employee and sales compensation, organizational and individual assessment, leadership development and coaching, human resources, communications, change, and sustainable transformation. Visit us at www.futuresense.com
Matt Finkelstein is a Consultant with FutureSense LLC and the primary project manager for the Cannabis Compensation Survey. He has a passion for both people and plants – combining years of experience in the organic farming and cannabis communities with his work in people strategies and HR consulting. He believes in the power of cannabis to heal and strengthen individuals and communities alike, and actively works to help cannabis businesses thrive. Connect with Matt on LinkedIn: www.linkedin.com/in/matt-finkelstein-972253179 or email him at matt@futuresense.com.
Equity Member Spotlight: Legacy Greens, LLC
NCIA’s editorial department continues the Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
Tell us a bit about you, your background, and why you launched your company.
My name is Dr. Donise Floyd and I am the founder and managing member of Legacy Greens, a vertically integrated cannabis company. I was born and reared in Detroit, Michigan and I am a product of the public school system. I have a BS and MS from U of Detroit Mercy. I also have a Ph.D. in Leadership. Throughout my career, I have been instrumental in developing teams, building sustainable programs, formulating compliance models, and have been instrumental mentoring and impacting the community. I have been an administrator, educator, professor, mentor, business owner, and advocate for the community.
I experimented with marijuana when I was younger and like many others around me understood the value of the product for medicinal and recreational purposes. When I was younger, I would hear individuals reference marijuana as their medicine. In the late 1970s up to now, people use the plant to treat things like anxiety, depression, stress, and cancer. It was referenced and/or used as a medicine before it was popular. What is now known as the cannabis industry was known as a “side hustle” in my family and in some cases, a full-blown business that thrived and supported families and communities. But it was illegal. I look back now through very educated eyes and think how things could have been different if there were no legal implications. There was a high price to pay if you were caught! Especially if you were Black!
I have witnessed my family, friends, and community pay for it with their lives. Whether it was long-term prison sentences or loss of life; the sacrifice was tremendous and the impact far-reaching and long-lasting. I have seen, felt, witnessed, and lived the fallout of the war on drugs that ultimately decimated my community. We knew the penalty for “hustling” this plant was either incarceration or maybe even death. Today, the very thing that destroyed communities and families has become a multi-billion dollar industry. Legacy Greens was birthed to assist in restoring the community, build generational wealth, and repair some of the harm in family dynamics. Our goal is to vertically integrate this company so that it can lend itself to support, educate, and fund other entrepreneurial ventures that are connected, directly linked or outside of the cannabis space.
What unique value does your company offer to the cannabis industry?
Legacy Greens is a minority female and social equity-owned and operated company. We are committed to connecting the community to resources. Our desire is to build a network and partnerships with other minorities, BIPOC, women, LGBTQ+ and veteran-owned companies both in the cannabis and ancillary space. The goal is to build relationships that would build wealth, opportunity, community, and lasting relationships.
While Legacy Greens is a for-profit cannabis company, our vision and mission are rooted in a philanthropic belief and value system. We are currently raising capital to launch phase one of our plan to open a dispensary leading to a fully vertically integrated company. We have submitted applications for several licenses beginning with an event planner. Others include dispensary, grow, and processing. Our business will use its profits to restore the community and part of our purpose is to build bridges that will lead to the creation of pathways to business ownership.
What is your goal for the greater good of cannabis?
Part of our goal is to “turn the black market green” by building bridges to access (one entrepreneur at a time). That is to say that we will support businesses with undocumented years of plant-touching experience with no resources and maybe even a lack of understanding with running a formal business. Legacy Greens is committed to R.I.D.E. for its community – Restore, Invest, Develop, and Educate.
What kind of challenges do you face in the industry and what solutions would you like to see?
The major barrier, at this time, is access to capital. We have been bootstrapping this initiative and have been faced with many challenges that we have and are still overcoming. Access to capital is a huge barrier but being a minority women business owner is another. It would be great to see more access to capital for the BIPOC community. It is so disheartening that in some cases the access is limited because of the color of your skin. We shall overcome all barriers and become a successful business that builds wealth not only for itself but for the community.
Why did you join NCIA? What’s the best or most important part about being a member through the Social Equity Scholarship Program?
NCIA has been a great networking tool. Their commitment to support social equity businesses is extremely valuable. The access to information has been very beneficial. The relationships and exposure have been immeasurable and the connections have been extremely rewarding.
It is my goal to continue to build relationships and maybe even partnerships. In some cases, it has even been a support system. Having the opportunity to discuss and roundtable ideas or challenges has proven to be an invaluable resource. NCIA has been an extremely valuable resource for Legacy Greens and its efforts.
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By NCIA’s Cannabis Manufacturing Committee
by Madeline Grant, NCIA’s Government Relations Manager
Joshua Gilstrap
Gisela Leon brings in over 33 years of experience in international labeling. She is well-experienced in USA labeling requirements of food, dietary supplements and cosmetics, in European food laws and multi-language labeling. As a regulatory consultant, she focuses on a concise review process, having reviewed hundreds of labels for U.S. compliance and helped international products to come into compliance with U.S. regulations. Her international labeling background allows her to point out differences or similarities with other countries.
Gary Cohen is the CEO of 
NCIA’s editorial department continues the Member Spotlight series by highlighting our 
Jack Naito is President of Luna Technologies, where he oversees operations, strategic growth, and R&D for the company he co-founded in 2016. Jack entered the cannabis industry after time spent as a Materials, Process, and Physics Engineer for aerospace giant Boeing. Jack obtained an Economics and Business degree from Colorado College and a Master’s degree in Mechanical Engineering from the University of Washington.
Kaveh Newmen is an associate at 
Morgan Stinson is a social impact manager, leader of the 
By Ellen Komp, 
Ellen Komp is the Deputy Director of California NORML. Founded in 1972, Cal NORML is a non-profit, member-supported organization dedicated to reforming California’s marijuana laws. As the state chapter of the National Organization for the Reform of Marijuana Laws, we lobby lawmakers, promote events, publish newsletters, offer legal and consumer health advice, and sponsor scientific research. Check out our website at 
Author Tommy Truong is the Director of Partnerships at 
I grew up in Connecticut in the 70s and was repeatedly reminded of the cannabis stigmas, witnessing others partake in regular consumption, yet never noted any of the proclaimed stigmas; in fact, it appeared the exact opposite.
Unfortunately, being an African American woman in this industry is a challenge. My personal experience with the plant, professional education, and long-standing career in preventative 
Eric Rahn, Managing Director of 
Alex Rogers is the owner and CEO of the International Cannabis Business Conference series. Rogers is a serial entrepreneur and world citizen with a passion for building businesses that create, support, and sustain culture and community.
FutureSense® is a consulting firm specializing in the areas of organization and people. FutureSense provides holistic people strategies that improve business performance. Our specialties include business strategy, motivation and rewards, executive, employee and sales compensation, organizational and individual assessment, leadership development and coaching, human resources, communications, change, and sustainable transformation. Visit us at 
My name is Dr. Donise Floyd and I am the founder and managing member of 