NCIA recently visited with our members HAL Extraction based in Golden, Colorado. While social-distancing with the team there, we learned more about their extraction rooms, booth, and labs, and how operators can get their cannabis extraction production facility up and running. The company’s Chief Engineer, Josh Gladfelter, gave us a tour and demonstration of the capabilities of their product offerings, while Sales Manager Emma Byrnes explained how the company works with customers to find solutions to their specific needs. As explained by the company’s President, Patric Galvin, HAL Extraction is focused on leading the way for industry’s safety standards, helping facilities achieve compliance, and the longevity of our industry. Learn more and take a tour in this NCIA member video spotlight.
Log In to NCIA Connect to Watch #CannabisCaucus CYBER Recordings
All 2020 Cannabis Caucus CYBER recordings are available on NCIA Connect, the exclusive members-only community for the cannabis industry.
We missed seeing your faces in person but were happy to still visit with our members in the Southwest, Midwest, and Northeast regions at our CYBER events.
These lively evenings of education and entertainment – all from the comfort of our homes – took everything you love about theCannabis Caucus events and reformatted it into a one-of-a-kind virtual experience. If you missed these virtual events in September, you can get all caught up to speed on industry insights delivered firsthand from national and regional leaders.
Be sure to catch the Ohio Cannabis Caucus Cyber recording with Congressman Dave Joyce (OH-14) and the Pennsylvania Caucus with Congressman Brendan F. Boyle (PA-02) with important updates in those states.
NCIA members can log in to NCIA Connect to revisit today!
Movement for Marijuana Marks Major Milestones in Montana
by Madeline Grant, NCIA’s Government Relations Manager
Over the last month, we’ve featured many blogs focused around key congressional races and cannabis policy reform ballot initiatives taking place in various states. As we are days away from the 2020 election, we can’t stress how important it is to get out and vote. We’ve heard from our peers, families, social media influencers, celebrities, news mediums, and much more about how each and every single vote counts – so do your civic duty and make sure that your voice is heard! If you need help determining if you’re registered, or need more information about anything election related, you can click here for some great resources.
This week, I want to dive a little deeper and discuss the two ballot initiatives that Montanans will vote on this November: Initiative 190 and Initiative 118. Initiative 190 would regulate cannabis for adults age 21 and older. Initiative 118 would allow legislation or a citizen initiative to set the legal age limit for possession at an age higher than the state definition of adulthood (18 years old).
First, let’s take a look at statutory Initiative 190, which legalizes, regulates, and taxes marijuana in Montana. I-190 legalizes the possession and use of limited amounts of marijuana for adults over the age of 21. The initiative also requires the Department of Revenue to license and regulate the cultivation, transportation, and sale of marijuana and marijuana-infused products and to inspect premises where marijuana is cultivated and sold. Additionally, it requires licensed laboratories to test marijuana-infused products for potency and contaminants. This initiative also establishes a 20 percent tax on non-medical marijuana, 10.5 percent of the tax revenue goes to the state general fund, with the rest dedicated to accounts for conservation programs, substance abuse treatment, veterans’ services, healthcare costs, and localities where marijuana is sold. The initiative would allow a person currently serving a sentence for an act permitted by the initiative to apply for resentencing or an expungement of the conviction. Lastly, I-190 would prohibit advertising of marijuana and related products.
Of course, when you look at any state that has legalized cannabis, there is the ability to generate millions of dollars in new tax revenue. According to the University of Montana Bureau of Business and Economic Research, Montana will generate $236 million in marijuana tax revenue by 2026. The general fund will net four million dollars. As ballot initiatives pass it is important to allocate the tax revenue to important causes that help communities and people and this is exactly what this initiative does as it would contribute to accounts for conservation, veterans’ services, substance abuse treatment, healthcare, and local governments. On top of that marijuana fees will fund program administration and enforcement.
The constitutional Initiative 118 allows the minimum legal age for marijuana to be set at 21 years old. Currently, under the Montana Constitution, a person 18 years of age or older is an adult, except that the legislature or the people by initiative may establish the legal age of purchasing, consuming, or possessing alcoholic beverages. This initiative amends the Montana Constitution to allow the legislature or the people by the initiative to establish the legal age for purchasing, consuming, or possessing marijuana.
When learning more about New Approach Montana, the main backer of Montana’s cannabis initiatives, they clearly stated why legalizing cannabis is a step in the right direction. Along with the significant tax revenue, Montana can improve access to medical marijuana for veterans and rural Montanans. They stated that despite Montana’s medical marijuana law, doctors at the VA are prohibited from recommending medical marijuana to their patients. By legalizing marijuana for all adults, veterans will be able to safely access it to treat chronic pain, PTSD, and other serious health conditions. Montana can stop wasting law enforcement time and resources on arresting people for personal marijuana possession. Treating marijuana as a criminal issue wastes law enforcement resources and needlessly cycles people through the criminal justice system. In states that have legalized marijuana for adults, police have more time to solve serious crimes.
As we gear up for election day it is important to note just how important these ballot initiatives are in our laboratories of democracies: the states. As more states reform their outdated cannabis laws, it puts more pressure on the federal government to fix our broken laws surrounding the war on drugs. With more states moving forward, it is evident that constituents have spoken in support of legalization; therefore, more representatives and senators on Capitol Hill must support their cannabis reform. If you would like more information on these ballot initiatives or would like to donate to the cause please do so here. Please stay tuned for more blogs coming your way post-election. If there is anything you have questions about feel free to contact our Government Relations team at madeline@thecannabisindustry.org.
Member Blog: Five Reasons to Use a High-Speed Smart Safe for Your Cannabis Business
There are many challenges to running a successful cannabis business, including finding the correct product to sell, hiring and training qualified budtenders, dealing with state regulations, accepting cash payment, and depositing cash into the limited number of banks and credit unions that accept cannabis business. Although many economists and magazines believe cash is going away with the recent introduction of digital and app-style payment solutions, in the cannabis space, cash is king. Cash payment is really the only form of payment for many states except for the rare occasions an app can be used. The questions that have been asked for years are what does the cannabis industry do with the cash payments they receive, how is the cash counted and secured, and how can it be deposited into the business bank account?
Cannabis businesses are always looking for ways to effectively count cash and make deposits in their retail locations while simultaneously trying to lower labor cost, increase accountability and productivity, and reduce risk. Traditional deposit preparation methods have not drastically evolved in the last 50+ years. A budtender will pull their till from the drawer and count down to the starting till amount, leaving the remaining funds as the deposit. In addition, it is also common practice for businesses to incorporate dual authentication practices, essentially double counting, or counting in the presence of a witness to ensure the count is correct. While dual authentication can give the impression of good quality control and insurance, unfortunately, it raises the cost of counting the deposit inside the store by tying up at least two employees’ time and attention on trivial cash counting responsibilities. Granted the store manager is a salaried employee, but the downside is the store manager is managing for time to count cash instead of the daily sales, however, there is a much better, faster, and more accurate way to make deposits in the cannabis industry.
A high-speed smart safe is faster than counting by hand and a more secure way to deliver cash deposits to the select banks. The reason is, at the end of the night, the procedure of making a deposit at the bank location is a dangerous one and is why many organizations will have utilized the same type of dual authentication to drive to the bank to make the deposit in the night drop box. Again, there is an illusion of safety with having two people make a deposit in the night drop. Here are five of the many reasons to use a high-speed smart safe in a cannabis business:
Accountability:
The smart safe provides individual user accountability, by capturing critical transactional data: who is making a deposit, the date and time stamp of the transaction, and the total value of the deposit. Individual user accountability allows customers to abandon the need to deploy dual authentication practices, allowing managers to reallocate their time and attention towards revenue-building responsibilities: supervising employees, training employees, inventory, customer service, etc.
Remote Visibility:
An online dashboard provides detailed transaction statements, trend/behavior tracking potential, and simplified reconciliation reporting. Reports can be accessed online from any device, downloaded/exported, and shared across your network, which improves the efficiency of accounting and loss prevention departments. The online dashboard will have different reports ranging from daily deposit, transactional history for the day, and a monthly deposit report for easy reconciliation.
Deposit Accuracy:
Incorporated bill validators will count and authenticate each note before securing funds into their final depository, thus creating a closed-loop system-cash is deposited, not dispensed.
Security of Funds:
By incorporating drop policies that align with the placement of the cash management device, customers can achieve an efficient and secure deposit process, but also reduce unnecessary cash exposure that may accumulate within a till drawer or within the back office. Smart safes are designed to only allow the Cash In Transit Company to pick up all deposited cash thus reducing the risk of theft.
Provisional Credit:
Provisional Credit is an online credit to the business bank account prior to the removal and secondary validation of funds offsite. In conjunction with your banking relationship, a smart safe has the ability to transmit a daily electronic file to the bank where said bank will give credit on the day’s deposit.
With the proper smart safe in place, it will allow cannabis business owners to manage the cash deposits more efficiently and reduce risk inside the location, and to reduce lower/short deposits. The smart safe gives each owner the ability to log in to the online dashboard from any device connected to the internet and see all the transactions from all smart safes across all their cannabis locations. Just imagine having the ability to see all deposits and transaction history in one convenient place to allow for better transparency and reconciliation. With the CARES Act being introduced and voted on, if passed, it would afford for more banking partners and offer more options for the smart safe to send provisional credit to your bank.
Bobby Combs is National Account Executive at Kisan America Corporation. He has over 6 years of experience in the cash automation industry and utilizing previous experience to formulate best practices and redesign cash handling procedures to maximize efficiency and reduce risk and labor. Kisan provides cash management solutions through smart banknote deposit and sorting systems.
2020 Senate Races To Watch
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Photo By CannabisCamera.com
As you may have heard by now, Election Day is just around the corner! Let me take this opportunity to remind you to vote, to do so safely, and come up with an election plan! If you need help determining if you’re registered, or need more information about anything election-related, you can click here for some great resources.
Over the last two years, NCIA and the cannabis industry have had some success in Washington, D.C.: passing the SAFE Banking Act out of the House, passing the MORE Act out of committee (we expect a full House vote during the lame duck session!), and even getting the language of the SAFE Banking Act included in three proposed COVID-19 relief packages. But, the same challenge has remained: the upper chamber of Congress, the Senate.
This year, there are 35 Senate seats up for election, and the results will impact cannabis policy for years to come (remember, Senate terms last for six years). Let’s take a look at three races that could not only impact cannabis policy, but the makeup of the Senate as a whole.
Arizona
Incumbent: Sen. Martha McSally – Republican
Challenger: Mark Kelly – Democrat
The Details: Senator Martha McSally, Mark Kelly, and seventeen other write-in candidates are running in this year’s special election in Arizona. The winner will fill the rest of the 2017-2022 term that former Sen. John McCain (R) won in 2016. You may remember McSally’s name– that’s because back in the 2018 general election, McSally ran for Arizona’s other Senate seat and lost to Kyrsten Sinema (D) 47.6% to 50.0%. After the 2018 election, interim Sen. Jon Kyl (R) announced his resignation and Gov. Doug Ducey (R) announced McSally as Kyl’s replacement in December 2018. Easy to keep up with, right?!
On Cannabis: This year, Arizonans will vote on Proposition 207, which would legalize adult-use cannabis in the state. During a debate in October, the candidates were asked about the initiative. Mark Kelly responded, “I think I’m gonna vote yes. It has some provisions in there to decriminalize it and address some incarceration rates for marijuana offenses — I think that’s good. I think there’s a funding source there. So I’m probably gonna vote yes.” When asked if he’d support removing marijuana as a Schedule 1 narcotic were such federal legislation to come before him, Kelly replied, “Based on my vote here in Arizona, I would seriously consider removing it.”
Senator McSally, on the other hand, has been essentially silent and inactive on this issue since assuming office. Last month, when asked about the initiative, McSally said “I’ll let the Arizona voters decide that [Proposition 207].” During her time as a Congresswoman prior to being appointed to the Senate, McSally voted against several cannabis-related appropriations amendments. She has not co-sponsored any cannabis-related legislation in the Senate.
Colorado
Incumbent: Sen. Cory Gardner – Republican
Challenger: Former Governor of Colorado, John Hickenlooper – Democrat
The Details: This race is one of the most contested in the country– both the Democratic Senatorial Campaign Committee (DSCC) and the National Republican Senatorial Committee (NRSC) have added it to their election target lists. The previous three U.S. Senate elections in Colorado—2016, 2014, and 2010—were decided by margins of 5.7, 1.6, and 1.7 percentage points, respectively. Gardner was first elected in 2014 after defeating incumbent Mark Udall (D) 48.2-46.3%.
On Cannabis: Sen. Gardner has long been touted as one of the most pro-cannabis Republicans in the Senate. He has sponsored and co-sponsored a number of cannabis bills, including the STATES Act and the SAFE Banking Act. However, Sen. Gardner has been unable to convince his colleagues to bring SAFE Banking up for a committee vote, or even have a simple hearing on the STATES Act. That being said, if Republicans retain control of the Senate, but Gardner loses his seat, it may have adverse consequences for the cannabis industry.
During his time as governor, Hickenlooper actively opposed cannabis legalization, even going so far as to unsuccessfully campaign against the state’s marijuana legalization ballot referendum. He then went on to implement it after voters approved the measure. During his last year as governor, he also vetoed proposals to add autism as a medical marijuana qualifying condition, to increase flexibility for investments in the cannabis industry, and to allow dispensaries to operate tasting rooms. But Hickenlooper has come a long way since then– his campaign website states, “As U.S. Senator, I will fight to remove cannabis from classification as a Schedule I drug.” Plus, he even responded to an op-ed penned earlier this year by NCIA’s own Social Media Manager, Vince Chandler, tweeting, “Yes, I support decriminalizing & descheduling marijuana. Colorado set the gold standard, and I’m eager to work with you and Colorado’s cannabis industry and entrepreneurs to get this done in Washington.”
Montana
Incumbent: Sen. Steve Daines – Republican
Challenger: Former Governor of Montana, Steve Bullock – Democrat
The Details: Incumbent Sen. Daines was first elected in 2014 with 58% of the vote. Bullock was first elected Governor of Montana in 2012 with 49% of the vote to his opponent’s 47%. His margin increased in 2016 when he won 50% to 46%. That same year, Donald Trump (R) won Montana in the presidential election with 56% of the vote to Hillary Clinton’s (D) 36%.
Both the National Republican Senatorial Committee and the Senate Majority PAC, a Democratic PAC, have targeted the race. Prior to announcing his bid for Senate, Bullock joined the crowded Democratic presidential field before dropping out in 2019.
Implications: This year, there are two cannabis-related initiatives on the ballot in the Treasure State. Montana I-190, the Marijuana Legalization Initiative, is on the ballot and would legalize the possession and use of marijuana for adults over the age of 21, impose a 20% tax on marijuana sales, require the Department of Revenue to develop rules to regulate marijuana businesses, and allow for the resentencing or expungement of marijuana-related crimes. The second initiative, Montana CI-118, the Allow for a Legal Age for Marijuana Amendment, would amend the Montana Constitution to allow for the legislature or a citizen initiative to establish a minimum legal age for the possession, use, and purchase of marijuana, similar to the regulation of alcohol in the state constitution.
While neither Senate candidate has weighed in on the state’s cannabis initiatives, we do have some understanding of their views on the issue– Sen. Daines has consistently voted in favor of appropriations amendments related to hemp, medical cannabis, and banking. In 2015, he co-sponsored an industrial hemp bill. It’s important to note that all of these votes were more than three years ago. On the other hand, while running for president last year during July 2019, Bullock stated, “I think this [cannabis legalization] should be left up to the states. I think the federal government should get out of the way and this is a state-by-state decision.”
Now, remember to get out there and VOTE! Here at NCIA, we’ll be analyzing other initiatives, candidates, and what it all means for you and your business as we get closer to the election, and doing the same once we get the results!
Member Blog: Are You Practicing Your A, B, R’s? Yes, “R.”
by John Serrantino, co-founder and Chief Strategy Officer of EzHire Cannabis
Why it is critical to “Always Be Recruiting” in the cannabis industry and how to do it.
The cannabis industry is primed for unprecedented growth in the coming months. Today posting a job can yield thousands of candidates in a matter of hours. In the post we will discuss why this may not be the blessing it appears and how businesses can adapt to handle the influx of talent coming into the cannabis industry.
It seems like everyone wants to work in cannabis these days. With the retail industry experiencing damage that has accelerated its demise, a more diverse candidate set is flocking to cannabis as the industry continues to grow. At EzHire Cannabis, a talent engagement platform, we have identified three distinct buckets of candidates:
Retail Refugees – these are candidates with extensive experience in a retail setting, including middle and upper management. This pool of candidates is short on cannabis experience but seasoned when it comes to creating a retail customer experience.
Silicon Valley meets cannabis – when it comes to the evolving needs of cannabis, technical knowledge is at a premium. IT support is necessary as digital storefronts become vital. Digital marketing & communication, particularly to maintain business-to-business relationships, has become a priority over face-to-face interactions.
Advancing from within – as new markets open the talent from more established markets is proving willing to relocate. Finding this type of talent isn’t easy but it can be critical when starting a cannabis operation in a new market where industry experience is near impossible to source locally.
Cannabis Talent is Building
The legal cannabis market currently employs nearly 300,000 people with exponential growth expected in the coming years. That means there are a lot of prospective candidates with real experience. Unfortunately, there are three core problems that hinder your hiring efforts:
Those experienced professionals aren’t always actively looking for jobs
Experienced candidates aren’t always located in your backyard
Your competitors may be able to lure these candidates to their business before you
In the 1992 film Glengarry Glen Ross, Blake, an aggressive big city salesman played by Alec Baldwin, introduces a sales team to the “Always Be Closing” mentality to drive business. While this advice hasn’t really aged well for sales, when it comes to staffing your business, it is applicable. Best practice dictates the need to “Always Be Recruiting.” This practice, known more commonly as active recruiting, involves networking with those already in the industry to improve your reach and visibility to those prospective candidates.
Best Practices for Finding Talent
The most common methods of active recruiting involve:
Attending industry networking events – virtual or otherwise these are a great way to get face time with a mix of industry professionals.
Leveraging Technology – as the stigma around working in the industry fades, top talent has migrated to LinkedIn. A smart business owner or hiring manager will build a strong network via the platform.
Monitor industry trends nationwide and share that knowledge – if you’ve built a strong social network, you’ll want to keep them educated. This helps engage the right people for your business.
Balancing Priorities While Getting Results
While it can feel like a lot of work to constantly be recruiting, the benefits far outweigh the time investment in the long run. Take for example the way an experienced hire, be it in retail or lab testing, is able to come in and “get stuff done” with limited onboarding and handholding. Most businesses find those candidates primarily need training on protocols and processes specific to the business rather than a full background in the industry which can be time-consuming and expensive.
Hiring Managers have consistently expressed feeling overwhelmed by the sheer amount of applicants they receive when they post for a position. They simply do not have time to sort through thousands of resumes to find the diamonds – and resumes often do not tell the full story, requiring a phone screen and in-person interviews to really get to know whether the applicant is a fit.
Fortunately, within the industry, there are a number of ways to streamline these motions. In fact, this post offers insight into some of the ways you can work toward securing top talent. Bringing on a new employee is an investment you are making in your business, taking the steps outlined above serves as a great way to make sure you are getting the highest probability of a return on that investment.
Happy Hiring!
John Serrantino is the co-founder and Chief Strategy Officer of EzHire Cannabis. EzHire Cannabis offers technology forward solutions for business owners and hiring managers to enable their growth. Founded in 2017, originally as Fortuna Business Solutions, EzHire represents the first talent engagement platform for the cannabis industry. Prior to joining EzHire, John was an early-stage employee at multiple successful startups including as Director of Sales for Seattle-based CRM, PipelineDeals and Director of Client Services at Philadelphia-based remindermedia. John and his wife Sarah reside in the Tampa Bay area and are active in the animal rescue community.
It’s autumn, and that means where I live, the temperatures have dropped from an insufferable 110 to a pleasant 85 degrees. In other parts of the country, leaves are turning color, the nights have turned chilly, and change is in the air. And all of this has me wondering, what happened to the summer?
This was the summer that wasn’t. With the pandemic, activities were curtailed, vacations were canceled, and nothing seemed normal. Like many companies, we adjusted our workflow to morph into a combination of virtual and in-person, and we implemented new sanitary and social distancing protocols. Cannabis was deemed essential, so with a few adjustments, we were able to carry on business as usual. And this got me thinking about how much we have to be able to adapt in order to survive and thrive.
One of the things I most enjoy in life is giving back to others. I’ve had a fair amount of success in my career and have learned a thing or two, and now I love passing along that knowledge and helping the younger generation get a foothold and better navigate their own pathway through the world of business.
And of all the things I’ve learned throughout my career, the one that has helped the most, especially through this complex and challenging time, is the ability to be flexible.
No, I’m not taking up yoga, although that’s probably a good idea. I am referring to being flexible in business.
When we are young and the whole world is in front of us, we think that all things are possible. The road ahead is uncluttered with roadblocks and there are no speed limits.
As we mature, we realize that life will throw a few obstacles at you, and a key component to success is how well you are able to overcome these challenges and keep moving forward.
The one thing that is constant in business is change, and without flexibility, failure is almost certain.
Think of the American companies that could not adapt to changing circumstances: Retailers like Kmart, Sears, and many others, have not been able to compete in the new world of online commerce and are all but gone. But Walmart continues to refine its online strategy and recently reported that e-commerce sales are up 74%. Target, another retailer that understands how to change with a changing world, reports online sales revenue will jump 24 percent this quarter. These two companies have embraced flexibility.
Borders Books is another giant that couldn’t adapt to a changing marketplace. While consumers were switching to e-books, Borders kept building new brick and mortar stores and focused on growing its CD and DVD department – clearly out of step with the changing times.
Not so long ago, Blockbuster was the place to go to rent movies. The company could have become a leader in digital entertainment but only made a last-minute and unsuccessful attempt to transition to the new platform. Today, they are gone.
The fact is, there are countless examples of companies that have shuttered because they could not adapt to changing times.
In the cannabis industry, change comes at a rapid pace. Laws and regulations are in almost constant flux, and if you are not prepared to quickly pivot and change directions, you will be left behind.
From overly aggressive expansion to stockpiling potentially unsellable inventory to not keeping enough capital on hand to handle those “rainy days,” there is a myriad of problems that can seemingly come out of the blue and dramatically impact a cannabis company’s ability to function.
I’ve seen this with my own eyes, far too many times.
In today’s world, and especially in the cannabis industry, it is vital to look ahead and maintain flexibility. Because before you know it, it will be spring and the world will be different… once again.
Pamela Donner is COO of High Point Jewelry, and is an experienced C-level corporate executive, with an impressive history of growing companies, navigating successful business turnarounds, launching new products, and implementing structural organization changes to reduce costs and maximize profits.
She is currently COO of multiple companies in the legal cannabis and CBD industries, including
Gel Cap Concepts, LLC – a manufacturer of cannabinoid-infused products; the Uncle Herbs, Naked Vape, and Desert Azee brands; and High Point Jewelry – the world’s first luxury cannabis-inspired jewelry company. She is also a partner in a CBD retail store and is COO of a popular dispensary.
Donner was named the 12th Most Powerful Woman in the Cannabis Industry by Cannabis Business Executive Magazine, and was listed as one of America’s Finest Entrepreneurs by Business Management News.
Pam resides in Scottsdale, Arizona with her husband, Glenn Murray.
Member Blog: Risks and Values Right Under Your Feet – M&A Real Estate Considerations
by Mark Hefner, CEO of MGO Realty Advisors and Dustin Grizzle, MGO Tax Partner
In the cannabis and hemp industries, capturing the true value of real estate holdings in an M&A deal can be both elusive and central to the overall success of the transaction. Difficult-to-acquire licenses and permits are essential for operating, which often drives up the “ticket price” of property, ignoring operational and market realities that suppress value in the long run. On the flip side, real estate holdings are sometimes considered “throw-ins” during a large M&A deal. These properties can hold risks and exposures, or, in many cases, are under-utilized and present an opportunity to uncover hidden value.
Both Acquirers and Target companies must take specific steps toward understanding the varied layers of risk and opportunity presented by real estate holdings. In the following, we will address some common scenarios and provide guidance on the best way to ensure fair value throughout an M&A deal.
Real estate as a starting point for enterprise value
Leaders of cannabis and hemp enterprises must understand that real estate should be a focus of the M&A process from the very beginning. All too often, c-suite executives are well-acquainted with detailed financial analyses for other parts of the business, but have a limited or out-of-date idea of their enterprise’s square footage, details of lease agreements, or comparable values in shifting real estate markets. Oftentimes it takes a major business event, like an M&A deal, to spur leadership to reexamine and understand real estate holdings and strategy. Regrettably, and all too often, principals come to that realization post-closing and realize they may have left money on the table.
In an M&A deal, the party that takes a proactive approach to real estate considerations gains an upper-hand in negotiations and calculating value. Real estate holdings can provide immediate opportunities for liquidity, cost-reduction, or revenue generation. At the same time, detailed due diligence can reveal redundant properties, costly debt obligations, unbreakable leases, and other red flags that would undermine value post-closing.
For both sides of the M&A transaction, real estate strategy and valuation should be a core consideration of the overall goals and value drivers of the deal. A direct path to this mindset is to place real estate holdings on the same level of importance as other assets that drive value – human capital, technology, intellectual property, etc. Ensuring that real estate strategy aligns with business goals and objectives will save considerable headaches and potential liabilities in the later stages of negotiating and closing the deal.
Qualify and confirm all real estate data
One of the harmful side-effects of a laissez-faire attitude toward real estate in M&A is that the entire deal can be structured around data that is simply inaccurate or incomplete. This inconsistency is not necessarily the result of an overt deception, but too often it is simply an oversight. Valuations can also be based upon pride and ego, without supporting market data.
Let’s visit a very common M&A scenario: The Target company has real estate data on file from when they purchased or leased the property (which may have been years ago), and that data says headquarters is 20,000 sq. ft. of office space. Perhaps they invested heavily into improvements like custom interiors that did nothing to add value to the real estate. The Target includes that number in the valuation process and the Acquirer assumes it is accurate. Following the deal, the Acquirer moves in and, in the worst case, realizes there is actually only 15,000 sq. ft. of useable space. Or it is equally common that the Acquirer learns the space is actually 25,000 sq. ft. Either way, value has been misrepresented or underreported. M&A deals involve a multitude of figures and calculations, and sometimes things are simply missed. But those small things can have a major impact on value and performance in the long run.
The only solution to this problem is to dedicate resources to qualifying and quantifying data related to real estate holdings. When preparing to sell, Target companies should review all assumptions – square footage, usage percentage, useful life, etc. – and conduct field measurements and physical condition assessments (“PCA’s”). This will help your team understand the value of your holdings and set realistic expectations, and perhaps just as importantly, it saves you from the embarrassment of providing inaccurate numbers exposed during Acquirer’s due diligence—and getting re-traded on price and terms. That reputation will ripple through the marketplace.
From the Acquirer’s side, the details of real estate holdings should come under the same level of scrutiny as financials, control environment, etc. Your due diligence team should commission its own field measurements and PCA, and also seek out market comparables to confirm appraisals. It is simply unsafe and unwise to assume the accuracy of any of these details. Performing your own assessments could reveal a solid basis to re-negotiate the M&A, and will help shape post-merger integration planning.
Tax analysis will reveal risks and opportunities
The maze of tax regimes and regulatory requirements cannabis and hemp operators navigate naturally creates opportunities to maximize efficiencies. This is particularly the case when it comes to enterprise restructuring to navigate the tax burden of 280E.
For example, it may be possible to establish a real estate holding company that is a distinct entity from any “plant-touching” operations. By restructuring the real estate holdings and contributing those assets to this new entity it may be possible to take advantage of additional tax benefits not afforded to the group if owned directly by the “plant-touching” entity. This all assumes a fair market rent is charged between the entities.
Recently, operators have looked to sale/leaseback transactions to help with cash flow needs and thus these types of transactions have gained prominence for cannabis and hemp operators. It is important that these transactions be carefully reviewed prior to execution to ensure they can maintain their tax status as a true sale and subsequent lease, instead of being considered a deferred financing transaction. If a Target company has a sale/leaseback deal established but under audit the facts and circumstances do not hold up, this could open up major tax liabilities for the Acquirer.
When entering into an M&A transaction, it is important that the Acquirer look at the historical and future aspects of the Target’s assets, including the real estate, to maximize efficiencies of these potentially separate operations. It is also equally important to review pre-established agreements/transactions to ensure the appropriate tax classification has been made and that the appropriate facts and circumstances that gave rise to the agreements/transactions have been documented and followed to limit any potential negative exposure in the future.
Contract small print could make or break a deal
An area of particular focus during due diligence should be a review, and close read, of the Target company’s existing property leases and other contracts. There are any number of clauses and agreements that seem harmless and inconsequential on the surface but can have disastrous effects in difficult situations. In many cases, the lease/contract of a property is more important than the details of the property itself. For example, if the non-negotiable rent on a retail location is too high (and scheduled to go higher), there may be no way to ever turn a profit.
The financial distress resulting from the COVID-19 pandemic has brought these issues to the forefront in the real estate industry. Rent payment and occupancy issues are shifting the fundamental economics of many property deals and contracts. If, for example, you are acquiring a commercial location that is under-utilized because of market demand or governmental mandate, you must confirm whether sub-leases or assignments are allowed at below the contract price. If not, you could be stuck with a costly, underperforming asset amid quickly shifting commercial real estate demand.
In many leases and contracts, there are Tenant Improvement Allowance conditions that require the landlord to fund certain property improvement projects. If utilizing these terms is part of the Acquirer’s plans, you may need to have frank and open conversations with landlords about whether the funds for these projects are still available, and if those contract obligations will be met. Details like these are often penned during times of financial comfort without consequences to the non-performing party, but a landlord struggling with cash flow may not have the capability to meet contract standards.
These are just a few examples from a multitude of potential real estate contract issues that can emerge. It is recommended to not only examine these contracts very closely, but have dedicated real estate industry experts perform independent assessments that account for broader social, economic, and market realities. That independent analysis will help your executive team formulate a real estate strategy that better aligns with core business objectives.
Dig deep to uncover real value
There are countless scenarios where issues related to real estate make or break an otherwise solid M&A transaction, whether before or after closing the deal. The only path forward is to treat real estate holdings with the same care and attention paid to the other asset classes driving the deal. The cannabis and hemp industries have recently endured micro-boom-and-bust cycles that have left many assets under-performing. As Target companies offload these assets, and Acquirers seek out good deals, both parties must undertake focused efforts to establish the fair value of complex real estate assets and obligations.
Mark Hefner, CEO and Shareholder of MGO Realty Advisors, is a real estate investment professional with over 30 years of experience supporting occupiers and investors as they navigate commercial real estate markets. Mark focuses on providing strategic advisory, transaction advisory, capital markets guidance, and ownership formation support for all types of commercial properties, both nationally and globally.
Dustin Grizzle, CPA, Tax Partner and Office Managing Partner of MGO’s Boca Raton, has over 15 years of experience providing tax planning and compliance services to real estate management and investment companies, manufacturing companies and high-net-
worth individuals. Dustin focuses his practice on tax compliance and real estate structuring, as well as tax consulting for entities with large inventories and manufacturing-related needs. He also manages tax programs involving investment funds, corporate structuring and IRS examination representation.
About MGO
One of the top 100 CPA firms in the country, MGO has a 30-year history of providing trusted accounting and advisory services to many leading public corporations, private companies and government agencies. The MGO team has developed a suite of proven solutions to help operators, regulators and institutional investors navigate the complexities of the cannabis and hemp industries.
About the Cannabis M&A Field Guide
This serialized multi-media project is an educational resource for cannabis and hemp operators and investors. It focuses on the evolving market conditions driving mergers and acquisitions, and provides first-person insight on best practices for strategy, structuring, valuation, and other topics behind successful M&A transactions.
Member Blog: Designing and Purchasing a Greenhouse with Rebates and Incentives in Mind
What if the highest performing cultivation facility isn’t the most expensive?
The highest producing cultivation facility is probably the most expensive, right? Highly productive and efficient cultivation facilities can be more financially accessible than you may think. Rebates and incentives provide business owners the option of turning otherwise high dollar projects into affordable, highly efficient grow operations.
Rebates/Incentives
An Incentive is a provision intended to motivate further growth, while a Rebate is a refund or discount that is returned to the client after the purchase has been made.
Rebates and incentives can be hard to classify because the process varies between utility providers. That being said, it is worth understanding the basics of how they work and how they can influence your overall construction budget.
Utility providers often have programs in place to incentivize the purchase of higher quality, and more efficient materials and equipment for your facility. These programs allow the utility to achieve their stated goals of energy efficiency, while providing power to more customers without having to increase their infrastructure/capacity. Because your efficient equipment is beneficial to the utility they may pass some of their savings on to you.
LED Lighting
LED lighting is the easiest place to start. Most utilities have an “efficient lighting program”, which is usually offered as an incentive. This means you submit your lighting plan and the lights you are going to use, and they compare your lighting layout and power needs (how much power your efficient LED plan will use) vs. a standard HID light, usually a double ended 1000 watt HPS bulb. Based on the equation they use, we have seen between 25% and 100% of the cost of the lighting being paid for by the utility. Often, this is paid upfront by the utility company (the client doesn’t have to pay full price and wait for a check). Once the facility is operational the utility will make sure the lights are being used as described.
Building Envelope and HVAC
Building envelope and HVAC equipment are also eligible for savings, but this usually comes in the form of a rebate. Normally, a utility will set a baseline for a greenhouse (i.e. all walls 8 mm polycarbonate, R-1.4 insulation value), and then compare the operational cost savings of a more efficient design vs. the baseline to calculate a rebate amount. We have seen rebate amounts between $100k – $750k for high efficiency sealed greenhouse facilities (up to a 15% reduction in costs on a new build).
The Design Process
It is important to know if rebates/incentives are available before beginning the design process for your cultivation facility. Understanding the entire process of design, build, and rebates/incentives when designing and budgeting a new cannabis grow can have a huge effect on capital expenditures. Sunlight grown cannabis with indoor environmental controls is emerging as the best way forward for cultivators looking to grow high-quality cannabis with lower operating costs, and rebates/incentives are a great way to help make the best option a more affordable one.
The most efficient option?
While sealed greenhouses tend to fall in the middle in terms of capital expenses, when compared to a newly built indoor grow (most expensive) and a vented greenhouse (least expensive), much of the equipment required to build a highly efficient sealed greenhouse can be expensive.
A highly insulated, well designed, sealed facility can be an expensive option because both the value of the structure and the systems within it are of the highest quality. An uninsulated sealed greenhouse, on the other hand, might cost less money upfront, owing to cheaper materials and possibly lower quality systems. This is where incentives/rebates can become a major cost-saving avenue for your bottom line, allowing you to build the best facility at a more affordable cost. Once built, the higher quality structure will continue to save money in operational costs–a win-win.
Conclusion
In mature cannabis markets, smokable flower continues to demand high prices, especially high-quality flower. Consumers and brokers have learned to recognize quality, and price per pound has adjusted accordingly. The ability to produce high-quality flower, at a low cost per pound, is the future of cannabis production.
Given the accessibility of rebates and incentives and the general trajectory of the market, we are living in a moment where the highest quality option may also be the most affordable.
Josh Holleb is co-founder, co-owner, and senior solutions architect at Ceres Greenhouse Solutions. Since starting at Ceres 7 years ago, Josh has created the cannabis division, bringing more than a decade of experience in both construction, cultivation, and dispensary management. Josh approaches his job with an interdisciplinary understanding of systems, architectural design, and problem-solving. His goal is to create a whole-systems approach to both greenhouse design and environmental controls, resulting in the most efficient systems and highest quality product. He has been featured in Marijuana Venture Magazine as one of the “40 under 40” rising stars in the cannabis industry in 2018.
Possession:Adults 21+, 1 ounce flower or 5 grams concentrate
Home cultivation:YES, adults 121+ may have up to 6 plants in an enclosed locked location out of public view.
Licenses:
Issue no more than one marijuana establishment license per 10 pharmacies;
Issue no more than two marijuana establishment licenses in counties that contain no registered nonprofit medical marijuana dispensaries;
Issue no more than one marijuana establishment license in counties with one nonprofit medical marijuana dispensaries; and
Issue 26 licenses, notwithstanding the other limits, to entities qualified under the Social Equity Ownership Program.
Social Equity: Department of Health Services would be required to establish a Social Equity Ownership Program to promote cannabis business ownership and employment for individuals from communities disproportionately impacted by the enforcement of previous marijuana laws.
Proposition 207 would establish a fund called the Justice Reinvestment Fund (JRF). Revenue in the JRF would be allocated as follows:
35 percent to local public health departments in proportion to the county’s population for the purpose of providing justice reinvestment programs or giving grants to nonprofits to provide justice reinvestment programs within the county’s area.
35 percent to DHS to provide grants to nonprofits to provide justice reinvestment programs in the state.
30 percent to DHS “for the purpose of addressing important public health issues” that affect Arizona.
Taxes & Revenue:
Transaction Privilege Tax (currently 5.6%)
Specific 16% excise tax (non-medical)
Revenue from the excise tax and license fees would be deposited into the Smart and Safe Arizona Fund. First, revenue would be used to implement and enforce marijuana regulations. The remaining revenue would be allocated as follows:
33.0 percent for community college districts;
31.4 percent for municipal police and fire departments, county sheriff departments, and fire districts;
25.4 percent for the state’s Highway User Revenue Fund;
10.0 percent for the new Justice Reinvestment Fund; and
Alternative 65A – Rep. John Thomas “Trey” Lamar and Rep. Brent Powell
Possession:
Initiative 65 – Qualifying patients may purchase/possess up to two and a half (2.5) ounces every 14 days
Alternative 65A – Undefined, no explicit protections
Home Cultivation: NO
Licensing:
Initiative 65 – TBD by Dept. of Health; no limits on number of treatment centers; may not be located within five hundred (500) feet of a pre-existing school, church, or licensed child care center
Alternative 65A – Undefined
Social Equity: None explicitly included in either initiative.
Taxes & Revenue:
Initiative 65 – Dept. of Health may authorize taxes up to the level of the state sales tax (currently 7%); revenue to be used for special operating fund and may not revert to state general fund
Ballots: Initiative 190 Marijuana Legalization Initiative (adult use), CI-118 Allow for a Legal Age for Marijuana Amendment
Summary:
Initiative 118 would allow legislation or a citizen initiative to set the legal age limit for possession at an age higher than the state definition of adulthood (18 years old).
Initiative 190 would regulate cannabis for adults age 21 and older.
Possession: Adults 21+, up to one ounce of flower or 8 grams of concentrate
Home Cultivation: YES, up to four (4) plants per adult, maximum eight (8) per household.
Licensing:
The Department of Revenue shall develop rules and regulations regarding licensing of providers, marijuana-infused products providers, and dispensaries for adult use. For the first 12 months, only existing medical cannabis licensees may apply. Provider licenses are established in tiers based on canopy size and also include micro-business licenses. Applicants must have resided in Montana for at least one year prior and may not have been convicted of a felony involving fraud, deceit, or embezzlement or for distribution of drugs to a minor within the past 5 years. Cannabis businesses may not be located within 500 feet of a school or place of worship unless permitted by the local jurisdiction.
Social Equity: Persons convicted of behavior permitted by Initiative 190 may apply for resentencing or expungement.
Taxes & Revenue:
Specific sales tax – 20%
Revenue will be used to fund operating costs of regulation as well as to support conservation efforts, substance abuse treatment and education, veterans programs, local governments, the general fund, and other programs. More information is available here.
In a recent announcement by the IRS, they may allow deductions through Section 471, but it is still unclear this impact as of this writing is still unclear, so with that said, I am proposing this argument because of the impact needed TODAY to help in the economic recovery effort, given it is an election year, as well.
Before I begin, please do not construe my argument as a Republican argument for legalization. When I say conservative, I am speaking from a purely fundamental belief and values perspective, not a contemporary political ideology. There is hypocrisy on both sides and I recognize this fact.
Having a nonprofit background, most of my life has been spent hovering on the political lines, mostly policy, not parties. Liberals are traditionally more aligned with causes than conservatives, although conservatives have traditionally been more fiscally supportive of charitable causes. Why are conservatives more fiscally supportive of charitable causes? Conservative values.
The most undervalued weapon in the fight for legalization
In the fight for legalization, there appears to be a definite challenge from conservatives.
I came into this industry four years ago and noticed a disconnect between the arguments from the industry and the conservative response. Although support is growing from conservatives, most of the arguments being discussed for legalization seem to be falling on deaf ears.
Why is that? It is because the current arguments for legalization are being fed to conservatives in a language which they do not understand and are hearing as a direct challenge to their values.
The values and language of the right are fundamentally different from the left in most ways. One value which is, in my opinion, grossly undervalued by the industry is philanthropy.
Timing is everything
The health and economic ramifications of COVID-19 have caused us to look at the government and our nonprofit sector for help. The political discourse of our governments, from local to federal, unfortunately, is not helping to meet the needs of individuals or communities and thus someone has to step up. Something I haven’t heard many conversations about is our community-based nonprofits and how they are working to address the needs around COVID-19 and the economic challenges COVID-19 has manifested. Nonprofits, which are on the front line of meeting communities’ needs, from animals to veterans and every population in between, are fighting a battle from a deficit position.
The COVID-19 pandemic has cut into nonprofits’ resources while increasing demand for their services.
According to the Stanford Social Innovation Review’s “Giving With Impact Podcast,” our community nonprofits, especially 501(c)(3) nonprofits, are being “…asked to do more with less money and reduced staff while taking on an expanding client population, and all of this at the same time that revenues from services have dried up and donations from their traditional fundraising activities have declined. Some have had to lay off staff and cut salaries and others have had to cut programs.” This is according to Amir Pasic, the Eugene R. Tempel Dean at the Lilly Family School of Philanthropy at Indiana University and a professor of philanthropic studies. He also highlights that although disasters cause a spike in giving, which the pandemic did, in a recession, which seems to be a by-product of the political response to COVID-19, he states, “…we see the opposite effect… It took many years, several years, for individual giving, in particular, to recover. So in recessions giving does go down, simply because the resources that we have available go down, as well.”
Amir also states in the podcast that “…over 60% of nonprofits are anticipating significant decreases in terms of their fundraising ability. And I think many of them will be in crisis further, depending, in part, also, in terms of how federal help continues or does not continue going forward… So there is certainly a sense of crisis and pressure for many nonprofits because their services are increasingly… many of them in the human services, increasingly in need, and yet there is the sense that their sources of revenue are going to be under severe pressure at the same time.”
In the same podcast, Mary Jovanovich, Senior Manager for Relationship Management at Schwab Charitable, states that clients involved with their donor-advised fund are actually giving 50% more at this time. Looking at this in the most simplistic way, those who can give more are giving more, but giving is being done by fewer people and thus still creating a deficit.
Together we CANNA make a difference!
Of course, those companies and people who are doing extremely well are the usual suspects. But what about a flourishing industry? One which is new and growing, and has been growing through a pandemic? An industry that is doing better than most industries and has the reach and means to impact the communities which they serve and beyond? What would be holding them back from coming to the rescue of the communities they serve and ultimately helping the entire nation?
Well, not to put too fine a point on it, but taxes!
If you are a company with an effective tax rate of between 60 and 70%, you might need to hold on to your profit in order to make sure you and your employees survive in case something else is looming on the horizon. Say an election?
Imagine a time when the cannabis community comes together to elevate those nonprofits which are providing the most impact on our economic and social recovery. The world is watching and in awe of the support being provided to tens of thousands of deserving nonprofit 501c3’s and the Senate is watching as thousands of the nonprofits in their states are participating, which is a statement that they are willing to accept support from the cannabis industry. This is the way you sway minds and hearts.
The Conservative Argument for 280E Reform
Conservatives believe in free markets and thus less regulation, in the belief that the growth of companies and the economy will thrive and ultimately self-regulate as much as it can with limited governmental intervention. This needs to be applied to the cannabis industry as well. But not just for the reasons you may think. 280E reform needs to take place NOW so that philanthropy can be elevated and help address COVID-19 and economic recovery challenges.
The effective tax rate is high specifically due to the IRS code 280E, which does not allow cannabis companies to write off typical business expenses, things like marketing, depreciation on equipment, and other expenses including charitable donations to 501c3 nonprofits! Just imagine what could be done if a cannabis company, many of which are already giving without the tax advantage, was given a tax incentive to donate? Everyone understands the taxes imposed by the states and municipalities for the legal purchase drive the cost of cannabis up. So the margins are fairly thin when compared to that of other companies that do not have to abide by 280E. 280E is government regulation. Conservatives tend to be for free markets. If, as we all know, even my fundamentalist Christian friends know, that cannabis will be federally legal eventually, why not take this opportunity to deregulate this industry allowing it to assist in addressing community resource deficits at a time when it is needed most? This argument also addresses the fundamental hierarchy, which conservatives believe should be the path of assistance, self, family, church, community, local government, and finally state government, in that order.
I do not mention the federal government, because another value of conservatism is small government and that the federal government is there to protect the inalienable rights of humans as well as the right to property. Traditional conservatives believe in a helping hand, but only a temporary one as they understand many might not have all the support systems in place mentioned previously.
So the argument for 280E reform, in the context of nonprofits and helping with the health and economic crises stemming for COVID-19, addresses the conservative values of human rights, property rights, individual responsibility, free markets, lower taxes, and deregulation of businesses.
The Conservative Argument for Banking Reform
Now, imagine that 280E was reformed or no longer applicable to LEGAL cannabis companies. There is still a problem. Even if 280E was rescinded for the cannabis industry, banks may still not allow them the same banking services because it would in effect still be federally illegal. If this is the case, even if a company chose to donate to a willing charity, the charity would fall under these very same banking laws and thus might not be able to deposit funds from the cannabis industry into their bank accounts, running a risk that their accounts could still be closed for accepting money from a federally illegal activity. So truly, banking and 280E reform are not just a cannabis industry issue, but a nonprofit sector issue, which needs to be addressed sooner than later!
Now, we all know many charities will still not accept the funds offered from cannabis companies due to many factors, however, many of those most impacted by the pandemic and economic decline, such as those focused on food, housing, homelessness, veterans, mental health, senior citizens, and others, could benefit from receiving funds from cannabis companies as their own resources are diminishing. Therefore, the fight for our nation’s recovery needs to include banking and 280E reform for an industry which can make a difference for many!
Because TOGETHER WE CANNA MAKE A DIFFERENCE (If given the opportunity)!
Founder of Corporate Compassion, LLC and DBA CannaMakeADifference, Kevin J White is a social entrepreneur, nonprofit evangelist, volunteer activist, community engagement advocate, tennis player, golfer, BUCKEYE, and Avid shoe wearer.Kevin began his journey into social entrepreneurship after a 20+ year career in the nonprofit sector. Having started his career as a direct care counselor for at-risk children he advanced through the nonprofit sector, eventually moving to Colorado for a job with a major animal welfare nonprofit, overseeing 4 departments and over 100 staff and volunteers, eventually creating his own nonprofit 501(c)(3) public charity. With a strong background in nonprofit management and resource management, he began his cannabis journey through his Colorado-based, 501c3 nonprofit, having to identify the benefits and challenges of accepting support from the cannabis industry. He realized that there were some challenges for both sectors and decided to further his social entrepreneurship by consulting with cannabis companies looking to strengthen and develop their cause-marketing and philanthropic goals. This was the birth of CannaMakeADifference.
CannaMakeADifference is a strategic consulting company created to assist purpose-driven cannabis companies with meeting their cause-marketing and philanthropic goals. He has co-authored two white-papers, one for cannabis companies and one for nonprofits, highlighting the benefits and challenges of working with each other.
Kevin also hosts a podcast called Together We CANNA Make A Difference which highlights philanthropy in the industry and companies making a difference from the cannabis sector. You can download the podcast on most major podcast platforms including Google Podcasts and Apple Podcasts.
2020 Marijuana Ballot Initiatives – Time to Make History!
by Madeline Grant, NCIA’s Government Relations Manager
With the election coming up just around the corner, 2020 could be another big year for our movement. It is imperative that we all head to the polls, send in our mail-in ballots and make our voices heard in this monumental election. This week I will briefly go over each ballot initiative that has officially qualified for the November ballot. As we continue to get closer to the election, I will get into detail about what each ballot initiative does for each state. 2020 has been a year of uncertainty and as we approach the election it is our duty as U.S. citizens to get out and vote and as members of the cannabis industry, it’s important that we support the expansion of markets by donating to initiative campaigns.
Without further ado please see marijuana ballot initiatives below:
More information provided by the Marijuana Policy Project here.
Nebraska – Medical marijuana ballot initiative is no longer happening due to the Nebraska Supreme Court deeming the legalization of medical marijuana on the November ballot as unconstitutional. Following over 180,000 signatures by Nebraskans in support of the measure, the Supreme Court decided to not include the vote on November’s ballot on the day before the deadline. The justification of unconstitutionality came from Nebraska’s single-subject rule for a ballot measure, which bans multiple issues into yes-or-no questions for voters to address.
It is more important than ever to get out and vote. Our government relations team works hard in our nation’s Capital to achieve legislative victories at the federal level; however, achieving legislative victories at each state is just as important. It is through each successful ballot initiative at the state that provides the proof and support for legislative change and policy reform at the federal level. States are moving forward; therefore, we must be on Capitol Hill. We must keep fighting the good fight and get out and show our support for cannabis policy reform.
Are you interested in any of these states or want to learn more about one of these ballot initiatives? If so, please feel free to reach out to me to set up a meeting to discuss the information in more detail or contact the campaigns directly to find out how you can support them.
Member Blog: Creating a Diverse, Inclusive, and Sustainable Cannabis Industry
This year, a national outcry against police violence and the impact of COVID-19 on Black and brown communities initiated a reckoning with the legacies of oppression and injustice in the U.S. Along with recognizing our institutionalized and internalized racism, we have started to come to terms with our economic inequality now that the income gap is worse than it has been in 50 years and three families alone control more wealth than 50% of Americans.
As with the rest of the country, the cannabis industry is lived differently based on the intersectionalities of race, class, gender, orientation, (dis)ability, and veteran status. For example, already wealthy, white, male individuals have amassed fortunes in cannabis with roughly 74% of U.S. cannabis businesses owned by men and 81% by whites, according to a 2017 Marijuana Business Daily survey.
After most states designated cannabis “essential” during COVID-19, private individuals, family funds, and pension funds plowed $2.6 billion into corporate cannabis, and multi-state operators posted record sales in the hundreds of millions. Earlier in September, the second cannabis exchange-traded fund (ETF) was announced which involves an investment portfolio of multi-state operators, REITs, and CBD companies. In contrast, Black and brown communities face mass incarceration for that same plant whereby African Americans are four times more likely nationally to be arrested for cannabis offenses than whites, while in states such as Kentucky and Montana, almost 10 times more likely, cited by a 2020 ACLU report.
These economic barriers to entry entrench the lack of representation in cannabis. For most entrepreneurs, the main obstacle to starting a cannabis business is the lack of access to traditional banking. It takes at least $300,000 to open a cannabis retail store, and up to millions of dollars for other cannabis enterprises, according to the 2019 Marijuana Business Factbook. Without traditional banking, most professionals finance their businesses through family wealth or personal contacts – 84% of U.S. cannabis companies are self-funded by founders, and 22% capture additional funding through a Family and Friends Round, cited by that same report. In this system, minority entrepreneurs are at a disadvantage. U.S. median household net worth ranges from $171,000 for white families to $17,600 for African Americans, $20,700 for Latinx, and $64,800 for “Other,” based on a 2016 Federal Reserve Board survey.
In addition to funding challenges, cannabis entrepreneurs must navigate onerous state and local regulations to obtain and maintain licensing. Some states have launched Social Equity Programs to help communities historically targeted by the criminalization of cannabis to now participate in the profits of legalization. However, even Illinois’s Social Equity Program, which is considered the gold standard, awarded only 21 out of its total 75 retail social equity licenses, leaving unclaimed 54 licenses that could have transformed the applicants’ economic circumstances. The 21 finalists were taken from a total pool of 1,667 applicants, which equates to only 1.3%. Low success rates stifle market entry and ensure that corporate, multi-state operators continue to saturate the cannabis space.
Beyond media proclamations, we must actualize an inclusive cannabis industry that reflects and celebrates the rich diversity of our community and provides equal opportunities to all professionals throughout the growth cycles of the market. We must operationalize sustainable businesses that produce unionized jobs and foster generational wealth. To do so, we must not only promote our own professional aspirations, but we must champion our friends’ and colleagues’ pathways into and up the cannabis industry.
While federal legalization remains the ultimate goal, local policies that would articulate a diverse, inclusive, sustainable cannabis industry must include explicitly legalized access to banking and finance, an overhaul of law enforcement and the criminal justice system, and social equity programs that encourage market activity. Until then, we must collectivize our professional resources and knowledge to build a true business community that empowers each of us to achieve our cannabis ambitions.
Rebecca Lee Katz is an attorney at an international law firm and President of Pakaloh LLC, the free business resource for an inclusive cannabis, CBD, and hemp industry. Pakaloh offers three types of membership which are all free, and members may select as many as they choose. Membership is available to 1) “Individuals”, including new and established entrepreneurs and professionals, 2) “Providers of Products”, or plant-touching businesses, and 3) “Providers of Services”, including ancillary services.
A WOC-owned company, Pakaloh provides its members with a comprehensive suite of services, starting with free information and discounts at financial institutions like banks, lenders, and payment processors that work in cannabis. Pakaloh also features free Business Tutorials that cover a range of cannabis topics from accounting to agriculture. These are informative, introductory online videos submitted by members that allow them to reach an audience of potential clients who may need to hire their services. Additionally, members may post and search for job opportunities.
Partner companies also offer discounts for members to use on individual and bulk orders. Members network on the site by accessing directories and sending messages directly to each other. Lastly, Pakaloh curates information on professional and activist organizations and events. Pakaloh is pledged to every community, and comes from pakalolo, an embrace of generations of the founder’s family in Hawai’i. Pakaloh holds true that no matter your roots, each of us aspires toward something greater than ourselves, be it our family, our nation, our cannabis movement.
It’s Time to Spark the Vote! Calling On All Retailers to Mobilize Customers for the 2020 Election
Despite having been marginalized and underrepresented in the political process for as long as prohibition has been policy, cannabis consumers are quickly emerging as an incredibly diverse and effective voting bloc in American politics. The impact of the cannabis consumer vote on state and local elections is palpable in these unprecedented times. As a beneficiary of this constituency base, we as an industry need to appreciate not just what elections have done to enable our businesses to exist today, but, critically how by lifting the voices of our patrons we are ensuring our own sustainability tomorrow. In fact, the backbone of the cannabis industry is our consumer base. Without consumers, there would be no local reform and, in most cases, no legal state market.
Today, we have hundreds of licensed retail stores across the country, and our industry is finally in a place where we can mobilize our customers nationally for the 2020 election. As retailers, it is now absolutely essential that we ensure cannabis consumers are effectively engaged, which is why we, at Berkeley Patients Group, are proud to join the Spark the Vote Retail Partnership Program. We are calling on every retailer out there to join us.
Spark The Vote‘s Retail Partnership Program is a COVID-safe, cannabis consumer voter registration and mobilization drive. The goal is to leverage the growing number of public-facing cannabis retail networks, and allied businesses to promote the effort through in-store and online customer engagement. The campaign is bringing together hundreds of socially responsible operators from across the country that are committed to supporting public participation in the electoral process. This is an excellent opportunity for our industry to stand out as good corporate citizens by lifting the voices of the communities we serve, and by empowering our employees to support positive social change.
There is no fee to participate as an official retail partner, and his campaign was designed specifically to minimize any staff or operational disruption. The only requirement is to promote get out the vote by displaying a QR code sign (graphic is provided) in a high-traffic, high-visibility location in the store, and highlight content on social media when necessary (language templates are provided). The sign acts as a COVID-safe, contactless voter registration station where a customer can use their phone to scan the code and quickly find out about their registration status, early voting, and other resources on how to participate and promote the democratic process.
In the words of Thomas Jefferson, “We do not have government by the majority. We have government by the majority who participate.”
For more information on Spark the Vote, how your organization can participate in the Retailer Partnership Program, or other partnership opportunities, please contact ben@sparkthevote.org or go to www.sparkthevote.org.
[Sabrina Fendrick, Chief Public Affairs Officer, Berkeley Patients Group; Spark the Vote Advisory Board Member, contributed to this post.]
Video: NCIA Today – Federal Policy Update, Andrew Yang, And More!
Host Bethany Moore, NCIA’s Deputy Director of Communications and host of NCIA’s weekly podcast ‘NCIA’s Cannabis Industry Voice‘ brings you an in-depth look at what is happening across the country in federal cannabis policy reform and with NCIA.
From the top, Bethany breaks the big news that former presidential candidate Andrew Yang will be keynoting the Cannabis Business Summit this year. She continues and discusses the newly-launched NCIA Facebook Live series (and podcast) Cannabis Diversity Report.
We check in with NCIA Deputy Director of Government Relations Michelle Rutter Friberg, to hear some of the recent highlights from the nation’s capital about cannabis policy reform, cannabis, COVID-19, and more. Our resident political expert breaks down the ways that NCIA is looking to help our members improve their engagement and reach in the legislative process.
Membership Manager and DEI Coordinator Tahir Johnson joins the show to discuss the recent move by NCIA to endorse the Cannaclusive Accountability list, asking all cannabis companies to adhere to promises made in the wake of racial injustices and actively strive to build a more equitable, inclusive industry.
A Third Round of SAFE Banking, HEROES 2.0 Unveiled
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Photo By CannabisCamera.com
It may seem like a while since you got an update on the SAFE Banking Act, but I have some exciting news to share with you!
Yesterday, House Democrats unveiled “HEROES 2.0” which is their latest COVID-19 relief package. If you’ll recall, back in May, the House also passed the initial HEROES Act, which included the text of H.R. 1595, the SAFE Banking Act.
Since HEROES passed the House in May, NCIA has been hard at work (from home!) talking to House and Senate leadership, as well as other key Senate offices about the need to pass this legislation and solve the cannabis banking conundrum. Unfortunately, those talks have been stalled for months as congressional leadership and White House officials struggle to make a deal.
Eager to return home in October with a victory to show, many moderates on both sides of the aisle have been stressing the importance of passing another relief package. As the language was just unveiled late yesterday evening, it’s still unclear how the Senate will react to the bill, and of course, the bill still has to clear the House of Representatives.
You might remember that just days before the first HEROES Act was passed in May, NCIA led ten cannabis advocacy and industry organizations in sending a letter to congressional leadership urging lawmakers to include SAFE in the next pandemic relief package. If the new HEROES 2.0 passes the House, it will mark the third time that the full body has approved the SAFE Banking language.
The language included in both packages is identical to the House-approved version of the bill and would make it easier for financial institutions to work with cannabis businesses that are in compliance with state law, as well as help address serious public health and safety concerns caused by operating in predominantly cash-only environments. The bill would also assist with the financial and practical hardships that are facing cannabis entrepreneurs of color as a result of a lack of access to capital from traditional lending institutions.
Make sure you stay engaged and continue to tell your lawmakers that you are a cannabis voter and that these issues are important to you! Contact your Senators today and ask that they support SAFE Banking as a necessary piece of legislation that can help the tens of thousands of cannabis workers stay healthy by allowing our industry access to legitimate banking and end our cash-only operations.
Want to make sure you hear the latest about what’s happening in cannabis policy? Follow NCIA on social media and be sure to share important information and resources as we release them with your networks, because we’re going to need all of us in this together!
The most important thing anyone can do to make sure SAFE Banking and other important reforms are realized in Congress is to ensure that their cannabis business is a member of NCIA. If you are not yet a member, please support our work by joining today. If you already are a member, thank you for making our advocacy work possible.
Member Blog: Top 8 IT Concerns for the Cannabis Industry
by Sean Dawson, Director of IT Solutions at Office1
Integrating and measuring innovation for cannabis businesses can be daunting, mostly because cannabis has been considered illegal for decades. Luckily for the cannabis industry, the laws prohibiting the use of marijuana and marijuana products are tumbling down, and windows of opportunities are opening for people to integrate information technology with their cannabis businesses. As in other industries, information technology is shaping the cannabis industry as a frontier of opportunities for professionals in many exciting ways.
Despite being stereotyped and demonized for close to a century, the marijuana industry is swiftly reconstructing itself, thanks to cutting-edge technology that’s ensuring inventions, innovations, and progress. IT remains the ultimate lever for changing how people view and relate to the cannabis industry. Over the last few years, IT revamped the cannabis industry and transformed how marijuana is grown, processed, distributed, purchased, branded, and consumed.
Despite the remarkable progress, there are a few IT concerns for the cannabis industry. Here are the top 8 IT concerns for the emerging cannabis industry:
Automated Cultivation
Marijuana grow-boxes with fully automated grow technology for high-quality yields are a potential game-changer for the cannabis industry. A perfect example is a home-grow technology that allows people to discreetly plant a seedling or two in every corner of their houses. Every bit of the home-grow technology is highly guided and fully automated. This gives growers a deep personal satisfaction of growing their own marijuana without having to go through the taxing learning curve that other farmers have to endure to get the best quality yields. With this technology, you don’t even need an outdoor garden.
On a larger scale, there are tech-driven innovations in seed genetics and breeding as crucial aspects of cannabis cultivation. This technology modifies the DNA of cannabis to develop a cultivar with rich taste and more resistant to pests, diseases, and harsh elements of weather.
On the applications frontier, cannabis farmers now have access to customizable apps that allow them to configure cannabis cultivation to their geographical locations, soil texture, climate, and desired outcomes, among other considerations.
Automated cultivation is a growing concern for the cannabis industry as IT companies are striving to improve the cultivation technology even further, and growers are looking to leverage the best technology to gain more control over the quality and quantity of their yields.
Access Control
Cannabis dispensaries face the need to ramp up security within their premises. These dispensaries mostly deal with large cash transactions, which expose them to crime. These businesses are vulnerable to burglary, forgery, and robbery, necessitating advanced security options.
The need for improved security has led these dispensaries to incorporate stringent security options that effectively prevent malicious activity. For instance, to protect their crucial product, processing plants and growers utilize remote and cloud-based access control to the facilities.
Cannabis dispensaries normally take advantage of the flexibility that comes with current security systems to ensure that only authorized persons can access various areas within their facilities. To enhance security and access, these systems combine various security applications within one package, making them robust and efficient.
For instance, an access control system that grants keyless entry also combines with surveillance cameras, alarms, and the check-in systems to store a proper record of all personnel who visit specific areas within their premises. This ensures a safe work environment where the company maintains trust with their staff while simultaneously reducing liability. Remote access control also triggers rapid growth since it facilitates the management of many branches from a single point.
Automated Vending and Online Recommendation
With advances in computing and robotics, various companies have been experimenting with non-human point of sale vending technologies. The cannabis industry has not been left behind. Artificial intelligence has allowed companies to aggregate HIPAA compliant data thus allowing for the creation of platforms where doctors and patients to better predict treatment outcomes as well as managing analytic data points from seed to consumption. Enter, opportunity. Companies have now been utilizing this to innovate the way cannabis is being purchased. Through the creation of search engines designed off the AI data aggregation, consumers are now able to find the best available strains for their desired use case in both a medical and recreational use case.
Such technologies revolutionize the supply and delivery of the product as they help users make informed decisions regarding consumption methods and available strains, and therefore pivotal IT concerns for the cannabis industry.
Artificial Intelligence
Artificial intelligence (AI) has significantly transformed the way every industry does business, and the cannabis industry is not lagging far behind on this. The grade and strain of cannabis produced majorly depend on the environment in which it was grown. Artificial intelligence helps growers to enhance the plants’ genetic makeup and CBD/THC concentration to produce popular strains.
AI also helps in optimizing the supply chain, ensuring efficient and fast delivery of marijuana products. Companies are diligently exploring ways in which AI can help improve how quickly and efficiently the product can be moved, from the growers to the processors and, finally, the consumer.
For example, a California-based startup, Eaze, collects consumer data relating to consumption and delivery. The data is then processed, analyzed, and leveraged to help dispensaries keep track of demand and update their stock.
Other companies use artificial intelligence to forecast price changes, fluctuations in product supply, and to analyze trends within the cannabis Industry.
AI is, therefore, a critical concern for the cannabis Industry.
Retail, eCommerce, and Delivery
Retail, too, has benefited from advances in delivery technology. Today, you can order a product or service with the click of a button, pay for it remotely, and have it delivered at your doorstep. The cannabis industry is already in on these advances. In states where marijuana consumption is legal, there are apps you can use to order a marijuana product and expect a home delivery in minutes.
Marijuana dispensaries have also turned to technology to help educate the public on cannabis production and consumption. For instance, some dispensaries are adopting the use of augmented reality to guide consumers through the available strains and their effects on the human body. There are also tons of education programs that cover everything from how cannabis functions in the body, growing options, and the best strains for different types of consumers.
Customized Consumption
Technology has revolutionized how we consume the product. Unlike the previous years, when smoking was the most popular means of consumption, modern consumers have a wide range of options. These include skin patches, e-cigs, and dosed inhalers. These technologies have disrupted the cannabis industry, and are paving the way for even safer options.
No doubt, modern technology has led to the invention and discovery of safe practices in the consumption of marijuana. For instance, it is known that different consumers react differently to various methods of marijuana delivery. Today, it is not uncommon for a doctor to take a swab of saliva to determine the best strain and delivery method for a particular user.
Electricity Storage and Consumption Monitoring
Marijuana growers attest that one of the highest costs of marijuana production arises from the use of electricity. The use of LED lights and climate control are responsible for these power costs. One way to reduce these costs involves the use of storage batteries. Growers can buy electricity during off-peak times when power is cheaper, store it batteries and use it during peak times. This also calls for the use of energy monitoring solutions to determine power consumption trends within the cannabis farms.
Seed-To-Sale Technology
With the growth of the marijuana industry, producers and growers seek ways to improve efficiency in the cannabis production process, following the laid-out regulations and maximizing profit. Seed-to-sale technologies equip producers with all knowledge regarding their product supply chain. This way, marijuana growers function the same way as any legitimate pharmaceutical or distribution chain.
Seed-to-sale software allows for vertical integration, which means the grower can track the product through various phases of distribution (manufacturing, supply, and dispensing). Point of sale software can combine with the company accounting software to create a fully-fledged Enterprise Resource Planning system, making it easy to manage the product like any other business.
Seed-to-sale software also helps with the documentation of cannabis transactions, which helps with compliance management, inventory management, and analysis of consumption trends.
The Bottom Line with Cannabis and Technology
With the increased decriminalization of cannabis comes unprecedented growth, which attracts investors. This growth has brought with it some industry shifts, especially in technology. This article has explored various IT concerns that have spurred growth in the marijuana industry. Legalization has also helped debunk myths formerly associated with the cannabis industry, which has encouraged IT startups to create solutions for the marijuana supply chain. This way, growers and suppliers can focus on developing high-end products, while technology helps with compliance, bookkeeping, and product improvement.
The relationship between IT and marijuana growth will spur developments that propel it into a multi-billion-dollar industry in the coming decades.
Sean Dawson is the Director of IT Solutions at Office1. Office1’s mission is to innovate and progressively modernize the inefficient business landscape by providing a proactive, personalized, and eco-friendly office technology solution from planning to implementation and optimization. One solution from one company – Office1. Sean seeks to understand the heart of a challenge and then focuses on creating practical and timely solutions. He is an avid DIYer, gardener, and master house re-doer who loves spending his free time with his wife, four children, and six chickens.
MORE Act House Vote Delayed, NCIA Submits Comments on FDA Guidance
by Morgan Fox, NCIA’s Director of Media Relations
In what House leaders have assured supporters is merely a temporary delay, lawmakers announced that the vote on the MORE Act which was originally scheduled for this week has been postponed until at least after the November election.
This legislation – which would remove cannabis from the Controlled Substances Act (CSA), expunge federal cannabis convictions, and establish programs to promote diversity in the cannabis industry and help communities that have been unfairly targeted by marijuana enforcement – was eagerly awaited as the first bill of its kind to get a floor vote in either chamber of Congress. No other de-scheduling bill, particularly one that contains robust restorative justice provisions, has ever gotten a vote since the original passage of the CSA in 1971, and advocates were confident that it would be approved in the House. In recent months, dozens of additional lawmakers have signed on to co-sponsor the bill, bringing the current total to 113.
Unfortunately, despite recent polling showing majority support for the MORE Act among Republican voters (and its job- and revenue-creating potential), some in the GOP attacked Democratic House leadership for moving forward with the bill before Congress had come to an agreement on a new pandemic relief package.
While this is certainly disappointing, House leadership has promised that the MORE Act will get a vote before the end of the year. That gives us at least another seven weeks to continue building support! In the meantime, attention is turning back to pandemic relief, where we are still pushing for the continued inclusion of SAFE Banking language in the final package if Congress can come to an agreement. There are also a number of cannabis-related provisions in this year’s appropriations bills, including removing barriers to research, protecting universities engaged in cannabis research, and preventing federal interference in state-legal medical and adult-use cannabis programs.
Please contact your members of Congress and urge them to support ALL these measures!
In other federal news…
With the help of our Policy Council, Hemp Committee, and Scientific Advisory Committee, NCIA submitted comments to the Food & Drug Administration this week providing recommendations on a number of issues related to how the agency will classify cannabis and cannabis-derived compounds in the future. You can read the full comments here. While the current comment period is now closed, the FDA has been expressing increased interest in input from a variety of stakeholders, suggesting that they are preparing for a change in policy in the relatively near future. It is very likely that there will be more opportunities to weigh in on their policies that could affect the cannabis industry for years to come.
The DEA and USDA both have open comment periods right now, so be on the lookout for more information about how you can help us influence cannabis and hemp policy at those agencies in the coming weeks!
Member Blog: Soil Is A Way Of Life, But What Is Living Soil?
Our preferred definition of living soil is the community of microbes working together breaking down organic matter which, in turn, provides valuable nutrition to the plants.
Soil microbes are essential for decomposing organic matter and recycling old plant material. Microorganisms are the unseen majority in soil and make up a huge part of soil’s genetic diversity. This means easier absorption of nutrients by plant roots, reduced need for watering, limited erosion, and improved aeration. A combination of organic materials such as compost, coco coir, peat moss, aged tree bark, manure, worm castings, and more can be used to make a base for living soil. Like all living things, soil needs water, and flows water along the path of least resistance to bring hydration and nutrients to plant roots. Water remains in the soil by storing itself in porous minerals for later use.
Most beneficial life requires oxygen to survive and the complexity of living soil ensures air and moisture are continually cycled to keep roots oxygenated and allows plants to breathe. Organic soil additives must be broken down by microorganisms for plants to use them and three important microorganisms for living soil to function properly are bacteria, actinomycetes, and fungi.
Bacteria are single-cell microorganisms that exist in most of the earth’s habitats and are the most dominant group in soil. Bacteria are present in all types of soil but their populations diminish with the increase of soil depth. Though bacteria can live under starvation and dehydration conditions they reproduce quickly when optimal water, food, and environmental conditions exist. Having a diverse bacterial population increases soil productivity and crop yields over time, while also assisting in decomposition.
Actinomycetes are similar to bacteria and fungi, but do not have the chitin and cellulose found in the cell walls of fungi. The deeper your soil, the more actinomycetes will be found as their numbers increase in the presence of decomposing organic matter. Temperatures between 77°F and 86°F are ideal for actinomycetes growth and the most commonly found are thermoactinomyces and streptomyces which help prevent molds, mildew, and other soil pathogens.
Fungi are second only to bacteria in their abundance in soil and the quality of the soil has a direct effect on their numbers. They are found in all soils and have filamentous mycelium, composed of individual hyphae. The quality and quantity of organic inputs present in soil have a direct effect on fungal numbers. Degradation of organic matter along with help in soil aggregation are the main functions of fungi in soil. Additionally, certain species of fungi produce substances similar to humics in soil which improve nutrient uptake in the root zone. Some fungi also aid in the mobilization of soil phosphorus and nitrogen — two of the three most important minerals — into plants. With cannabis, in particular, establishing roots becomes much less challenging when mycorrhizal fungi are introduced. “Myco – rhizal” literally means “fungus – root” and describes the mutually beneficial relationship between the plant root and fungus. These specialized fungi colonize plant roots and extend far into the soil to acquire resources beyond the “nutrient depletion zone” that plants can’t access alone. Mycorrhizal fungal filaments in the soil are truly living extensions of plant root systems and are more effective in nutrient and water absorption than the roots themselves as hyphae, or fungal roots, grow much faster and longer than the roots of the plant itself. This expands the surface area of the plant root allowing for increased access to nutrients, water, and oxygen.
There are many ingredients that work synergistically for optimum growth effects and less environmental impact. It is up to the individual which ingredients they prefer, but I recommend a blend of coco, peat, and compost to start. After accomplishing a drainable media you can begin working in the biologicals and bringin the soil to life.
Growing with organic inputs and methods not only provides healthier plants because they are grown without toxic or persistent pesticides or fertilizers, it contributes to a healthier planet. Growing in organic living soil builds carbon with less waste while keeping toxic and persistent pesticides and fertilizers out of the soil, water systems, and our bodies. Many books have been written about living soil and this is just a small glimpse of its importance to businesses in the cannabis industry. For me, it breaks down to dollars and sense, as it does with many businesses that care about their bottom line. Living Soil allows for the grower to reuse soil for many years, saving them money on labor, fertilizer, and growing media. As growers, we are always working toward minimizing our carbon footprint and living soils empower growers to consistently achieve higher yields and organic purity.
Lee Spivey is the Marketing Manager for Good Earth Organics, Inc. a premium potting soil manufacturer in Oregon. As the driving voice behind the brand, it is his personal mission to make the world aware of the benefits of using organic living soil. After seven years with the company, he is well versed in the science behind the soil and the organic mission behind the brand.
Good Earth Organics, Inc. shares this passion for clean, living soil and has a vision to bring GEO products to growers everywhere that care for increased yields and organic purity.
We Must Hold Ourselves Accountable To Create A Fair Cannabis Industry
by Aaron Smith, NCIA’s CEO and Co-founder
As the nation began grappling with issues of systemic racism and inequality on a massive scale following the death of George Floyd and ensuing civil rights protests across the country, we saw an outpouring of support from members of the cannabis community. It was inspiring to see so many people standing up for justice and recognizing the disproportionate impact that prohibition has had on marginalized communities and Black people in particular.
Words, however, are not enough. Implicit in supporting positive change is the need to reflect on where we can do better – and be better – ourselves, and then taking action.
Since our initial public statement on this national reckoning early this summer, NCIA has started taking the first in what will be an ongoing series of steps to facilitate more diverse representation, participation, and access to opportunities in our industry. We instituted aSocial Equity Scholarship Program to provide complimentary first-year membership and other benefits to licensees and applicants in state and local social equity programs and recently launched the#CatalystConversations webinar series to provide them with valuable information and amplify their voices. We have created a staff position to directly engage staff, membership, and allies to critically analyze and expand upon our progress. And, we are currently establishing an Opportunity Fund to help support and expand our scholarship program, and assist disenfranchised members and the organizations fighting for them. But we still have a long way to go.
As part of our efforts, we are also encouraging cannabis and ancillary businesses to commit to improving diversity, equity, and inclusion in the industry and to hold themselves to those commitments by participating in The Accountability List byCannaclusive.
The Accountability Listgives businesses and organizations the opportunity to show consumers, the industry, and policymakers what they are actively doing to promote fairness and inclusivity in cannabis and beyond. We encourage everyone in the cannabis space to stand up for justice, be honest about where they can improve, and commit to doing so in the most forthright, measurable, and transparent ways possible.
Photo By CannabisCamera.com
Ending cannabis prohibition and improving diversity in the industry is not going to eliminate systemic racism or fully repair all the death and destruction committed in the name of the war on drugs, but together we can make a real difference and help create a better future.
NCIA, our Board of Directors, and I stand firmly in support of people fighting to end racial injustice and ensure a fair cannabis industry with equitable opportunities for all. We hope you’ll stand with us.
Member Blog: Pivoting Your Cannabis Business During COVID-19
By Lindsey Griffith, Creative Content Specialist at ThrivePOP
Life has changed, and businesses are in panic mode. Consumer income suddenly becomes uncertain, and we begin to face our own economic vulnerability. Luckily for the cannabis industry, they were deemed as an “essential” business during the COVID-19 pandemic. And while this meant they were still excluded from federal funding, they were allowed to operate and service their consumers based upon differing state rules and regulations.
While some cannabis companies’ first instinct may be to cut costs to marketing, there are several reasons why that should not be the case. Not only does marketing need to continue for your cannabis business to stay thriving, but it also needs to be amped up. Here we’ll discuss some reasons why you should keep marketing efforts rolling and just how you can pivot your tactics during a pandemic.
Make The Most Of Your Time Online
On a normal day, the majority of the population is online. Now that many companies have transitioned their employees to work from home, or shut down altogether, even more people are spending time online. More people are on social media trying to interact with their clients and audience, and those that may have downtime are spending it on the web. COVID-19 brought sudden closing to in-person cannabis services across the globe and many businesses found themselves scrambling to get online. Social distancing practices suddenly transitioned daily activities to a completely digital life, so increasing your digital marketing efforts is a good way to continue to bring revenue to your business.
Now that your cannabis business may be limited to curbside, it is necessary to make your new purchasing process transparent online. Create a pickup process graphic for your website or pin directions to the top of your Facebook page. The easier you make it for your consumers to purchase your cannabinoids products during COVID-19, the better. Being online and consistently updating your content across the board is essential to keeping your cannabis business afloat.
Focus On eCommerce
During times like these, people are stuck inside – so naturally, everyone wants to shop online. By transitioning your cannabis sales to an online market, you will be able to maintain stability in uncertain times.eCommerce is a highly beneficial and successful way to keep your business active and making money during an economic crisis! It’s called retail therapy for a reason, right?
Luckily there are many resources to list your products online within the cannabis industry that expose you to a much larger audience than your website alone. Leaflymaximizes your cannabis or CBD business presence through targeted advertising on its website. It’s also equipped with an easy to use online ordering system that allows customers to easily order in advance for pickup at your location. Another resource often used as an eCommerce platform within the industry is Weedmaps. Equipped with a mobile application, Weedmapsalso makes it easy for consumers to easily search for cannabis brands and products near them. These are just a few of the resources available for you to legally list your products online.
While these external resources are extremely beneficial, all of these should work in conjunction with your own cannabis domain. Having your own domain and website for your business is essential to succeeding and staying on top of Google search results during COVID-19. Using search engine optimization and regularly adding new content to your website are just some of the ways to continually rank for related cannabis search terms. Don’t expect immediate results, however, as it often takes several weeks for Google to analyze and formally rank your website changes.
Build Your Email Marketing List
Now more than ever is a great time to build your client database. With the influx of people online and more time on their hands, it means that your offers can reach more people with the right marketing strategy. Setting up a marketing campaign with insider exclusives is an amazing way to keep people interested in your business and keep you at the forefront of their minds once things return to normal.
This can be done in the form of an email newsletter signup, social media contest, or even lead generation quizzes. Just make sure you’re following current web and social media contest rules and regulations. When creating these campaigns, consider what is valuable to your consumer, as this won’t be the same across all cannabis businesses. Do your consumers want to be educated? Are they interested in the latest products or strains in store? Does the majority of your business come from recreation or medicinal sales? Use what you know about your target audience to carefully curate exclusive offers that are unique to your brand.
Utilize All Of Social Media’s Tools
Adults are using social media up to 51% more than before the pandemic. Increasing your cannabis brand’s social media presence is key to staying in front of your audience during COVID-19. While you are currently not allowed to do any paid social media advertising (social media companies abide by federal law) there are many free tools available to grow your page organically. Making use of Instagram stories polls, questions, and countdowns are easy ways to give your audience a chance for them to interact with your page, therefore feeding into the algorithm.
Confused as to how that works? It’s actually pretty simple. Every time someone interacts with your Instagram story it signals to the algorithm that the user is engaged with your content. The more they interact, the more Instagram deems your content important to that user. Therefore, bumping you right to the top of their news feed!
Using micro-influencers on social media is also a very cost-effective way to market your cannabis business on social media. Their small circle of dedicated followers is more likely to convert into a customer for your business than a larger influencer account. Just make sure the partnership aligns and makes sense for both parties involved.
Reassessing Your Long-Term Strategy
How often do businesses get to press the reset button? If there is one silver lining during COVID-19, it’s the ability for businesses to adjust their marketing strategies. Now is the perfect time to develop a cannabis marketing plan that implements the standards of a “new” normal. When you do this you are able to reconsider your 4 P’s of marketing:
Product: Does my product serve my audience well during COVID-19? Place: Is my product or service easily accessible to my audience during COVID-19? Price: Can consumers afford my product or service during this economic crisis? Promotion: Will consumers respond to marketing tactics as they had before COVID-19?
Marketing can’t just be turned on and suddenly leads and conversions pour in. It’s a long road with twists and turns that lead you to your destination. Dropping marketing efforts turns that car around immediately, reversing all efforts to obtain leads and increase sales. This may be a difficult and confusing time in the cannabis industry, but remaining strong in your marketing strategy will keep your business stable and active during and after a crisis.
Moving forward, consider how your marketing campaigns can now enter your consumer’s psyche. Keep your campaigns focused on your cannabis brand and don’t look to gouge worried consumers. Let’s be ethical about all this, while also remembering how marketing and staying in front of your audience is important, pandemic or not. Eventually, things will return to normal, so being smart and socially conscious and putting your best marketing foot forward will carry your business through!
Lindsey Griffith is the Creative Content Specialist at ThrivePOP, a West Michigan based Digital Marketing Agency. As a copywriter, Lindsey has experience in creating and implementing content across several digital platforms including podcasts, webinars, blogs, and social media profiles. During her cannabis career, she has worked with several cannabis manufacturers on search engine optimization through blogging to drive traffic to their website and assist in organic social strategies to gain new followers. Lindsey received her Bachelor’s Degree in Marketing from Grand Valley State University and her work has been published across several cannabis industry platforms.
Member Blog: GMPs – A Way Ahead for Hemp and CBD Firms
The hemp industry is the marijuana industry’s half-sister. Both are variations of the plant cannabis sativa and both were made illegal in 1937 with the passing of The Marijuana Tax Act. Flash forward to the Agriculture Improvement Act of 2018 (known as the 2018 Farm Bill) that was signed into law by Congress on December 20, 2018. One year later, The USDA issued interim regulations that entitled Establishment of a Domestic Hemp Production Program for the cultivation of hemp on October 31, 2019. Both were huge steps forward for public access to hemp and hemp products. FDA legalized the growing of hemp in states with a state-mandated hemp program and removed hemp and its derivatives from Drug Enforcement Administration (DEA) Schedule I status and the U.S. Domestic Hemp Program aims to approve cultivation plans issued by states and Indian Tribes.
Even so, then FDA Commissioner Scott Gottlieb issued a statement hours after the signing of the Farm Bill reiterating that “Congress explicitly preserved the agency’s current authority to regulate products containing cannabis or cannabis-derived compounds under the Federal Food, Drug, and Cosmetic Act (FD&C Act) and section 351 of the Public Health Service Act.”
Still today, two years later and counting, FDA only permits CBD products submitted as an Investigational New Drug (IND) Application as a pharmaceutical and there remains only one such accepted CBD product, Epidiolex, manufactured by G.W. Pharma. All other CBD products are illegal for interstate shipment.
In-state production and sales may be a different story, provided that state has a mandated hemp program. In those cases, provided state law is followed, production and sales are legal and protected, but the minute products cross state lines, they become the jurisdiction of the federal government and, more specifically, the FDA. At least 47 states have enacted legislation to establish hemp production programs or allow for hemp cultivation research.
Section 10113 of The 2018 Farm Bill states that (c) Nothing in this subtitle shall affect or modify:
(1) the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.);
(2) section 351 of the Public Health Service Act (42 U.S.C. 262); or
(3) the authority of the Commissioner of Food and Drugs and the Secretary of Health and Human Services- ‘‘(A) under- ‘‘(i) the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.); or ‘‘(ii) section 351 of the Public Health Service Act (42 U.S.C. 262); or ‘‘(B) to promulgate Federal regulations and guidelines that relate to the production of hemp under the Act described in subparagraph (A)(i) or the section described in subparagraph (A)(ii).”
The mission of the FDA is “to ensure the safety, effectiveness, and security of human and veterinary drugs, vaccines and other biological products for human use, and medical devices.” As such, FDA categorizes every product for sale in the U.S. which is either ingested or applied to a human or animals into categories. That means hemp-derived CBD products will have to lawfully fit into one of those categories, however, while there has been positive movement towards the legal sale of hemp products on the USDA cultivation side, the FDA has authority over foods and dietary supplements, and the FDA’s position is that the addition of hemp/CBD to a food or dietary supplement is “violative.” In a Consumer Update statement revised on November 25, 2019, the FDA clearly stated that “it cannot conclude that CBD is generally recognized as safe (GRAS) among qualified experts for its use in human or animal food.”
That being said, FDA has indicated it would be open to review of safety data for submission of a cannabinoid as Generally Recognized as Safe (GRAS) for Food or as a New Dietary Ingredient (NDI) in a supplement as the lack of any federal regulation runs the potential of putting people at risk. That has sent the industry scurrying to design and initiate studies in the hopes of demonstrating levels of safety that meet FDA’s satisfaction.
In the meantime, those currently operating in states where hemp manufacturing is legal, must ensure Good Manufacturing Practices (GMPs) are adhered to closely. Should the FDA ever allow hemp products with CBD to be sold in the future, a manufacturer’s ability to demonstrate understanding and compliance with GMPs will be critical. Each FDA regulated industry has its own set of GMPs for the development and implementation of quality systems.
21 CFR 117, Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventative Controls for Human Food
21 CFR 507, Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventative Controls for Food for Animals
21 CFR 111, Current Good Manufacturing Practice in Manufacturing, Packaging, Labeling, or Holding Operations for Dietary Supplements
21 CFR 210, Current Good Manufacturing Practice in Manufacturing, Processing, Packing, or Holding of Drugs; General
21 CFR 211, Current Good Manufacturing Practice for Finished Pharmaceuticals
FDA Draft Guidance for Industry, Cosmetic Good Manufacturing Practice, June 2013
As the industry waits in the hopes that FDA will come on board with those states that have already legalized CBD’s use in products, it important to take the necessary steps to develop GMP protocols and quality systems as part of documented Standard Operating Procedures and record-keeping that those procedures are being followed, products are being tested and those tests are being validated.
Ensure as you begin to develop or strengthen your GMP programs that you do so with a full understanding of the requirements set forth in 21 CFR 111. Whether these programs are designed in-house or with the assistance of an outside consulting firm, ensure your GMPs are specific to your manufacturing procedures as opposed to a stock one-size-fits-all program. A reputable consulting firm with demonstrable expertise in FDA regulations and in helping to develop these GMPs is a good place to start, one that listens to your questions and concerns before providing you their stock answer. A good consulting firm can walk you through your unique processes.
Ensure your quality systems are robust and documented, including your demonstrations that your cGMPs are being followed.
Charlotte Peyton supports EAS Consulting Group CBD and hemp clients as well as that of dietary supplements and pharmaceuticals. As an independent consultant, she assists with projects ranging from startup through manufacturing and support. Her expertise includes quality, regulatory and management, method development, and method validation for FDA regulated drug, dietary supplement, and bioanalytical samples. She has extensive experience in writing validation protocols, reports, and SOPs and assists with implementation of stability programs and report writing for finished products.
EAS Consulting Group, a member of the Certified family of companies, is a global leader in regulatory solutions for industries regulated by FDA, USDA, and other federal and state agencies. Our network of over 150 independent advisors and consultants enables EAS to provide comprehensive consulting, training, and auditing services, ensuring proactive regulatory compliance for food, dietary supplements, pharmaceuticals, medical devices, cosmetics, tobacco, hemp, and CBD.
Looking Back On #10YearsOfNCIA: 2018-2019
Photo By CannabisCamera.com
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Over the last several weeks, I’ve been taking a retrospective look at the progress NCIA has made in the ten years since its inception. This is our last installment, detailing 2018-2019, and brings us up to 2020 (the year that shall not be spoken of). While this timeline is by no means a comprehensive look at everything that’s happened in cannabis policy during those years, here are some highlights:
January 2018
On January 4, 2018, then-Attorney General Jeff Sessions declared in a one-page memo that he had rescinded the Cole Memo, a similar memo related to cannabis activity on tribal land, and two other older memos. Sessions directed U.S. Attorneys to instead “follow the well-established principles that govern all federal prosecutions,” which require federal prosecutors to “weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.”
February 2018
This month was filled with the political fallout of the rescission of the Cole Memo. First, a letter was written by the U.S. Treasury Department’s assistant secretary for legislative affairs to Congress that said, “We are reviewing the [cannabis banking] guidance in light of the Attorney General’s announcement [to rescind the Cole Memo] and are consulting with law enforcement”. Then, following Sen. Gardner’s (R-CO) decision to block the Department of Justice’s nominees over the rescission of the Cole Memo in January, he released his holds on nominees for U.S. attorneys in a dozen federal districts and U.S. marshals in every district. Holds continue on the nominations of seven top Department of Justice nominees.
March 2018
In March, Attorney General Sessions spoke at an event where he acknowledged that the Department of Justice cannot use its limited resources to enforce cannabis prohibition against everyone who violates federal marijuana laws. He said, “We’re not going to be able, even if we desired, to take over state enforcement of routine cases that might occur.”
April 2018
The Trump administration officially began accepting online comments about whether marijuana should be rescheduled under international agreements. That same month, U.S. Senate Majority Leader Mitch McConnell (R-KY) filed a hemp legalization bill.
May 2018
The U.S. Small Business Administration (SBA) quietly issued a document saying that businesses that work with the marijuana industry aren’t eligible for federally backed loans. Fast forward to 2020, this document is largely what prohibited both direct and indirect marijuana businesses from receiving PPP money or federal assistance due to the COVID-19 pandemic.
June 2018
Senators Elizabeth Warren (D-MA) and Cory Gardner (R-CO), introduced the Strengthening the Tenth Amendment Through Entrusting States (STATES) Act. Shortly thereafter, President Trump was asked if he supports new Senate legislation to let states set their own marijuana laws without federal interference, to which he replied, “I really do. I support Senator Gardner. I know exactly what he’s doing. We’re looking at it. But I probably will end up supporting that, yes.” The STATES Act has never had a congressional hearing or moved in any way through the legislative process.
July 2018
In a slight change of tone, U.S. Attorney General Jeff Sessions said that “states have a right to set their own laws and will do so” but that “the American republic will not be better if there are marijuana sales on every street corner” and “we’ll [Department of Justice] enforce the federal law.”
August 2018
A group of the top financial regulatory officials from 13 states sent a letter urging congressional leaders to solve the marijuana industry’s banking access issues. The regulators wrote, “It is incumbent on Congress to resolve the conflict between state cannabis programs and federal statutes that effectively create unnecessary risk for banks seeking to operate in this space without the looming threat of civil actions, forfeiture of assets, reputational risk, and criminal penalties.”
September 2018
NCIA worked with Congressman Lou Correa (D-CA) to send a letter to the Department of Homeland Security Secretary Kirstjen Nielsen that urges the department to develop clear guidance concerning the entry into the United States of foreign nationals with authorized work visas who are associated with the cannabis industry.
October 2018
Well-known pollster Gallup found that sixty-six percent of Americans now support legalizing marijuana. Support has remained near that number to the present.
November 2018
This month, midterm elections were held, and a number of states voted on setting their own cannabis policies. Residents of Michigan and North Dakota both voted on adult-use measures, one passing and one failing, respectively. Additionally, Utah and Missouri both passed medical cannabis ballot initiatives. While the Senate remained in control of the GOP, the House of Representatives switched from a Republican majority to a Democratic majority.
December 2018
Congress passed the 2018 Farm Bill which included hemp legalization. The bill did not create a completely free system in which individuals or businesses can grow hemp whenever and wherever they want — there are numerous restrictions — and the programs are still being adjusted today.
January 2019
The 116th Congress was sworn in and quickly filed a number of cannabis-related bills, including:
H.R. 420: Regulate Marijuana Like Alcohol Act, H.R. 493: Sensible Enforcement of Cannabis Act, and H.R. 127: Compassionate Access, Research Expansion, and Respect States (CARERS) Act of 2019
February 2019
In February, the Subcommittee on Consumer Protection and Financial Institutions held its first-ever hearing on marijuana and financial services, entitled: Challenges and Solutions: Access to Banking Services for Cannabis-Related Businesses. Up for discussion was the Secure and Fair Enforcement (SAFE) Banking Act.
March 2019
Quickly following the subcommittee hearing, the House Financial Services Committee scheduled a full markup for the SAFE Banking Act. The bill passed out of committee with a bipartisan vote of 45-15.
April 2019
During a House appropriations subcommittee hearing, several lawmakers asked Treasury Secretary Steven Mnuchin about what could be done to provide state-legal cannabis businesses with access to financial institutions. Mnuchin replied, “Let me just say, I hope this is something that this committee can on a bipartisan basis work with since there are people on both sides of the aisle that share these concerns. I will just say I don’t believe this is a failure of the regulators. I want to defend the regulators on this issue.”
May 2019
NCIA hosted our 9th Annual Cannabis Industry Lobby Days, bringing hundreds of professionals to Washington, D.C. Over the course of 48 hours, attendees met with nearly 300 congressional offices to share their stories and experiences and dropped off informational materials to 200 offices that we did not schedule meetings with. In addition to these meetings, we had two briefings, held a PAC fundraiser, and hosted our first-ever VIP Day for members of our Leadership Circle.
June 2019
In June, the Senate Banking Committee held a hearing entitled “Challenged for Cannabis and Banking: Outside Perspectives.” NCIA was proud to have Sen. Jeff Merkley introduce for the record the testimonials of nearly 100 NCIA members during the hearing.
July 2019
The Subcommittee of the House Judiciary Committee held a hearing on ending cannabis prohibition in America. The hearing, entitled “Marijuana Laws in America: Racial Justice and the Need for Reform” will focus on the need to deschedule cannabis, the importance of equity, diversity, inclusivity in this burgeoning industry, and will also cover issues pertaining to cannabis and public health, law enforcement, and the failings of prohibition.
August 2019
When President Trump was asked at the end of August whether or not marijuana will be federally legalized during his administration, he said, “We’re going to see what’s going on. It’s a very big subject and right now we are allowing states to make that decision. A lot of states are making that decision, but we’re allowing states to make that decision.”
September 2019
For the first time in history, a standalone cannabis policy reform bill was brought before the House of Representatives for a vote and passed with an overwhelming bipartisan majority. The Secure and Fair Enforcement (SAFE) Banking Act of 2019, or H.R. 1595, was approved 321-103, including nearly half of voting Republicans, in a suspension vote.
October 2019
The U.S. Tax Court ruled this week that the tax code ban on business deductions by medical marijuana companies is constitutional. The case is Northern California Small Business Assistants Inc. v. Commissioner of Internal Revenue, docket number 26889-16.
November 2019
In a vote of 24-10, the House Judiciary Committee approved a bill that would effectively end marijuana prohibition. The Marijuana Opportunity Reinvestment and Expungement (MORE) Act of 2019, or H.R. 3884, was introduced by House Judiciary Committee Chairman Jerrold Nadler (D-NY) and has been moving through the legislative process steadily. The MORE Act is anticipated to be voted on by the full House of Representatives this month.
December 2019
The Federal Reserve released guidance allowing banks to work with the hemp industry. Financial institutions are no longer required to file suspicious activity reports on customers operating a hemp business.
It’s been a wild ride to look back at the last 10 years of NCIA, and we are looking forward to serving you and your business for another 10 more!
MORE Act Headed For Vote, SAFE Banking Still In Play
by Morgan Fox, NCIA’s Director of Media Relations
We asked, you answered, and your efforts are seeing results!
Over the past months, our Government Relations team in Washington, D.C. has been hard at work gathering support in Congress for the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act, and many of our members responded to the call to contact their lawmakers to urge them to support the legislation and bring it to a floor vote in the House. Well, our mutual work is paying off!
Last week, House Majority Whip James Clyburn (D-SC) announced that the MORE Act would be called for the vote! This was confirmed Monday as taking place during the week of September 21.
This legislation would remove cannabis from the Controlled Substances Act and do away with the continuing conflict between states with modern cannabis laws and the federal government. It would also expunge federal cannabis convictions, remove barriers to research, eliminate the current problems with the 280E tax code and lack of access to banking, promote more diverse participation in the cannabis industry, and establish funds to help undo the disparate harms caused by prohibition.
Make no mistake: this vote will be historic. This will be the first time that a bill to end cannabis prohibition has come up for a full vote in either chamber of Congress, and the results of the vote could determine the path of cannabis policy reform efforts for years to come.
This means we have just three weeks to drum up as much support as possible and show our elected officials where the vast majority of Americans stand on cannabis.
If your representatives are not among the 87 current cosponsors of the MORE Act, please contact them and urge them to join in showing their support for this momentous and necessary bill.
Meanwhile, our efforts to maintain momentum for cannabis banking reform have continued throughout the negotiations of the next pandemic relief bill. Despite a somewhat contentious public debate over the size and scope of the stimulus funds in general, hope is still alive for the SAFE Banking Act provision to be included in the final legislation if Congress can come to some agreements on the numerous other issues at stake.
What is not up for debate is that SAFE Banking is an absolutely necessary part of COVID-19 relief. This measure will improve public health and safety by enabling more social distancing and decreasing cannabis businesses’ reliance on cash transactions which can spread contagions and make them a target for crime. Most importantly, it will help thousands of small businesses – with hundreds of thousands of employees across the country – survive these difficult times while providing uninterrupted healthcare services. It doesn’t get more COVID-relevant than that.
While it is still uncertain when or how the House and Senate will arrive at a compromise for pandemic relief, we don’t have much time before the elections divert most of their attention.
Keep an eye out for updates on ways you can help get SAFE Banking passed this year.
We couldn’t do this work without the support and assistance of our valued members. If you are not yet a member, please support our work byjoining today. If you already are a member, thank you for making our advocacy work possible.
Video: NCIA Today – August Recap, Diversity, Equity, & Inclusion Update, Election Predictions, and more!
Host Bethany Moore, NCIA’s Communications Manager and host of NCIA’s weekly Podcast ‘NCIA’s Cannabis Industry Voice‘ brings you an in-depth look at what is happening across the country in federal cannabis policy reform and with NCIA.
From the top, Bethany discusses the new NCIA #IndustryEssentials webinar series. Webinars that arenʻt just about getting some big-name talking heads on a Zoom call, but about getting the correct people with the most up-to-date information to help our members stay ahead of the curve. This new series provides insights you canʻt find anywhere else, from experts who will surprise and delight you with their in-depth knowledge on relevant industry topics.
We check in with NCIA Diversity, Equity, Inclusion Manager Tahir Johnson to hear some of the recent highlights from his new show “The Cannabis Diversity Report.” Launched alongside the NCIA Social Equity Scholarship program, this weekly conversation takes an in-depth look at navigating, regulating, and growing the cannabis industry as a minority operator.
Director of Public Policy Andrew Kline joins Bethany on NCIA Today to discuss the nomination of Kamala Harris as the Democrats’ vice-presidential choice. A former Biden staffer and advisor, Kline discusses the minute differences he sees in the nominees’ cannabis policy and his expectation that Senator Harris can help Vice President Biden’s views evolve.
2020 isn’t completely canceled, as we begin registration for this November’s #CannaBizSummit CYBER, register today!
Together We Can – Working To Achieve Legislative Victories
by Madeline Grant, NCIA’s Government Relations Manager
Can you believe we are already coming to the end of August? 2020 has certainly not been what we were expecting – but we will persevere together. At NCIA, we want you to know we are here for you through these unstable times and now more than ever we will stand as a united cannabis community. As members of NCIA, we appreciate your dedication and contribution to continue the good fight to reach legislative victories at the state and federal levels. With your dedication to NCIA and our dedication to you, we can continue to achieve success through education and advocacy.
As the Government Relations Manager, I want you to know we are still working continuously in D.C., with a unified message, to achieve legislative victories. Next month, the House of Representatives may vote to make cannabis legal and start repairing the harms caused by decades of failed prohibition policies. As the legislative session draws to a close and what is sure to be one of the most pivotal elections in history nears, there is a renewed effort in Congress to pass meaningful criminal justice reform before the end of the year. And this includes the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act.
The MORE Act was introduced in the House last year by Rep. Jerry Nadler (D-NY) and already made history when it became the first legislative bill to be approved by the congressional committee (House Judiciary) in November.
This legislation would remove cannabis from the Controlled Substances Act, effectively decriminalizing it at the federal level and eliminating the ongoing conflict with effective regulated state cannabis markets. It would also expunge federal cannabis convictions, remove barriers to research, eliminate the current problems with the 280E tax code and lack of access to banking, promote more diverse participation in the cannabis industry, and establish funds to help undo the harms that have been disproportionately inflicted on marginalized communities by the war on drugs.
Now, a growing chorus of lawmakers are calling for it to receive a floor vote in the House in September, and we need your help!
Pleasecall your member of CongressTODAY and urge them to support the MORE Act and help bring it to a vote this year. When you call your representative’s office explain to them how important the MORE Act is to you and your business. The staffer that answers the phone is there to pass along the message to YOUR representative so the more calls they get the better.
NCIA Lobby Day, May 2017. Photo by Ben Droz
On another note, I’d love the opportunity to chat with you over the phone or zoom to discuss the challenges you are facing in the cannabis community. As we continue to meet with Hill offices virtually, it is important to relay your stories about the difficulties you face within the cannabis industry. Real-life examples help paint the picture of the reality our cannabis businesses face every single day. This is imperative to illustrate just how necessary legislative victories, like the MORE Act, are to us. So, if you have the time please send me an email to Madeline@TheCannabisIndustry.org and I will schedule a time for us.
As we draw closer to the end of this legislative session, the NCIA team will continue to work hard to reach legislative victories. We are nearing the 10th anniversary of NCIA and have come a long way together, from legislative victories in appropriations to the SAFE Banking Act passing the House, and we will continue to reach more legislative success in the halls of Congress. We must not lose hope during these unstable times but propel forward more unified than ever before.
Operational Excellence is basically having a goal that looks far ahead to the future of what ultimate business plans should be while analyzing every aspect of the business itself. This is accomplished by using evidence-based results to achieve a higher level of function than any other company in the same market. Whether issues are found in lean supply chain, revenue control, processes that may be unnecessary or serve a lower function than what is needed, or other areas in which money is getting tied up, Operational Excellence is a management philosophy based on a constant method of refinement. It is taking all of the thinking, ethics, and ideology of Lean Thinking, Six Sigma, and Scientific Management, and putting them into one category to cover a broad range of improvements. In this article, we will delve into how Operational Excellence ties in the cannabis and hemp industry.
Why Is Operational Excellence Important?
A company that is employing Operational Excellence will outperform its competitors in many ways, even if they are using a similar business strategy. How resources are being used will often decide which company is going to perform better. The superior company will have much lower operational risks because it will have done a proper and thorough analysis. It will have a lower operating cost because of constant improvements to enhance the information and material flow. And, it will likely have more revenue because of efforts made in the interest of saving money, which will create a higher value for customers and the business itself. Companies utilizing Operational Excellence develop the right culture for their industry while managing their processes and business in a systematic, analytical fashion.
Applications In The Industry
There are several ways this can be applied to the cannabis industry. We could speak at length about any of these topics, so we will try to stick to the most important points to watch for and ways to operate. This is much more of a state of mind than a list of ways to improve the overall success of a company. And the whole team should have this same method of thinking when operating in their respective departments because this is something that should cover the business as a whole.
Lean Supply Chain
Controlling how much inventory you have on hand is important, not only fulfill orders but keep operations moving forward while minimizing waste. As an example, farmers often want to be paid for their material immediately. If they want to sell their whole yield, you would then have to store their entire crop in your warehouse. At the end of the day, this costs money and could possibly interfere with production while trying to process the material. A better solution would be to take the entire 500,000 lb processing deal but split it up into ten 50,000 lb shipments, or five 100,000 lb shipments. In this model, the farmer is paid sooner and you do not have an oversupply of product cluttering the warehouse and workspace.
Value Stream
A value stream map is a visual tool that displays all critical steps in a specific process and easily quantifies the time and volume taken at each stage. Value stream maps show the flow of both materials and information as they progress through the process. Within that value stream is the value-added processes and non-value added processes. For example, all machines need maintenance in one form or another; however, particular circumstances will determine whether or not maintenance on a given machine will be considered value-added, or non-value-added processes. If the maintenance required is a routine scheduled maintenance, then it is considered to be a value-added process. If it breaks down because the scheduled maintenance was subpar, however, that would likely deem the maintenance a non-value process. As a rule, it is beneficial to eliminate all non-value processes in your value stream.
The Invisible Killer
You can grow yourself out of business easily. In fact, this almost happened to our company. Because we were unable to wait 24 weeks for materials to arrive before we started manufacturing, we were pre-ordering to build up our inventory. As more orders start coming in, it is still necessary to have cash available to continue manufacturing – otherwise, it is not feasible to have a surplus of inventory. Bankers told us that we might have strangled ourselves with inventory. Fortunately for us, that did not happen, and since we have been using Operational Excellence to enhance the business, growth has never been greater.
As a business owner you should always have an insight into how the operations are running. This takes it a step further by recording and analyzing the information of your cannabis operation and making decisions that are going to have the most benefit for continuous growth. Operational Excellence means you should be using a Business Execution System that efficiently and harmoniously incorporates the following components: Process Excellence, Performance Management, and Strategy Deployment.
Dr. Jon Thompson, Ph.D., Chief Executive Officer of extraktLAB is a separations scientist, entrepreneur, and inventor. As a scientist, he has a strong technical background and industry experience in analytical instrumentation, in-vitro diagnostics, biotech, mining, and homeland security markets. During his cannabis industry career, Dr. Thompson has earned a strong track record of winning and implementing medical cannabis licenses in well-regulated, medically-modeled states. Dr. Thompson has assisted numerous companies to attain their goals in cannabis and hemp manufacturing, as well as market development, strategic marketing, and worldwide business-to-business alliance formation (including international markets). He received a Bachelor of Science degree in Biochemistry, Master of Science degree in Chemistry and a Doctor of Chemistry degree–all from the University of Minnesota.
Looking Back On #10YearsOfNCIA: 2016-2017
Photo By CannabisCamera.com
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Over the last month, I’ve been taking a retrospective look at the progress NCIA has made in the ten years since its inception. While it’s been fun to look back at those early years, this week I’m excited to look at a time when cannabis policy was getting really active: 2016-2017! While this timeline is by no means a comprehensive look at everything that’s happened in cannabis policy during those years, here are some highlights:
January 2016
District judge dismisses lawsuit against the Fed, filed by the Fourth Corner Credit Union, says Congress must fix the cannabis banking problem. The same month, President Obama announces that cannabis reform is not on his agenda in 2016.
March 2016
The Supreme Court dismisses Kansas’ challenge to Colorado marijuana laws. The 6-2 vote meant the nation’s highest court would not rule on the interstate dispute, and Colorado’s legal cannabis market remains safe. “Since Colorado voters overwhelmingly passed legal recreational marijuana in 2012, we have worked diligently to put in place a regulatory framework — the first in the world — that allows this new industry to operate while protecting public health and safety,” then- Gov. John Hickenlooper (D) said following the decision. “With today’s Supreme Court ruling, the work we’ve completed so far remains intact.”
An AP poll shows that 61% of Americans support legalizing cannabis. The most recent Gallup poll on the issue, published in October 2019, shows that approval number has risen to 66%.
April 2016
U.S. Senate Caucus on International Narcotics Control holds a hearing titled “Is the Department of Justice Adequately Protecting the Public from the Impact of State Recreational Marijuana Legalization?”
May 2016
NCIA holds its 6th Annual Cannabis Industry Lobby Day in D.C., garnering over 150 attendees and participating in more than 200 scheduled meetings on Capitol Hill. That same month, the Tax Foundation reports a legal marijuana industry could mean up to $28 billion in federal, state, and local tax revenues.
June 2016
NCIA hosts our 3rd Annual Cannabis Business Summit in Oakland with 3,000+ attendees. That same month, the U.S. Senate Appropriations committee narrowly approved a marijuana banking amendment. Ultimately, the amendment did not make it into law. The amendment has not passed this specific Committee since, though we continue to try!
July 2016
Showing increased interest and momentum on this issue, the U.S. Senate Judiciary Committee holds a hearing on the potential benefits of medical marijuana. The same month, the Democratic Party included reclassifying cannabis in the party’s platform.
August 2016
This was an exciting month because we got to really see our efforts at work in the real world. Four years ago this month, the Ninth Circuit Court of Appeals ruled that due to the Rohrabacher-Farr amendment, the Department of Justice cannot use funds to enforce federal law against state-legal medical cannabis businesses.
September 2016
U.S. Attorney General Loretta Lynch says that marijuana is not a gateway drug, but that same month, FBI data showed that there is one cannabis arrest every 49 seconds in the U.S. The majority of those individuals are Black and brown and are arrested four to eight times more than their white counterparts.
October 2016
Members of Congress and the campaigns to legalize cannabis in various forms enter the final push. That month, a report also showed that Colorado’s marijuana industry had a $2.39 billion financial impact and created more than 18,000 jobs in the state.
November 2016
Five states (Arizona, California, Maine, Massachusetts, and Nevada) voted on ballot initiatives to legalize, tax, and regulate marijuana for adult use. Four of those initiatives passed, and three of them passed by more than seven percentage points.
Four states (Arkansas, Florida, Montana, and North Dakota) voted on ballot initiatives to create or expand legal medical marijuana programs. All four of those initiatives passed, with an average victory of 26.3 percentage points.
Of course, November 2016 is also when Republicans took control of both chambers of Congress and candidate Trump became president-elect Trump.
January 2017
NCIA establishes the Policy Council to serve as the industry’s “think tank” in D.C., developing and publishing policy papers to educate policymakers and other stakeholders on topics relevant to the cannabis industry. The same month, Sen. Jeff Sessions (R-AL) begins his confirmation hearing to become U.S. Attorney General. He is subsequently confirmed, bringing uncertainty to the cannabis space.
February 2017
White House press secretary Sean Spicer said that he expects states to see “greater enforcement” of the federal law against marijuana use, a move that would be at odds with a growing number of states’ decisions to legalize it. Spicer, taking questions from reporters at the daily briefing, differentiated between the administration’s positions on medical marijuana and recreational marijuana. Funnily enough, Spicer’s career lasted about as long as it takes me to smoke a joint.
The nation’s first-ever Congressional Cannabis Caucus is formed by Reps. Rohrabacher (R-CA) and Blumenauer (D-OR) with help from friends Reps. Polis (D-CO) and Young (R-AK). In the 116th Congress, Rohrbacher and Polis left Congress and were replaced by Barbara Lee, a Democrat from California, and David Joyce, a Republican from Ohio, as co-chairs.
May 2017
NCIA’s D.C. team grew from two (myself and Mike) to three, with the addition of Maddy Grant, who was our Government Relations Coordinator at the time. Since then, Maddy has become one of my best friends and was even one of my bridesmaids! If you know Maddy, you know she’s the best and NCIA is lucky to have her!
NCIA held its 7th Annual Cannabis Industry Lobby Days in Washington, D.C., where 250 industry professionals coalesced on Capitol Hill to attend over 300 scheduled meetings. Following that, there was a substantial increase in the number of cosponsors on cannabis-related bills compared to the previous Congressional session.
July 2017
The Senate Appropriations Committee voted on their equivalent of the Rohrabacher-Farr amendment, sponsored by the committee’s vice chairman, Patrick Leahy (D-VT). That amendment passed on a voice vote and was the first time ever that a cannabis-related amendment passed in such a manner. At the end of July, the Senate Appropriations Committee also adopted an amendment that would allow the Department of Veterans Affairs to recommend medical cannabis in states. That amendment passed by a vote of 24 to 7 – the most votes this measure has ever received in the Senate. The veterans’ measure did not end up becoming law.
September 2017
The House Rules Committee held a hearing to discuss amendments to the upcoming appropriations bill that will fund the federal government for the upcoming fiscal year and chose not to vote on the amendment that protects medical cannabis businesses, patients, and programs. Since the protections for medical cannabis businesses were included in the Senate’s version of the budget bill but are not included in the House’s versions, it came down to a conference committee to negotiate its inclusion, and ultimately, the provision remained in law.
December 2017
Senate Republicans passed their tax reform package into law. Sen. Cory Gardner (R-CO) introduced two amendments to the bill that targeted 280E, however, he withdrew both amendments before the final bill was voted on.
If you think reminiscing on all that was a lot, make sure you keep an eye on our blog and future issues of NCIA’s Cannabusiness Leader to learn more about 2018-2019 and the progress we’ve made more recently as we wrap up this series!
Video: NCIA Today – July Retrospective, D.C. Update, Cannabis Caucus Cyber Series Returns, and more!
In NCIA’s monthly video series, NCIA Today, host Bethany Moore shares a retrospective on the month of July, plus what to expect from NCIA’s digital events this fall. We also check in with NCIA’s Director of Government Relations, Michael Correia, to hear more about NCIA’s efforts to advance the cannabis industry’s legislative goals in D.C. during the COVID-19 pandemic.
NCIA members can join us at our second Cannabis Caucus CYBER series in the month of September.
Dates for NCIA’s rescheduled 2020 conference schedule has been announced… for 2021.
Mark your calendar for the NEW dates for NCIA’s Cannabis Business Summit and Expo, Midwest Cannabis Business Conference, and 10th Annual Cannabis Industry Lobby Days.
Plus, we announce a brand new virtual educational event taking place October 21-22, 2020!
Committee Blog: Best Practices Guide – Allergen Labeling
Determining which edible to consume is an art all by itself. Making that choice when you suffer from food allergies often makes the decision all the more challenging.
Despite the continued federal illegality of cannabis, cannabis products are still obligated to abide by federal labeling requirements regarding the disclosure and identification of the presence of common allergens, including tree nuts (such as coconut and almonds), peanuts, fish, shellfish, dairy, soy, eggs, and gluten. Labels often do identify the presence of those ingredients and sometimes even the traces thereof. Although companies are seemingly committed to following federal requirements, there is still a continued absence of additional, more specific information that could help individuals with allergies make better-informed decisions when selecting their edibles.
A commitment to providing more information in labeling of common allergens not only helps consumers but also has the propensity to battle the stigma of cannabis as an underground and unregulated industry by embracing more advanced self-regulation and increased transparency. Additional information promotes transparency in the production and packaging processes, and provides valuable information to the discerning customer in addition to promoting better business practices. With roughly one in 20 adults allergic to peanuts or tree nuts, at least 5% of purchasers are directly impacted by the information related to the presence and management of nuts in a manufacturing facility.
In the marketplace today, common label designations include “may contain traces of,” “produced in a facility that also processes” or “produced on equipment that also processes.” Rarely is more information provided. Even though broad strokes disclosures satisfy federal requirements and limit legal liability, they do not do much to inform consumers suffering from allergies who could eat something produced with care, but cannot safely or comfortably consume food products that may contain traces of. With anxiety and paranoia, a potential consequence of cannabis overconsumption, the availability of more information about the presence of allergens on a label could possibly cure or temper an unwarranted freakout. More detailed information could even help avoid emergency room visits and the related trauma and anxiety from experiencing allergic reactions or the vestiges of one. No one enjoys the associated trauma and paranoia of hives in their mouth or wheezing while under the influence of an edible because they ate something that may contain traces of and actually did contain traces of the allergen.
The “may contain traces of” designation is good for the edible manufacturer at discharging potential liability, but it does not do much for consumers that are actually allergic to the items beyond sending the signal that if they consume the product, there is a possibly a legally identifiable amount present within the edible that could potentially trigger a severe allergic reaction. The language provides little information as to why there may be traces of the allergen. For the affected consumer, the business practices used to segregate common allergens or otherwise avoid cross-contamination or contact is what is critical for determining the likelihood and magnitude of the risk of any potential contamination, and therefore the risk presented by the consumption of an edible. This language, while good for insulation from liability, is not informative as to how the traces may have occurred and has the potential to be misleading and deter purchasers that would not be deterred if the label were more accurate at disclosing where in the production chain a potential trace of contamination could have occurred.
Manufacturers currently provide notice if there are “traces of,” or if equipment or a facility contains a common allergen, but they could go further. Four potentially more informative versions of “may contain traces of” or “made on the same equipment as other items that include…” or “made in the same facility as items that include” are:
Produced in a facility, but on separate equipment,
Produced on equipment, that processes INSERT ALLERGEN(S), but using best/reasonable business practices to segregate allergens in the production and storage process.
Produced on equipment, that processes INSERT ALLERGEN(S) where the facility produces products containing allergens on different days than products not containing INSERT ALLERGEN(S).
Produced in a facility that processes INSERT ALLERGEN(S) where the facility produces products containing allergens on different days than products not containing INSERT ALLERGEN(S). All production machinery is cleaned between the productions of different types of edible products.
Cannabis edibles product manufacturers could lead the charge on providing more informative allergen disclosures by promoting the use of more descriptive labeling practices. While such a move may cost fractions of a penny in ink and packaging real estate, the goodwill it could buy is invaluable. The loyalty of the allergy afflicted consumer (and the purchasers who care for or care about them) should not be understated. If a little extra print turns one in 20 customers into a lifetime brand patron, it is probably worth the rub.
Brandon Dorsky helps clients navigate the constantly evolving global marketplace in a variety of industries, providing strategic, seasoned counsel to facilitate growth, mitigate risk and seize opportunity in the cannabis, fashion, music, entertainment and media industries. Through a wealth of experience, contacts, enthusiasm, and commitment, clients receive carefully tailored legal and consulting services to accelerate their business’s success.
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Over the last month, we’ve featured many blogs focused around key congressional races and cannabis policy reform 
Bobby Combs is National Account Executive at 
Pamela Donner is COO of 
Mark Hefner, 
Rebecca Lee Katz is an attorney at an international law firm and President of 
Retail, too, has benefited from advances in delivery technology. Today, you can order a product or service with the click of a button, pay for it remotely, and have it delivered at your doorstep. The cannabis industry is already in on these advances. In states where marijuana consumption is legal, there are apps you can use to order a marijuana product and expect a home delivery in minutes. 
Sean Dawson is the Director of IT Solutions at Office1. Office1’s 
On a normal day, the majority of the population is online. Now that many companies have transitioned their employees to work from home, or shut down altogether, even more people are spending time online. More people are on 
Adults are using social media up to 
