Committee Blog: Announcing The NCIA Best of 420 Clio Cannabis Award
The Clio Cannabis Awards, September 29, 2022 in Las Vegas at the MGM Grand
During the winter of 2021, when vaccines were not yet widely available, and many people were still in lockdown, the NCIA Marketing and Advertising Committee was determined to shine a light on those in our community who were fueling opportunity and growth during a difficult time for many businesses.
MAC Chair Kary Radestock of Hippo Packaging assembled a subcommittee tasked to amplify top member marketing efforts and thus the Best of 420 Award program was born. The 2021 event received dozens of submissions from all over the U.S. across all business sectors and budget sizes and was conducted and presented virtually. See last year’s winners here.
For 2022, NCIA and the Marketing and Advertising Committee are bringing it back and this year, it’s going to hit differently.
Through the guidance of our subcommittee co-chaired by Melinda Adamec of Gabriel Marketing and myself, Tara Coomans of Avaans Media, we’ve also enlisted Michael Kauffman of the Clio Awards, Angela Wong of The People’s Ecosystem, and Vanessa Valdovinos of Hush Chicago to provide support to this year’s process and expand this award.
The winning honoree will be presented live at the 2022 Clio Cannabis Awards to be held on September 29th at the MGM Grand in Las Vegas.
What’s Staying The Same:
NCIA invites all cannabis companies and brands, both B2B and B2C to submit their 420 campaigns—NCIA membership is not required. Budgets of all sizes and companies of all types, B2B and B2C, are encouraged to apply.
It’s still FREE
A jury of NCIA members and peers who will evaluate submissions and recognize the top entry.
What’s Changing:
Winners: There will be one winner and this winner will be chosen based on three criteria.
Judging Criteria
Criteria: Judges will evaluate entrants in three ways: Community Impact, Creativity, and Results.
Community Impact: How did your campaign bring your community together? How did it highlight the best of the cannabis community to others? Did it support an advocacy campaign such as DEI, sustainability?
The cannabis industry is showing the world how an industry-aligned can create positive change. How does your campaign positively impact either the cannabis industry, your customers, the environment, underserved or unrecognized cannabis users, or businesses?
Creativity: How creative was your overall 420 campaign? How creative are you in getting out your message and implementing the campaign?
Results: Was it an effective campaign by your own goals and KPIs?
This category is one of the most important because our judges will judge the results based on your goals. Regardless of budget size or market size, show us your results. Results are those KPIs that are important to YOU. Make sure you grab those baselines so we can see your progress!
Judges:
Selected from a diverse slate of NCIA members, including past winners and NCIA committee members from a cross-section of perspectives, including the Sustainability Committee, the Diversity and Equity Committee and the Marketing and Advertising Committee.
Submission Process and Deadline
Submit your company’s campaign today by following the link below! Act fast as entries will be collected over the following six weeks, with a deadline to submit by Friday, Jul 22, 2022.
Good luck to everyone and have a fantastic 420! Submissions are being accepted now! We look forward to seeing your exceptional campaigns!
About Clio Clio is the premier international awards competition for the creative business. Founded in 1959 to celebrate creative excellence in advertising, Clio today honors the work and talent at the forefront of the industry in a variety of specialized fields, including: sports, fashion, music, entertainment, cannabis, and health. As a leading authority on the diverse and ever-changing creative landscape, Clio celebrates creativity 365-days-a-year via its global ad database Ads of The World and its content platform Muse by Clio. https://clios.com/ https://musebycl.io/ https://www.adsoftheworld.com/
About Clio Cannabis Expanding on Clio’s enduring reputation for establishing best-in-class programs honoring creative ideas in a variety of specialized verticals, Clio Cannabis celebrates the creators at the forefront of cannabis marketing and communications. Launched in 2019, Clio Cannabis sets the bar for creative work in a rapidly growing industry, builds a greater understanding of a developing category, and elevates creative contributions from top talent and agencies. https://www.cliocannabisawards.com/
Media Partner
For hints and tips on winning award programs, with hints and tips from the entire Marketing and Advertising Committee, listen to the replay of our recent webinar:
An Optimistic Congress Aims to Legislate a Bipartisan Cannabis Omnibus Package
By Sadaf Naushad, NCIA Intern
As the cannabis industry progresses nationwide, the public demands Congress to pass major cannabis reforms. After months of opposition met among Congress members, a breath of fresh air awaits cannabis advocates, lobbyists, and consumers.
Last Thursday, two crucial congressmen revealed objectives to establish an extensive package of incremental cannabis proposals.
While Senate Majority Leader Chuck Schumer (D-NY) expects to file the final version of the Cannabis Administration and Opportunity Act (CAOA) sometime this summer, lawmakers are using the draft language as a guide to propose an alternative backup bill in creating a cannabis “omnibus” package.
With the wide-ranging package garnering support across Democratic and Republican lawmakers, industry insiders have high hopes that both chambers could come together to endorse an effective, bipartisan bill by the end of this year.
Let’s discuss the potential inclusions within the bipartisan cannabis package.
Recently, a number of Congress members have discussed the possibility of creating a new cannabis bill that would comprise several incremental measures, including provisions focusing on banking, access to medical cannabis for veterans, research expansion, access to SBA programs, drug sentencing reformations, and more.
Lead sponsor of the Secure and Fair Enforcement (SAFE) Banking Act, Rep. Ed Perlmutter (D-CO) is hoping to incorporate protection for financial institutions operating with state-legal cannabis businesses in a potential package. According to Rep. Perlmutter, members also have interest in including Rep. Dave Joyce’s (R-OH) Harnessing Opportunities by Pursuing Expungement (HOPE) Act, a bill designed to expunge prior marijuana convictions. Additionally, lawmakers are deliberating over granting cannabis businesses access to SBA loans and services that are obtainable to every other industry, a reform initially advocated by Sen. Jacky Rosen (D-NV).
These four concerns –- veterans, research, expungements, and banking – constitute a small portion of the package’s considerations.
Congress will also potentially consider including a non-cannabis item as part of the wider deal, known as the EQUAL Act, which looks to alleviate racial disparities within the criminal justice system by eliminating the federal sentencing disparity between crack and powder cocaine.
Leader Schumer, however, faces the requirement of having a 60-vote threshold to pass legislation. Although the chamber comprises a slim majority of Democrats with the vast majority of GOP members opposing numerous past bills, the 60-vote requirement may be attainable. In contrast to Schumer’s CAOA, indications are that the incremental package has more broad bipartisan support.
Though members have not reached an official deal as these major reforms remain under deliberation, Congress members are not abandoning their efforts to push for a broader-based CAOA bill.
Currently in the bicameral conference committee remains the large-scale manufacturing bill, known as the America COMPETES Act. Leader Schumer has rejected attempts to integrate the SAFE Banking Act as currently written into the COMPETES Act, alleging that it may weaken the ability to approve a slightly larger cannabis reform package. Having passed the House six times, industry insiders feel certain that the Senate will authorize the SAFE Banking Act later this year.
Altogether, the above-mentioned legislation would come up short in federally descheduling cannabis; however, these provisions may acquire the support necessary to reach U.S. President Biden’s desk.
Committee Blog: Do’s and Don’ts of Cannabis Influencer Marketing on Social Media
By NCIA’s Marketing and Advertising Committee, Helen Mac Murray, Mac Murray & Shuster LLP, and Dan Serard, Cannabis Creative Group
The requirements and restrictions surrounding paid advertising on social media are hardly a secret. Cannabis businesses have to tread carefully to avoid getting shut down or banned completely from online platforms.
However, there is one popular way to leverage the power of social media without risking your account: Influencer Marketing.
An influencer is any public figure, celebrity, creator, or individual that has the power to affect the purchasing decisions of others because of their authority, knowledge, position, or relationship with the audience. Influencers are typically content creators that actively engage in a select niche online, such as Lifestyle, Fashion, and even Cannabis.
Influencer marketing is a fantastic way for cannabis brands and dispensaries to leverage the power of social media without getting tangled up in the mess of rules and regulations. However, that doesn’t mean there are no rules and regulations for influencer marketing.
Here are some do’s and don’ts of cannabis influencer marketing on social media:
DO select your influencer partners carefully.
Marketers and business owners can be quick to forget that influencers are not just marketing tools, but rather, people as well. In that regard, influencers are their own brand. Their entire digital presence is curated carefully to align with their unique values and interests.
This means that when cannabis brands are interested in working with influencers, they have to be extremely careful who they choose. Not only does their character reflect on your brand, but also because it’s going to cost you a pretty penny.
Therefore, focus on building meaningful relationships with influencers and popular creators. Add value to their community and don’t view them as a tool in the toolkit. When you manage these relationships the right way, you turn one-time influencers into long-time brand ambassadors.
If you are partnering with someone who will be making claims about your brand or promoting your product in any way, be sure to:
Examine their credentials
Make sure they actually use and love your product
Evaluate whether their values align with your brand’s values
Check that their engaged audience is your target audience
One of the biggest benefits of influencer marketing across industries is that it is a relatable way to sell products. If your influencer partners or brand ambassadors do not actually use and love your product, the partnership will lose its value. Both your brand and the influencer will lose credibility.
When selecting influencers to partner with on campaigns, take time to do your research. Observe their regular social media activity as a follower, be patient during the agreement phase, and understand that this is a long-term partnership.
DON’T run or re-run any paid influencer ads without consent.
After the Borat debacle in Massachusetts, cannabis brands have (rightfully) become paranoid about using influencers or celebrities in their marketing campaigns.
While memes on social media are perfectly fair game, a disclaimer or two never hurt anybody if you want to cover your tracks. However, paid ads are a completely different ball game.
For those who are wondering what you can and can’t do when it comes to using a celebrity or cannabis influencer’s image or likeness, here’s a general rule to keep in mind: Do not run or re-run any paid advertising with a public figure without express legal consent.
When it comes to influencers, this means you need to be very specific on the terms of your engagement. For instance, if you are simply looking for a one-time product endorsement on their own channels, you can share these assets from their account to yours. However, you are not allowed to take those assets and use them in future campaigns, especially paid ones, unless you have explicit permission from the influencer.
In other words, if you want to be able to run any cannabis advertising campaigns with partner content, be sure to let the influencer know during the agreement phase, and prepare your budget accordingly.
DO make sure your influencer partners disclose your relationship with their audience.
Disclaimers are extremely important on social media and other marketing platforms when working with influencers. They provide your audience with transparency and protect all parties from any legal backlash.
If you have any relationship with a cannabis influencer of any kind (celebrities, bloggers, etc.), make sure they disclose that to their own audience when engaging in formal partner campaigns with your brand.
Using a descriptor in the caption or image, like #ad
Disclosing any paid travel, stay, or product exchanges
Add disclaimers in both the text and the media
Disclosing material connections with a brand is an important requirement for influencers, but brands are also liable for influencer posts that violate the law. You never want your cannabis brand to be associated with anyone that might find themselves in hot water, so be sure to make these terms clear when partnering with influencers.
DON’T run ads without proving your product claims.
This may go without saying, but when it comes to paid advertising in cannabis, throwing spaghetti at the wall and seeing what sticks isn’t really a good idea. When you’re running ads – whether it is on a traditional medium, like a billboard, or a digital medium, such as pay-per-click ads – it is important to do your due diligence.
Don’t wait to prove your product claims until after the ads have run. Not only will this get you in trouble with the FTC, but you will appear deceitful to your customers and quickly lose their trust.
Instead, ensure you have third-party lab testing, credible experts (like cannabis doctors or budtenders) able to speak to your specific product, and/or the receipts to back up your claims if challenged.
DO be cautious when using consumer testimonials about your product.
Existing customers are the best marketers for your brand. Using reviews to show social proof of your product is a great idea. In fact, any cannabis marketing professional will tell you that it is encouraged to show off testimonials on social media, websites, email lists, and more.
Only use the words of your customers if you have express permission to use them on other channels, or if they are already posted in public forums, such as Google Reviews.
It is also highly recommended that you only use testimonials if they reflect the results of most of your customers. You can’t use consumer testimonials if you do not have substantiation that the endorser’s experience is representative of what consumers will generally achieve unless the advertisement clearly and conspicuously discloses the generally expected performance in the depicted circumstances, and the advertiser must possess and rely on adequate substantiation for that representation.
While it’s always helpful to highlight benefits that real people have experienced, disclaimers should always be made if anything sounds too close to a health claim. For instance, if a customer comments on an Instagram post that your product has made their anxiety disappear, you’ll want to gain express permission from them to use their words as a testimonial, and you should add a note when posting that such claims one customer’s unique experience and can’t be interpreted as medical advice.
DON’T bring on a marketing company only for damage control.
Cannabis marketing agencies are a powerful tool for a brand or dispensary. From social media and email marketing to search engine optimization, branding, website design and development, and more, these companies are experts at crafting a digital presence for your business.
However, good marketing only goes so far. Even the best cannabis marketing professional or influencer can’t cover up for false information, a bad product, poor customer service, or just bad business overall.
Additionally, even when marketing companies have industry-specific expertise, they are not lawyers. As a brand, you can’t rely on your agency to know the exact letter of the law.
Instead of using social media or your marketing efforts as damage control, be intentional about building a high-value brand and bringing on a marketing agency that can make you stand out from the crowd in good conscience.
That means, start from the ground up, provide accurate information, and protect yourself and your brand from any liability by being cautious of any cannabis advertising and marketing rules and regulations.
Using cannabis influencers for your social media marketing campaigns
Developing a strong presence on social media isn’t just impressive, it’s important for your audience and potential customers to buy into your brand. Whether it’s paid or organic, influencer marketing is a great workaround to some of the more harsh realities of social media rules and regulations for cannabis brands and dispensaries.
When you harness the power of these public figures and their engaged communities online, you can take your brand to new heights.
Member Blog: Three Reasons Why Cannabis Business Owners Outsource Their Accounting
Every entrepreneur knows that staying ahead of business demands is challenging and time-consuming. Unless you have access to enough capital to hire a large team of dedicated employees, you’ll probably have to juggle a wide range of tasks. From promotional marketing to financial forecasting, it seems cannabis business owners always have their plates full.
With this being said, it’s important to understand that taking on too many tasks at once can have negative consequences. The quality of your work is likely to suffer, and you could end up making mistakes that impede your ability to drive growth. Not to mention, doing everything on your own can leave you feeling tired and burnt out.
Unlike companies in many other industries, the cannabis industry is closely regulated, meaning entrepreneurs have to conduct rigorous administrative work. Failure to stay on top of state regulations could result in reputational damage, lost revenue, and even the loss of your business.
So, what’s the solution? Whether you’re a grower, manufacturer, or dispensary owner, outsourcing your accounting burden could significantly lighten your workload. As well as ensuring your accounts are accurately maintained, enlisting the services of a reliable firm will free up time for other important jobs, such as product and vendor management, marketing and promotion, partnership-building, and much more.
Of course, you shouldn’t rely on the first accounting firm you stumble across to look after your financial affairs. As an entrepreneur in the cannabis industry, you must find an accounting firm with knowledge of the sector – and, of course, a non-judgmental approach to hemp and cannabis sales.
This article will explore three key ways working with a cannabis-oriented accounting firm could significantly improve business outcomes.
1. You’ll Maximize Profits by Knowing Your Numbers
To see long-term success in your business endeavors, it’s important to know your numbers forwards and backward. Your financial records tell the story of how your company has evolved from start to finish. If you don’t have a comprehensive understanding of your business’s story, you’re not getting the full picture.
By hiring an accountant, you can rest assured knowing that you have someone on your team to oversee all of your accounting and record-keeping initiatives. An accountant will keep track of tax costs, payroll expenses, retirement plan costs, office equipment purchases, marketing & promotional fees, and much more. This means you can avoid unnecessary expenses and ensure your business is as fiscally responsible as possible.
If you’re overspending, they’ll help you cut back and offer valuable advice about maximizing profits while fulfilling key business goals. If you’re prone to overspending or don’t feel confident with complex mathematics, hiring an accountant could represent one of your smartest business moves.
2. You’ll ensure your business remains compliant with state and federal laws
The rules and regulations surrounding cannabis sales can be confusing and hard to follow. While many states have legalized the sale of medical marijuana, the substance remains a class 1 substance under federal drug laws. Because of this, there is uncertainty surrounding whether banks should service clients working in the cannabis industry and how to handle the Internal Revenue Service’s (IRS) tax regulations surrounding “illicit substances.”
By selecting a skilled accountant with knowledge of the cannabis industry, you can avoid such confusion and avoid penalization. By hiring the services of a company like Green Space Accounting, you can ensure the following:
That setting up your bank accountant is quick and easy: An accountant will know which documents to bring when setting up a new bank account, including your marijuana license, information about your sales tracking system, legal documents about operating agreements, Employee Identification Numbers (EINs), Articles of Incorporation, and more. Failure to present such documents could slow down the process.
That you remain compliant with tax code 280E: This rule states that taxpayers cannot claim deductible expenses related to the sale of illicit substances such as cannabis. Given that cannabis remains illegal on a federal level, it can be tricky to get around this law and make the most of business-related write-offs. Fortunately, you can write off expenses related to the cost of goods sold (COGS), an exception that your accountant will help you navigate to ensure you hang on to as much profit as possible.
That you maintain a healthy relationship with your bank: Hiring an accountant will help you maintain an open and honest relationship with your bank, as they will know precise details about your incoming and outgoing expenses. Failure to provide accurate numbers or meet regularly to discuss the details of your accounts could make your business seem untrustworthy. In the long term, this could lead to legal issues or the closing of your account.
3. You’ll have time to focus on core business tasks
One of the primary reasons entrepreneurs outsource tasks is to make time for the creative aspects of growing a business. Driving business growth requires much more than smooth day-to-day operations and well-maintained accounts. It also requires the ability and motivation to set your business apart from competitors and present customers with dynamic new offerings.
Doing the creative work involved with entrepreneurialism is tricky if you’re faced with a pile of administrative tasks. By enlisting the help of a professional accounting firm, you’ll enhance the quality of your business’s accounting work while freeing up plenty of time for other tasks, such as:
Expanding your product line or service offering
Selling your products across new platforms
Investing in customer acquisition
Conducting industry research
Researching new business tools
Drawing up a growth plan
Generating new business models
The Bottom Line
Managing the financial side of your business can be daunting, complicated, and most of all: stressful. If you own a business in the cannabis space, it’s wise to consider outsourcing your accounting initiatives to an industry professional.
Whether you are a start-up, a growing business, or a multi-state operator, specialized firms like Green Space Accounting can help you with intimate knowledge of cannabis rules and regulations.
Green Space Accounting is one of the leading cannabis accounting, tax, and advisory firms in North America. Our client service philosophy has helped forge an excellent working relationship with dispensaries, grows and ancillary businesses in the space. From accounting and tax services to business consulting and financial planning, we possess the knowledge and experience needed to assist you with your current and future needs.
LaKia Bourne has 20+ years of experience as an accomplished and trusted accounting professional. As a women-owned and minority-owned accounting firm, LaKia has a passion for working with other small businesses and engaging in the local community, and her values drive her overall career goals and mission to uplift businesses and encourage financial competency through reliable accounting services.
With her exceptional credentials and years of accounting experience, JoAnne Williams is a leader in every area of accounting and business consulting. Driven by a deep commitment to client satisfaction, JoAnne has helped non-profits and businesses of all sizes across various industries. Client satisfaction is her number one goal, making her a leader in every area of accounting and business consultation.
Committee Blog: Everything You Wanted to Know About Cannabis Facilities but Were Afraid to Ask Field Guide – Part 4 – Retail
by NCIA’s Facilities Design Committee Jacques Santucci, Brian Anderson, David Vaillencourt, and David Dixon
Continuing our five-part series on the behind-the-scenes workings of the legal cannabis industry. This series focuses on all of the inner dealings and industry advice from established professionals to craft this unlimited How-to-Guide to assist you in setting up your own facility. These articles cover cultivation, extraction, infused products, and retail facilities as well as support activities. In general, remember to be compliant with all local rules and regulations and contact a licensed contractor and industry expert.
Part Four, Retail & Dispensaries: Top Things to Consider When Planning Your Cannabis Dispensary and Retail Operations
Retail and dispensary design presents challenges that are distinct from the other areas of cannabis production and manufacturing. The biggest difference is that the design must now account for customers as well as employees. Listed below are a number of issues that an operator should consider as they are in the process of designing their retail or dispensary operations. Always remember to be compliant with all local rules and regulations.
Security Camera: Minimum Area of Coverage
Most states require a hundred percent minimum security coverage in any area where marijuana products are stored, displayed, or sold. Designing a camera system and placements to avoid “dead spots’ ‘ (i.e. areas with no camera coverage) can be challenging, especially if the operation is taking over an existing space, as opposed to building a new facility from scratch.
Bonus Consideration: Think about having an HVAC system specially dedicated to your security room. Security rooms for video monitoring and storage can sometimes be an afterthought. But these locations should be treated more like computer server rooms as opposed to standard office space. And with the amount of technology placed in a (typically) small space, things can overheat rather quickly. This can lead to damage to the system and ultimately, you could be out of compliance for video storage and retention.
Another Bonus Consideration: do not forget about placing security cameras to cover the entrance and exit points to the parking lot. Think about the field of view around doors, especially if the door is near the corner of the building or if there are other obstructions that can block the camera’s view of the area. Multiple cameras may be needed for this critical function. Contact a licensed professional.
Security Camera: Minimum Data Storage
Video storage and retention requirements for cannabis facilities are fairly stringent. Typical requirements include 90-days of on-site storage and up to five years of off-site storage. Off-site data storage is required for future legal needs. Many states require a minimum video resolution of 1080p. The video storage needs for even a moderately sized facility can amount to petabytes of data. For this reason, many facilities outsource this function at least in some measure. If you do decide to handle this all yourself, you should be sure that you have the technical expertise on your staff to handle this potentially complex technical issue.
Security Alarm: Monitoring
Like it or not, retail cannabis facilities will probably always be targets for crime. Having a security system probably seems like a no-brainer. But simply having an alarm system isn’t typically enough. You will need a system that is actively monitored. This allows the company to initiate actions on your behalf depending on the alarm status (e.g., call the police or fire department in response to a remote alarm). Your alarm should be monitored by at least one reputable company. Redundancy might not be needed, but check to be sure that you are in compliance with local rules and regulations. Talk to your licensed professional.
Security: Line of Sight
Customers should only see the public retail area of the location. Customers should not see the back-of-house operations. There is no need for them to see how business is conducted other than at the sales counter. Similarly, there is no need for customers to be able to view the offices, inventory areas, working areas, employee break room, etc. Keeping these areas private helps to avoid bad actors from learning operational routines that might make it easier for them to exploit.
Safety and Injury Handling
This is an easily overlooked area but can definitely get your dinged upon inspection. Be sure you have the appropriate amount of first aid kits and burn kits onsite as reunited by local regulations. Pay particular attention to the regulations about the placement of these kits as they are sometimes required to be within visual distance of specific rooms within your facility. It can be a hard pill to swallow to not be able to get your operation certificate for forgetting such a simple item, but it happens all too frequently.
Employee Access
Having a non-customer door or access point is a best practice. Non-customer access points are where employees and products are brought into the facility without customer line-of-sight. In some states, this is a requirement so check to be sure your facility is in compliance with laws and regulations.
Product Delivery
Getting cannabis products into a retail facility is a critical part of the merchandise flow and one of the most vulnerable points for theft. For maximum safety and control, consider the use of an air-lock/man trap/sally port door arrangement. If not possible due to location or architecture, planning for business hours separation and process can keep customers separated from deliveries.
Employee and Counter Safety
The counters where transactions occur in a cannabis retail setting can pose some risks especially since most facilities are cash-based operations. An open style counter can open up opportunities for theft. Consider a security barrier counter. The idea is to attempt to prevent customers from having access to products, cash, or employees where possible.
Security: Egress
Customer flow can be somewhat challenging, especially in facilities that have a registration lobby that is physically separated from the retail sales floor. Having separate entry and exit doors for customers can help with the flow of customers. Not a requirement but potentially a good customer experience design.
Customer Environment
Dispensaries and retail locations can be busy places at times. In COVID times, this can be a big issue. But even under non-pandemic circumstances, there may be a need to control the number and spacing of customers for both safety and privacy. Social distancing- the process of limiting the number of customers for the available space within the building- can be enhanced through various design elements. These can range from the use of rope and stanchion barriers, to signage and floor stickers.
Lobby design for restricted access – if access to the sales floor is restricted to registered customers, a secure lobby space should be provided with a separated check-in space and access-controlled doors both for customer entrance and egress.
And do not forget bathroom access for customers. You can have a single facility that is unisex but it should also be ADA compliant.
Environmental Consciousness
Unfortunately, like most other retail spaces, cannabis retail still generates a significant amount of waste. And much of it may be recyclable. Business recycling bins should be provided.
Energy-saving considerations can also be important for retail facilities. Motion detecting light systems can reduce energy consumption in non-occupied spaces. At the very least, interior lighting switches should be located in the same area for easy use upon space exit. HVAC systems should have an occupied and unoccupied night setback capability.
Parking Lot
Depending on the total number of employees and customers you anticipate visiting your business at its peak times, you will need to design a minimum number of accessible parking spots.
If curbside pickup is legally allowed in your area, be sure to map out and reserve spaces exclusively for this activity. It should be close to the exit door where the product will be delivered to the customer. Remember to keep parking spaces for handicapped people and even maybe for motorcycles.
Happy PRIDE! NCIA Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.
Make the investment, take the time, and do the work to position yourself for success in the Empire State!
Equity Member Spotlight: Ontogen Botanicals – Dr. Adrian Adams
NCIA’s editorial department continues the Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
Tell us a bit about you, your background, and why you launched your company.
Hello, I’m Adrian Adams, EdD. I spent a decade teaching Biology and Chemistry as well as coaching football. I chose to spend several years as a stay-at-home dad (the hardest job by far) and then worked in the pharmaceutical industry. I know many of the physicians in my area. While at dinner one night with a couple of doctors, the conversation revolved around having to combat the misinformation that patients come in with from “Dr. Google.” Minutes later, one doctor asked the others what they were saying to the increasing number of patients who come in asking about cannabis therapy. There was a prolonged silence until another doctor said “I just tell them I don’t know anything about that and to look online.”
Another doctor said, “me too.” The irony within the few-minute span was worthy of a fork drop. The FDA has approved CBD as a medicine. To me, not educating a patient about a legal, safe, and effective treatment option meant they just didn’t have the cannabis knowledge. That also meant more legal, safe, and effective products needed to be made for doctors and their patients. In that moment, Ontogen Botanicals CBD was born.
What unique value does your company offer to the cannabis industry?
We offer reduced costs, which can be a barrier to entry for consumers. And a deep knowledge of the intersection between cannabis and medicine. Physicians are a choke point for the industry that is overlooked. Simply put, doctors are good people. Most of them have simply had zero training on the endocannabinoid system as it was only identified in the 1990s. Ontogen Botanicals believes if they knew better, they’d do better. We offer doctors the information to make an informed decision on the utility of cannabis for their patients. We also offer the ability for doctors to provide legal cannabis products for their patients right in their office as part of a sound treatment plan.
Ontogen provides effective CBD products that are truly full-panel lab tested for safety. We strongly believe in starting at a low dose, which also lowers cost. Using the least medication necessary is part of medical training. Low-dose products work for many people and reduce the cost barrier of entry to try CBD and other cannabis products.
What is your goal for the greater good of cannabis?
We want to increase the healthcare provider and patient knowledge of what this plant can do, as well as provide quality of life-improving products. Now we’re expanding to help the population at large. Medically speaking, cannabis is as good as advertised. The more people use it, the more legitimate the industry becomes.
Cannabis gets a bad rap for being a gateway drug to the opioid crisis. In fact, doctors are beginning to address the pain that often starts and underlies chronic opioid use. You cannot pull opioids and not address the pain that drives many folks back to opioids. Regulated cannabis can reduce pain without the many harmful side effects of opioids – especially unregulated heroin.
With industry growth, and Ontogen Botanicals‘ growth, will come the capital for Ontogen to address the challenges that poverty creates for people who may have much less access to healthcare and prescription drugs to get the medicine they prefer. There is enough money in cannabusiness to use it for social good.
What kind of challenges do you face in the industry and what solutions would you like to see?
A big problem for any small business is finding the right people to do business with. Minority business owners face discrimination and mistrust when trying to do business in general. Now add cannabis to the equation. I’ve been asked for $5K just for the right to open a business checking account.
Groups like NCIA, MCBA, and Minorities for Medical Marijuana help us find each other to do business with as well as bridge the gap between us and traditional business communities like banking for access to capital.
This industry has shown the ability to help remediate the cannabis criminalization harms done to minorities during the war on drugs. Big tobacco and many other industries are already investing and awaiting federal law changes. I fear that once the flood gates open to large companies investing billions of dollars, the feeding frenzy will create an extinction-level event for smaller minority-owned companies. We need federal and state-level legislative dams in place before then to protect minority-owned smaller businesses.
Why did you join NCIA? What’s the best or most important part about being a member through the Social Equity Scholarship Program?
I joined to try to help advocate for social equity and social justice for minorities to have a once-in-a-lifetime chance to start an industry. The best part about the NCIA Social Equity program is that it brings minority entrepreneurs together weekly to support each other. We’ve locked elbows, pick each other up in hard times, and celebrated the good.
Member Blog: Key Metrics to Track & Mistakes to Avoid for Cannabis Retail Success in 2022
by Gary Cohen, Cova Software
Despite the pandemic, the cannabis industry has proven to be recession-proof and has grown exponentially over the past few years. Cannabis retail sales in the US are projected to top $30 billion in 2022, and as more states jump onto the legal bandwagon, competition will intensify. As such, dispensary owners must ensure that they are using data and analytics strategically to measure the health of their business. Many cannabis retailers fail because they don’t track crucial dispensary metrics or make avoidable mistakes.
Cannabis dispensary metrics are the data points that you must track regularly to help in better decision-making. Business intelligence reports generated via these metrics help you monitor your daily dispensary operations and create projections for future sales and required inventory. A robust cannabis POS system with advanced analytics and reporting capabilities collects information from various sources and unifies them into a single repository so that you can extract maximum insights for the growth of your retail business. By tracking some of the following important metrics, you can implement strategies to increase dispensary profits, enhance employee productivity, forecast inventory, and elevate the customer experience.
Cannabis Sales & Profits Metrics
Number of Products Sold per Transaction
Average Sales Value
Total Sales for a Period
By tracking the average basket size and transaction value, you can evaluate your customer buying habits and ideal price points and create your marketing and promotional campaigns or upsell opportunities accordingly. Implementing strategies will help you increase these metrics, manage inventory and employees efficiently during your busiest sales periods, and thus, grow your dispensary profits.
Staff Productivity & Dispensary Traffic
Individual Budtender Sales
Busiest Sales Days/Hours
Discounts and Refunds
Tracking individual budtender sales on your POS system will help you determine your top performers and aid in staff scheduling. Those employees who have higher sales per transaction must be scheduled during your busier hours of the day, and those who may not be performing can be offered training on strategies like deals, upsells, cross-sells, and bundles. Also, potential fraud can be identified by tracking discounts or refunds offered by employees.
Target Market & Customer Retention
Customer Demographics
New vs Returning Customers
Customer Lifetime Value
Segmenting your target market helps design a more customized experience based on age, location, values, buying behavior, etc. By tracking each customer’s average number of transactions over a period of time, you can determine their lifetime value and better tailor your dispensary’s promotions and upselling strategies through targeted marketing campaigns. These metrics help curate an enhanced shopping experience and increase customer retention.
Inventory & Product Performance
Inventory Turnover
Shrinkage
Top-selling Product Categories
Inventory turnover measures the number of times you sold through your entire inventory in a given period and allows you to determine how much of your cash flow is tied up in inventory. Shrinkage is the difference between the inventory you have on paper and the actual inventory in stock and helps you identify theft. Also, tracking your top-selling and lowest-performing products or categories can help in crafting strategic promotions and better inventory planning decisions.
Keep up With Changing Times
Successful cannabis retailers track top-selling products, profit per product, and all other metrics highlighted above, and use this data to make business decisions. If you have a robust and flexible cannabis retail platform that offers you these detailed data insights and can scale and adapt when needed, your dispensary will always stay ahead of the curve.
Learn in detail about all the mistakes to avoid and secrets to succeed in the cannabis retail industry by downloading Cova Software’s e-book, “Why Some Cannabis Retailers Fail”, which presents cautionary tales of what not to do if you want to thrive in the dispensary business.
Gary Cohen is the CEO of Cova Software, the fastest growing technology brand in the cannabis industry. Cohen’s focus has been driving the company’s overall strategy, including its vision, go-to-market plan, and strategic development. Since joining the cannabis industry in 2016 and launching Cova commercially in 4q17, Cohen has led Cova to dominate the enterprise sector for dispensary Point of Sale, while forging client relationships with hundreds of single-store retailers across North America.
With Cova’s cannabis POS and its excellent integrations with eCommerce and delivery services, the online order automatically pops up for the budtender to tender the sales, and the POS system updates inventory once payment is approved. Cova offers multiple eCommerce solutions to choose from, as per your needs and budget, and you can legally sell cannabis online stress-free while staying compliant with strict government regulations.
U.S. Federal Appeals Court Legalizes Delta-8 THC, Setting Precedent for the Cannabis Industry
By Sadaf Naushad, NCIA Intern
Thanks to the Agricultural Improvement Act of 2018 (2018 Farm Bill), hemp is now federally legal, permitting U.S. farmers to cultivate, process, and sell hemp. Since its passing, however, businesses in the hemp industry have found themselves in a legal gray area.
With the 2018 Farm Bill eliminating restrictions on the psychoactive cannabinoid delta-8 THC, the companies deemed their delta-8 THC products within legal guidelines. Several jurisdictions disagreed, calling for clarification on the status of delta-8 THC.
Last week, the U.S. Court of Appeals for the Ninth Circuit addressed the dilemma, claiming delta-8 THC products as federally legal.
Let’s consider what delta-8 THC legalization means for the future of the cannabis industry.
Because recreational cannabis use remains federally illegal, delta-8 THC products continue to gain popularity nationwide. Manufacturing developments have led to enhanced consumer products, in which cultivators safely extract delta-8 THC cannabinoids from hemp plants.
While delta-9 THC constitutes a major psychoactive cannabinoid in the marijuana plant, delta-8 THC appears in trace amounts of the plant. Its psychoactive properties grant consumers gentler side effects compared to delta-9 THC.
On Thursday, a three-panel judge of the U.S. Court of Appeals published their opinion regarding delta-8 THC, ruling products containing the psychoactive ingredient as federally legal. According to the panel, delta-8 THC qualifies as a legal substance under the present federal definition of hemp. Federal law outlines hemp as “any part of” the cannabis plant, in which “all derivatives, extracts and cannabinoids” with less than 0.3% delta-9 THC by weight are allowed.
Had U.S. Congress unintentionally created a loophole leading to the legalization of delta-8 THC, the U.S. Federal Appeals Court stated that Congress should be responsible for resolving the issue. The panel specified that they would not replace its own judgment with Congress’ policy rulings. In the meantime, the Court defines the federal hemp law as “silent with regard to delta-8 THC.”
According to a Politico article, “Members of Congress have proposed fixes to federal hemp laws that would close this loophole. Rep. Chellie Pingree (D-Maine) introduced a bill in February to limit hemp and hemp products by calculating the total THC rather than focusing on Delta-9 THC. At the same time, state hemp regulators are voicing for a similar change advocating for the 1 percent total THC definition of hemp. Meanwhile, some states have moved to ban the sale of Delta-8 THC products or to regulate them similar to recreational marijuana.”
NCIA takes a strong position that Delta-8 products and any other psychoactive cannabinoids must be restricted to adults over 21 and regulated by the states so that these products are subject to the same testing requirements, track-and-trace rules, and excise taxes as other adult-use cannabis products.
Furthermore, if you are interested in learning more or getting involved with NCIA’s Government Relations work please contact Madeline Grant at madeline@thecannabisindustry.org to schedule a call. As the oldest and largest trade association, our Government Relations team has been hard at work for over a decade educating and working with congressional offices. NCIA held its Virtual VIP Lobby Days last week, May 16-19 on Capitol Hill. NCIA’s Evergreen members participated in congressional meetings all week long to advocate and educate members of Congress(s) and staff on the importance of cannabis policy reform. We discussed the importance of keeping the Secure and Fair Enforcement (SAFE) Banking in the America COMPETES Act and descheduling cannabis at the federal level. You can read more about cannabis and banking from last week’s blog HERE.
NCIA members were able to share their personal stories about being in the cannabis space and relay their expertise to further understanding of the struggles and hurdles cannabis businesses face every day. There is never a time more important than now to support NCIA’s efforts for cannabis policy reform.
Member Blog: Illinois Adult-Use Dispensary Applicants Hope Licensing Process Doesn’t Go Up in Smoke
Recently, after delays in issuing any adult-use dispensary licenses, Illinois has attempted to push ahead with simplifying the application and issuance process. Interestingly, this has occurred even as recent developments in ongoing litigation indicate potential further delays in issuing the previously awarded licenses that are currently in limbo, and in one case, even threaten to upend the entire process.
Delays and Initial Lottery Announcement
On September 3, 2020, after multiple delays, the Illinois Department of Financial and Professional Responsibility (“IDFPR”) announced the application scoring results for the initial 75 new adult-use dispensary licenses to be issued under the Illinois Cannabis Regulation and Tax Act (the “Act”). Only 21 of the 900-plus applicant groups had achieved a perfect score, and the available licenses would be awarded via a series of lotteries involving only those applicants. Although all 21 applicants with a perfect score were deemed too qualified for “social equity” status under the Act, there were public allegations that only 13 of the 21 accepted applicants were actually owned and controlled by people of color.
Faced with multiple lawsuits claiming various flaws in the process, the Governor suspended the initial lottery. He announced that IDFPR would distribute Supplemental Deficiency Notices explaining where applicants missed out on points, and providing an opportunity to correct any identified issues. Unfortunately, this satisfied neither the excluded applicants nor those applicants who had already received a perfect score, and litigation continued. As of May 1, 2022, none of the proposed new adult-use licenses have been issued.
HB 1443 and New Lotteries
In July 2021, the Illinois legislature adopted H.B. 1443 in an attempt to address social equity concerns and expedite the issuance of dispensary licenses. It established procedures for three adult-use dispensary lotteries to occur in July and August of 2021, in which a total of 185 adult-use dispensary licenses were to be issued.
The first lottery, for 55 new licenses, included only applicants that received 85% or more of the available points. The second lottery, also for 55 additional licenses, included applicants that received a score of 85% or higher and met the ownership and control requirements for Social Equity Applicants. Applicants that qualified for social equity status solely by hiring qualifying employees were excluded from this lottery. The final lottery, for the original 75 licenses, included the 21 applicants who initially received a perfect score, as well as an additional 134 applicants who perfected their application using the Supplemental Deficiency Notice process. Although IDFPR announced the winners, none of the licenses have been awarded yet due to the ongoing litigation.
More recently, on March 15, 2022, Governor Pritzker announced another planned lottery process to occur later this year to award 50 new adult-use dispensary licenses. The proposed rules governing this process were released on March 25, 2022, and include a new, simplified online application process and an administrative review provision designed to help address issues without the need for litigation.
Status of Litigation
As Illinois attempts to streamline its processes, three different ongoing lawsuits involving Illinois dispensary licenses have continued to progress, one of which threatens to upend the entire lottery process.
First, Wah v. IDFPR claims that the additional points given to veteran-owned applicants create a special class of applicants in violation of the Illinois constitution. The most recent relevant development, in this case, was the stay order that prevents IDFPR from issuing any of the 185 dispensary licenses until the issues raised in Wah have been resolved, which remains in place.
A second lawsuit, which is really a group of fourteen different lawsuits involving dozens of plaintiffs consolidated into one “supercase,” challenges the application process on the basis of alleged violations of Illinois administrative law, and asks that the plaintiffs be provided additional licenses beyond the 185 currently allocated. The judge in that case recently had the opportunity to take control over the stay in Wah, but declined. As a result, the resolution of this case will affect only the parties to the case, and will not affect the larger issue of the stayed licenses. At a recent hearing, the parties discussed a supplemental lottery process for the plaintiffs that would attempt to recreate the odds that those plaintiffs would have faced in the original lottery, had their applications not been improperly excluded, and the fact that plaintiffs would need to succeed in that lottery in order to have a viable claim to a license. IDFPR and the judge indicated their belief that this lottery should occur soon so that unsuccessful plaintiffs could avoid further litigation costs. However, not all plaintiffs were amenable to this proposal, raising the issue that if none of the plaintiffs were successful in the proposed lottery, IDFPR might never be held to account for any flaws in the application process.
Finally, a third case was recently filed that could upend the entire licensing process. That case, Finch, et al. v. Mario Tretor, Acting Secretary of IDFPR, 1:22-cv-0158 (N.D. Illinois, March 23, 2002), claims that granting additional application points to Illinois residents (as well as the Illinois residency requirements included in the qualifications for social equity status) should be deemed unconstitutional under what is known as the “dormant commerce clause” because it unfairly discriminates against residents of other states. The plaintiffs in Finch have already won a similar case in federal court challenging similar requirements in Missouri, so those watching the case closely are concerned that this court may reach a similar result. In addition, because this case challenges the constitutionality of the entire scoring process, a win for the plaintiffs could mean a reset for the entire licensing process, even affecting those 185 licenses that have already been awarded.
All that interested Illinois applicants can do now is wait, and hope that these issues are resolved soon and licenses are finally released. Once that happens, expect a flurry of activity as those lucky enough to receive a license seek capital and expertise, with some likely to explore options for selling their newly-acquired license.
Andrew Halbert is a member of the National Cannabis Law Practice at Fox Rothschild LLP, based in its Chicago office. He focuses his practice on representing public and private clients, including cannabis companies, in a broad range of transactions including: state and local cannabis regulatory and licensing transactions; stock and asset acquisitions and divestitures; mergers; tender offers; private equity investments; reorganizations; private offerings; and financing transactions facilitated through the issuance of equity and debt securities.
Member Blog: What in Tarnation? North Carolina Stepping In The Wrong Direction
North Carolina, one of the last holdouts for any kind of marijuana program, is finally considering a medical bill. As a North Carolinian, I always thought that I would greet this news with joy and pride. Instead, I feel disappointed at the regressive and paternalistic bill my home is likely to pass.
To give a little bit of context, the state has about 11 million residents. Famous for its tobacco production, the state is quickly becoming a leader in STEM jobs. In 2020, the capital of Raleigh was ranked the third best city in the country for technology, due to the rapid growth of that sector. Meanwhile, Charlotte remains a leader in banking. After New York City, it is home to the country’s second largest financial services hub. North Carolina has a reputation for being regressive, or even backwards, but its residents are at the forefront of some very progressive industries.
Despite all this progress, the proposed medical marijuana bill is a shining step in the wrong direction. North Carolina’s SB 711, also known as the NC Compassionate Care Act, was originally brought forth by Senator Bill Rabon (R- New Bern), in April of 2021. The bill is strangely modeled on Utah’s medical program. Utah has one of the highest rates of prescription drug abuse outside of the rust belt. Yet with a population of just over three million, state regulators licensed a mere 14 dispensaries. This is insufficient to meet the needs of a large, rural population. Still, Utah has 17 qualifying conditions for patients seeking entry into the program.
North Carolina recognizes only 14 conditions and chronic pain is not among them. Post-traumatic stress disorder is a qualifying condition so long as the patient can prove, (with evidence) that he or she experienced a traumatic event. The bill includes a presumption that if a servicemember served in an active combat zone that he or she experienced a traumatic event. North Carolina is a service dense area, but not every veteran will serve in an active combat zone. Many service members will be precluded from accessing the medicine they need. Furthermore, the bill is vague about what constitutes evidence. If a college student is raped at a fraternity party but doesn’t report it to the police, will there be sufficient evidence to qualify under the rules? The bill is unclear.
The bill requires vertical integration at a time when most states are moving away from that model. An application fee is a whopping $50,000. The bill seeks to award 10 licenses and each license will have the ability to cultivate, process, and dispense, (with up to four dispensaries per license). The bill currently requires 10% of gross revenue paid to the Department of Health and Human Services as a monthly fee. Clearly, this bill is designed to suit the interests of multi-state operators. No one else will be able to participate, much less survive, in such a costly environment.
By now, most states see the value in social equity. New York and New Jersey both made strong strides in promoting diversity amongst license holders. The North Carolina bill fails to mention social equity or even diversity. Sensible South, a lobbying group that claims to promote the interests of future North Carolina patients is working hard with some of the largest MSOs, including Cresco, PharmaCann, and Columbia Care to set the playing field in their favor. When I asked Garrett Perdue, the group’s founder, if there was any room for small operators in this legal framework, he shrugged his shoulders and said “I really don’t know.”
North Carolina is contemplating legalizing medical marijuana while looking down its nose at patients and the cannabis industry in general. Anyone in North Carolina interested in a more equitable program should contact their state legislators and make the following requests: (1) broaden the list of qualifying conditions so that more people can access the medicine they need, and (2) permit separate license types so that smaller operators have a chance of success.
Bethany Niebauer is the CEO and Founder of Axial Compliance Consulting. Based in Denver, Colorado, Axial Compliance assists clients across the country with all aspects of license management, including new license applications, renewals, modifications, and transfers. Bethany grew up in Greensboro, NC.
Video: NCIA Today – Thursday, May 19, 2022
NCIA Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.
Committee Blog: Is American Cannabis Still the Wild West?
by NCIA’s Risk Management and Insurance Committee Matthew Johnson, Quadscore Insurance Services
Cannabis is America’s riskiest business.
Cannabis itself is a highly valuable commodity, but cannabis businesses also deal largely in cash – making them a prime target for thieves across the country. Recent headlines have reported a rash of unsolved robberies in the Bay Area and Washington State, not to mention the seizure of cash from Empyreal’s fleet of armored transport vehicles (fortunately, that cash has now been returned by the police).
This is a national problem, which begs the question… What should cannabis businesses do to stay safe during these trying times?
There are many different means of minimizing the risk faced by your modern cannabis business, but we’re going to focus on the big three today – security, technology, and compliance. Through careful consideration of these three tenets, cannabis businesses can take significant steps to mitigate risk and protect their employees. Appropriate investments can yield tenfold savings in the form of fewer stolen assets, lower insurance premiums, peace of mind, and safer employees.
SECURITY
Let’s start with the topic that gets the most attention during a crime spree – security. In cannabis, security means a number of things… video cameras, man traps, motion sensors, hardened glass, ID checks, and more. When building or retrofitting a facility for cannabis operations, it is crucially important to consult with security experts like Sapphire Risk Advisory Group or Cannabis Compliant Security Solutions.
“In many areas, it’s not a question of ‘if’ a cannabis business will be robbed – it’s ‘when,’” cautions Chris Eggers, CEO of Cannabis Compliant Security Solutions. With 13 years of experience as a law enforcement officer in the Bay Area – including several years working as an undercover narcotics officer – Chris is uniquely qualified to address the ongoing issues in Oakland and other areas along the West Coast. “There’s a question of how you navigate and survive an incident, but beyond that, how you ensure that your business will survive too.”
There’s an important distinction between security consultants like CCSS, security integrators, and vendors. To achieve best results, cannabis businesses should work with a security consultant who can identify ways to protect the business – without being tied to commission-based sales contracts or a specific ‘brand’ of security solutions.
TECHNOLOGY
Physical security aside, there are a number of high-tech security tools that can help cannabis business owners protect their operations. For example, let’s take a look at the biggest security company you’ve never heard of – an organization called 3SI Security.
3SI Security began their journey over 50 years ago as the original producer of dye and smoke packs intended to deter bank robbers in the 1970s. Technology has evolved over the years, and so has 3SI’s product offering – now, their GPS tracking tech is ubiquitous throughout banking, pharmaceuticals, luxury retail, and telecommunications.
As VP of Business Development for 3SI, Carlos Casas works to connect cannabis businesses with this tech to protect their assets and employees. “According to a Forbes report from July 2020, an estimated 70% of cannabis businesses are cash-based. This is a staggering statistic which shows the real risk to the industry is on an upward climb.” With the SAFE Banking Act still in the works, savvy business owners have to explore alternative solutions like 3SI’s technology to ensure their business stays safe.
Apart from 3SI, there are a number of technology companies that provide technology to make the cannabis industry a safer place. ADT Security has recently launched a cannabis-focused divison of ADT Commercial to provide critical security technology to cannabis businesses around the country. After spending three years keeping HERBL’s fleet secure on the west coast, Andy Fleet now leads ADT’s efforts to provide security solutions to the cannabis industry.
According to Andy, “Security planning is critical for any cannabis organization. Take the time to evaluate all the risks within your establishment and build a robust plan that ensures all areas of physical safety and security are considered and protected.” Underscoring the points above, Andy continues, “Working with a licensed, experienced consultant will ensure adherence with all relevant regulations and help keep your employees safe while having technology do the heavy lifting for you.”
COMPLIANCE & COVERAGE
Next up, everyone’s favorite topic: compliance. In this sense, we’re not talking about adhering to the myriad regulations imposed on cannabis businesses wherever they operate – but rather, making sure that your operation complies with the protective safeguard requirements in your insurance policy. Non-compliance with or material misrepresentation of your active protective safeguards could result in an uncovered or denied claim – and could even cause problems with your investors. If you’re buying insurance, you want to make sure that your policy will pay out when stuff hits the fan!
Theft Sublimit – Most cannabis insurance policies will only cover theft losses up to a certain ‘sublimit’ depending on the quantity of cash/cannabis being stored, the physical location of the cannabis business, and any relevant losses that the insured business may have sustained due to theft. Make sure that you are comfortable with the sublimit provided and, if you aren’t satisfied, work with your insurance broker to see if you can secure higher limits.
Protective Safeguards – Virtually all cannabis insurance policies carry some warranties around protective safeguards that can impact your coverage in the event of a claim. Make sure to read the Protective Safeguards endorsement and check that all of your security systems are functioning in compliance with these requirements.
Motor Truck Cargo – Similar to the protective safeguards warranty, make sure that you study your policy to ensure that any requisite safeguards are in place. For transportation operations, these safeguards are likely to include vehicular telematics, buddy systems for drivers, GPS tracking, and possibly even an escort vehicle to accompany the transport unit.
Security guards – When hiring security guards, it is recommended to employ a third-party guard service that carries appropriate limits of insurance. Make sure that your business is listed as an additional insured on their insurance policy to ensure coverage in the event of an altercation at your business!
Financing – Lenders and VC firms will often stipulate that the companies accepting their funds will need to adhere to certain requirements, like securing Directors & Officers insurance for the officers and executive board. Beyond insurance, it’s important to make sure you are actually doing what you promised to do in terms of safeguarding the property and not just so that you may be eligible for coverage, but also so that you are not held liable for losses suffered by third parties, such as lenders and investors.
Joseph Cioffi, chair of the Insolvency+Finance practice at the Davis+Gilbert law firm in New York advises, “Operators typically make certain representations to investors, lenders, and other capital providers, and undertake certain activities intended to preserve asset and collateral values. The operator is looking at default if it’s in breach of contract, but worse, the operator and its principals could be sued for misrepresentations made in obtaining funding – and be held liable for losses that flow from those misrepresentations.”
CONCLUSION
Like an onion, there are many layers to a risk management program for cannabis businesses. Through careful implementation of security measures and protective technology, many businesses will be able to prevent damage to their business with proper planning. In case all security measures fail, a comprehensive insurance policy should be able to help make a business whole again after a claim. Make sure to work with the proper insurance, security, and legal experts when building or restructuring a cannabis operation!
Member Blog: 2022 Cannabis Compensation Survey Reports Released
We are pleased to announce the release of the 2022 Cannabis Compensation Survey Report. The 3rd annual report seeks to further understand and illuminate pay trends and practices in the legal cannabis industry by aggregating and presenting benchmark data in accordance with federal guidelines.
FutureSense and NCIA laid the foundation for the project in 2019 and released results for the inaugural survey at the end of that year. At the onset of the pandemic in early 2020, both parties took a step back to adjust their trajectories looking to enhance the scope and depth of the project. Marijuana Business Daily came on as a primary partner to assist with publication and distribution. Green Leaf Payroll & Business Solutions came on as a supporting partner, providing the project with anonymized payroll data. NCIA has stayed on as an endorsing partner to promote the shared mutual interest of supporting cannabis businesses and the industry at large. In 2022, the project added Western Management Group to support data management, calculations, and analysis.
This year, the survey focused on the cannabis vertical – gathering data specifically for the cultivation, manufacturing, distribution, and sales sides of the business. It established benchmarks with reportable data for 87 unique positions in 41 jobs families/function. With its continued growth and expansion of participation from the industry, it has also begun to analyze demographic breakouts by state, headcount, and revenue.
The final report is available in two tiers:
The Summary Report – available free to the public; contains high-level trends & analysis along with three data cuts indicating central tendency.
The Detailed Report – available to current participants, other cannabis companies, and consultants & ancillary/professional service providers; contains more data cuts, percentiles, and demographic breakouts by state, headcount, and revenue (where appropriate).
The cannabis industry’s job market continues to evolve. The free Summary Report presents an analysis of the current state of the market, including trends relating to the “Great Migration,” the “Great Resignation,” the pivot to hybrid/remote work, and the challenges faced by major MSOs and small, independent, craft, and legacy operators. The Detailed Report presents in-depth data cuts by job and can be used across every facet of business.
Understanding not just how to pay your employees, but also how to attract, motivate, engage, and retain your employees through compensation can be make-or-break in this rapidly evolving industry. 60-70% of companies’ expenses are typically due to payroll. Being 5% on- or off-the-mark could mean thousands or hundreds of thousands of dollars either lost or gained.
The survey’s success is contingent on participation. More and more companies are realizing the value of this information and the importance of transparency through 3rd party surveys. All submissions and their respective data are held in strict confidentiality. Abiding by the Department of Justice regulations, this survey produces anonymous and unbiased results.
The survey accepts organization-wide submissions for cannabis companies with ten or more employees at this time. Individual submissions are appreciated as anecdotal insights but are typically not included in data calculation.
Survey: NCIA Retail Committee Wants To Hear From Cannabis Retail Employees
NCIA’s Retail Committee is looking to gauge what educational material may be the most useful in order to better direct our efforts on content creation for all cannabis retail employees.
We would like to hear from those who are most affected by training and continued education, in hopes of being able to provide tools that will enable all retailers and retail staff to grow and develop.
Previously, in part 1 and part 2 of this series, the DEIC examined the problems inherent in existing social equity programs and the merit for federal social equity in regulating interstate commerce. The DEIC also examined the key components of a proposed framework to address these challenges, how to define social equity federally, and the merit of determining the types and numbers of permits to be issued.
Sadly, as written currently, all proposed federal bills fail to meet the critical objective of creating as much NEW generational wealth for the most number of those disparaged from participating in the legal cannabis industry because of the socioeconomic impacts of more than 80 years of federal marijuana prohibition and due to the barriers to entry created amid state regulatory regimes.
To conclude this policy framework proposal, the DEIC will look at the key considerations for a federal program to ensure it functions as designed and how this framework can create social equity technical assistance, qualification, and a phased approach of implementation to ensure that social equity operators have ample time to qualify, have adequate funded, and are set up for success with an equal starting line in the new interstate commerce industry.
Qualifying Social Equity Operators – Federal Technical Assistance Program
It is imperative that any federal social equity framework helps the industry and their new partners, by ensuring permit holders are qualified in both cannabis and business backgrounds, and by helping them bring financing to the table to start a permitted interstate commerce cannabis business that can be as ready, as quickly as possible, to help import, export, and transport cannabis between the States.
To carry out these provisions in the policy, we recommend that amendments to any federal act include:
Requiring that qualified social equity interstate commerce permit holders:
Have a path to educational qualification (training and development)
Can qualify with equivalent experience
Can pre-qualify for the SBA’s funding once they obtain education or equivalent experience (funds issued upon state licensing approval)
Obtain the majority of initial permits offered for interstate commerce (95%)
In alignment with how long and at what percentage the current industry has been dominating the ownership of licenses
Entities should have 51% or more verifiable ownership and control by a social equity qualified applicant.
Advisory Committee to determine how to verify the 51% social equity ownership
Providing social equity qualified permit holders exclusivity for at least 5 years to ensure the qualifying process takes place equitable to the average time in which the industry developed for adult use without considering social equity.
Mandating laboratory testing as national permitting for interstate commerce to work.
Ensure parity amongst states and tribal nations such that tribe-to-tribe trading and interstate trade routes can be protected.
Avoiding overly limiting interstate commerce permits, but also giving them value by not making them unlimited either.
DEIC suggests 1,500 permits as a starting point divided among the three primary types as a fair balance initially.
These pillars of federal act amendments will proactively resolve interstate commerce concerns that are inherent in descheduling cannabis. Further, pre-qualifying permit holders based on their experience, education, as well as federal financing for their business (contingent on state licensing), will accomplish two primary concerns:
Incentivizes state governments to create social equity licensing regimes that emulate federal efforts
Reduces “predatory” operating agreements that use “token” social equity applicants who do not participate in the business license, contribute little to no financing, and are thereby diluted by existing operators and investors
We believe the U.S. Small Business Administration (SBA) is best to handle collaboration efforts to define this new “Minority Cannabis Business” (MCB) certification program for both program providers on the educational side and for pre-qualifying federal funding for qualified applicants.
Through this qualification, the Alcohol and Tobacco Tax and Trade Bureau (TTB) and (SBA) would issue an interstate commerce permit to be tied to state licenses, and only then would funding be issued to the applicant by the SBA. All funding issued is contingent on obtaining a state licensed facility or partnership with an existing operator in any given state.
Phased Approach:
We believe it is also important that the amendments clearly lay out a multi-phased approach to the rollout of interstate commerce permitting to ensure those most qualified operators proceed first, and to then qualify others with enough time to do so. Encapsulating the proposed amendments, we envision the following steps to ensure a smooth transition that maximizes the opportunity for social equity applicants to succeed:
Initially, establishing the advisory board for the regulatory agencies and mandates to allow for education providers to apply and be approved to provide the educational qualification to social equity applicants. These education providers may also be prioritized based on social equity and curriculum requirements designed in collaboration with cannabis business experts and diversity, equity, and inclusion advocates in cannabis.
For those who lack the experience in operating an interstate commerce permitted business, but who are impacted by the war on cannabis, approved educational programs are invaluable to overcoming the barriers in not knowing how to operate a regulated cannabis business.
Those with experience may qualify, without the need of an educational provider, and each are evaluated for priority licensing according to the following priority:
Applicants with cannabis and business experience (most qualified)
Applicants with legacy experience but limited regulated business experience
Applicants with business experience but limited cannabis experience
Applicants with little cannabis or business experience (least qualified)
If qualified in both, the applicant goes first and can qualify for SBA funding fastest.
If they have limited experience in cannabis or business, then the applicant can take the coursework to qualify and apply for SBA funding.
During this time, it is also crucial to increase community education efforts so that communities impacted most by the war on cannabis can be made aware of the opportunity to qualify, be trained/educated, and approved, and get access to the information necessary to pursue the opportunity along the above pathways.
Provide an education fund for state and municipal governments to promote the benefits of cannabis social equity, responsibilities, and risks of cannabis.
Access to financing is critical for social equity applicants and must be made available through the qualification process for social equity qualified businesses. Once qualified on education or equivalent experience, the SBA may pre-approve funding for qualified applicants. By achieving these qualifications, applicants have access to *reserved* funding appropriated by the federal act. Pre-approved financing in the form of grants and low-interest business debt instruments that are contingent on successful completion of course requirements and other “qualifying” factors for a Minority Cannabis Business is critical to ensuring success for operators and the federal government.
These government loans say how one qualifies and is “pre-approved” so that applicants can negotiate with existing industry license holders as valuable partners and receive federal funding contingent on state licensing approval. The idea is to promote partnership and participation between the existing industry and newly established social equity entrepreneurs while ensuring equal opportunity for social equity operators who do not choose to partner with the industry.
Follow Through
To ensure the program functions as designed and that the advisory committee is provided with as much data as possible to improve upon these suggested amendments, the Diversity Equity and Inclusion Committee (DEIC) recommends a final amendment in the form of a best practices study, along with collected data from participating states, to be instituted and reviewed annually for the first five years and subsequently every three years.
The intention of this study and report is to ensure the enforcement of laws, standards, and programs and to monitor that the activities of social equity operators are in alignment with the intention of the program in benefitting the social equity entrepreneurs permitted, that policies against predatory operating agreements are being enforced, and that policies are truly beneficial to creating social equity in the cannabis industry. The study will provide evidence of the benefits and challenges of the program, as well as possible improvements at federal and state levels.
Conclusion
It seems obvious that unless any social equity partner can “bring more to the table” to balance a “mega player’s” contribution, be educated in all aspects of their chosen field in the industry, recognize predatory agreements, and otherwise be positioned more equally to meaningfully participate in the cannabis industry, social equity programs will continue to fall short of meeting the goal of creating new generational wealth.
History has shown that as long as there’s an opportunity for inequality to be wielded as a weapon for those in power, it will be. No amount of good intention can change that fact.
Social equity requires empowerment opportunities for social equity candidates to bring more to the table as equals with “mega players.” We recognize partnerships can be an ideal path forward when the power dynamics within them are balanced and fair. The DEIC proposes these amendments to any federal act to serve as solutions to the traditional problems of inequality, exclusion, and gatekeeping that once spurred prohibition in the first place and that continue to prevail in the inequity the cannabis industry is still experiencing and to solve the shortcomings of social equity programs thus far.
We recognize that the role for the federal government in these federal act amendments is to even the odds in interstate commerce permitting. Their role is to oversee the fairness in qualifying candidates, to ensure a meaningful value for the permits issued, to give permittees the chance to catch up to the privileged few already in the industry with lockout periods for non-social equity applicants, limited licensing, and to provide access to financing for those traditionally locked out of access to financing or wealth as aa result of systemic oppression caused under prohibition.
Interstate commerce permitting seems like the last true chance for America to atone for 80+ years of marijuana madness and its detriment on our society. It is also the last chance for the industry to search for its soul to balance the impacts prohibition has had on these operators in excluding their participation in legal cannabis initially – born as a result of systemic discrimination overall and colonized on by those with clean records.
In doing so, a more equitable federal act can create the bold ideas and incentive to bring traditional wealth and experience into partnership with underprivileged social equity operators and their expertise/culture to form partnerships that truly represent the intent behind the policies intended for social equity and to create a more diverse, equitable, and inclusive industry for all.
Committee Blog: Everything You Wanted to Know About Cannabis Facilities But Were Afraid to Ask Field Guide – Part 3 – Extraction
by members of NCIA’s Facilities Design Committee Jacques Santucci, Brian Anderson, David Vaillencourt, and David Dixon
Continuing our five-part series on the behind-the-scenes workings of the legal cannabis industry. This series focuses on all of the inner dealings and industry advice from established professionals to craft this unlimited How-to-Guide to assist you in setting up your own facility. These articles cover cultivation, extraction, infused products, and retail facilities as well as support activities. In general, remember to be compliant with all local rules and regulations and contact a licensed contractor and industry expert.
Part Three, Food: 10 Things to Consider When Planning Your Manufacturing of Infused Products (MIPs) Operations
Food safety and handling practices are an issue for any industry working with or processing products for human consumption and often come with strict guidelines that need to be followed. In the cannabis industry, edibles and other processed or infused products Manufactured Infused Products (MIPs) are ready-to-eat foods, so many states are regulating them as foods under the cGMP requirements of 21CFR117. We feel this is likely the approach that will be appropriate when cannabis becomes federally legal. These 10 things should be considered as you begin to plan your facility. Always remember to be compliant with all local rules and regulations.
Sanitary Design and Operation
A production room is straightforward, conceptually: design the space so walls, floors, and ceilings can be washed and sanitized, then verified (ATP swabs) to confirm the cleaning process is effective. To facilitate cleaning, everything needs to be pulled away from the walls, the ceiling needs to be solid and the walls need to be sealed. Insulated metal panels (IMP) are a cavity-free construction that is seeing wide acceptance in the industry. To keep the space clean during operation, slope the floors to spot drains, install coves along with the floor/wall interface and avoid ledges and traps for water or dust.
Employee Hand Washing
A stringent internal process for sanitation and washing of hands is crucial. Make sure that lavatories are available throughout your facility for proper sanitation. Confer with the municipal board of health for locations and quantity. Generally locate any place where employees are handling consumable products or encounter the potential for microbiological.
Boot Washing
Sanitation includes making sure all boots/shoes are free of contaminants. Employee captive corporate footwear programs prevent contamination potential from non-business-related employee activities.
Cart Washing
For carts that transport ingredients and materials, it is important to prevent floor debris getting transferred from one area to another. Two areas of concern; are wheels and cart shelves. Either wheel or shelf area can be addressed from multiple washing devices specific to each type of cart used.
Product Storage
Food safety temperature and humidity separation of products are an important factor. The purpose is to store food products at such a temperature and humidity level to prevent the growth of undesirable bacteria.
Allergen cross-contamination
Make sure to arrange products to avoid cross-contamination of open and unopened products. Keep the first pallet off the floor at a height of 6” AFF to avoid picking up contaminants. OHSA SHARP may apply how to organize products.
You can design barriers to keep contamination from entering a room.
Limit contamination by having and always renewing Personal Protective Equipment (PPE), since the adjacent hallways may transport raw biomass. Test all ingredients, including THC, to ensure that everything is microbiologically safe. Wipe down, or unpackage ingredients, materials, and supplies before bringing them into the ‘clean environment’ room. Wear specific scrub, clean boots, and wash off any carts entering the room.
Employees entering the food production space
Contaminants can enter via the employees. It is essential to have all employees and agents clean up before entering the food production space. You must provide facilities to wash and sanitize hands as well as boots. Continuous training of employees and monitoring adherence to the procedures is important. Your procedure will include how sanitation is necessary, where are smocks hung, how are shoes cleaned, etc. Typical controls are in the FDA Food Code for jewelry, open sores, illness, etc.
Food Safety Inherent in the Recipes
Complete a Food Safety Hazard Analysis to know if you need to implement an upstream preventative control, such as for chocolate, or if you need to manage a thermal kill-step such as cooking the gummies mass. Low water activity, high acid, or a natural biocide additive, can all be considered.
Control for Allergens
MIPS often contain soy, flour, eggs, dairy, peanuts, tree nuts, coconut, and perhaps others. Each has special considerations for allergen separations and allergen cleaning.
Ware Washing and Clean Parts Storage Room
Don’t Underestimate the Ware Washing and Clean Parts Storage Room. Adjacent to your MIPs production room, consider building a washroom with a commercial dishwasher for utensils, kettles, wetted parts, trays, molds, etc. You might install a three-compartment sink. And make sure to safely store clean items, so they dry and do not get recontaminated prior to use. This room is maintained at negative pressure to the MIPs production room.
Plan for the Pantry
Store ingredients, materials, and supplies in a pantry off the MIPs room can be considered. It is much easier to clean the MIPs room if such items are stored outside production. If you pre-weight, or decant in the pantry, cardboard and plastic are kept out of production. It is a great idea to provide a door also to the adjacent hallway to drop off ingredients, then your staff can enter from the MIPs room. Special care is taken when storing opened products.
Keeping Final Products Food-Safe
The best practice might be to put products such as chocolate bars into primary film envelopes or fin-seal gummies while still in the MIPs room. Often, subsequent packaging is done where there are other possible contaminants such as open bud, pre-rolls, chipboard or corrugated, etc. If the food products are already protected by primary packaging, you will greatly reduce the risk of recontamination.
HVAC, Humidity Control, and Filtration
HVAC, Humidity Control, and Filtration are critical. The MIP production room should be air-conditioned and filtered to at least MERV 14. Cook kettles may be a source of humidity that could be placed under a commercial hood. Cooling and tempering of chocolates and cooling and drying of gummies/jellies have their own special considerations. And consider provide enough HVAC capacity to dry out the production room after a heavy cleaning.
Airlocks and Room Pressurization
Airlocks and room pressurization should be planned properly based on your goals, budget and facility. The MIPs room pressure should be positive to all other adjacent rooms: washroom, pantry, extraction, corridors, lab. There are a wide variety of approaches to airlocks, from a pharma approach with air showers down, to just a door with sufficient air supply to the production room to ensure that it is always positive to the adjacent hallway.
State-Level Insights: Momentum Builds Across Our Nation
By Sadaf Naushad, NCIA Intern
Although the action-packed April must come to an end, the fight for cannabis reform never stops! With U.S. Senators delaying the much-anticipated introduction of the Cannabis Administration and Opportunity Act (CAOA) last month, Congress has a lot of work to do.
In the meantime, a congressional bicameral bipartisan committee is considering the Secure and Fair Enforcement (SAFE) Banking Act as an amendment to the House’s U.S. Innovation and Competition (COMPETES) Act.
Now let’s focus on action occurring within the states. State-level updates help provide us with insights on cannabis reform progress at the federal level. As more state constituents vote in favor of cannabis initiatives, reformation support overall increases within the United States. Efforts to reform cannabis policies at the state level encourage members of Congress at the federal level to enact legislation.
Let’s take a look at this week’s state-level insights:
New York
As the legal cannabis market is set to launch later this year, New York lawmakers intend to ensure that a sufficient supply of marijauna exists. Last month, state regulators voted to allow conditional marijuana cultivation licenses to several hemp businesses. Regulators also established that adults with prior cannabis convictions, along with family members who have previously faced criminalization, would receive the first round of adult-use cannabis retailer licenses – ahead of present medical marijuana businesses. This week, lawmakers recently approved a second round of applications for recreational cannabis cultivators. Additionally, the Cannabis Control Board (CCB) passed amended regulations granting medical marijuana patients to grow their own plants for personal use.
Delaware
A Delaware House Committee approved a bill that would terminate 50 years of cannabis prohibition and criminalization. For the second time in history, Delaware’s District 24 Representative Ed Osienski (D) introduced House Bill 371, legislation legalizing cannabis possession and gifting. The legislation is attached to a companion measure that would build a regulatory framework for the market. Its two-piece model comes after the House defeated a prior measure in March that incorporated both components.
South Carolina
An eight-year attempt to legalize medical marijuana in a largely conservative state abruptly came to an end on the House floor Wednesday. South Carolina’s District 13 Representative and House Leader John McCravy (R) ruled that the Session 124 measure comprises an unconstitutional tax increase, thereby ceasing further consideration of the bill. According to Representative McCravy, since the bill contains a tax on medical cannabis, lawmakers should have introduced the bill in the House under the state constitution’s article for legislation that raises revenue. The bill’s sponsor, U.S. Senator Tom Davis (R), is rapidly seeking other ways to keep the issue active as the session concludes.
Missouri
In preparation for the 2022 midterm elections, a Missouri House Committee approved a GOP-led joint resolution seeking to place cannabis legalization on the November ballot. Missouri’s District 98 Representative Shamed Dogan (R) sponsored an amended version of the legislation, in which The Special Committee on Criminal Justice passed in a 7-2 vote. The amended bill eliminated provisions that would remove the state’s current separate medical marijuana program and set regulations regarding taxation in the legal market. Under the amended resolution, marijuana offenses would be removed from the Missouri criminal statute, permitting adults to possess, use and sell cannabis without facing penalties.
Washington
State officials Lieutenant Governor Denny Heck (D), Attorney General Bob Ferguson (D), Treasurer Mike Pellicciotti (D) and Governor Jay Inslee (D) sent a letter to congressional leaders, outlining the urgency of passing the Secure and Fair Enforcement (SAFE) Banking Act. With Washington being one of the first states to legalize cannabis, lawmakers remain frustrated at the industry’s lack of access to essential financial services stemming from federal prohibition.
New Jersey
Last month the state attorney general’s office released a controversial document detailing how New Jersey’s marijuana laws currently authorize police to use cannabis when not working. This week, New Jersey lawmakers introduced a string of bills designed to encourage employers to penalize workers from consuming cannabis off duty in compliance with state law. Punishable workers specifically include law enforcement officers and first responders. Now, three new bills exist that intend to enforce restrictions on such activity for particular employees. New Jersey’s 6th Legislative District Representative Louis Greenwald (D) aims to amend state statute to contain the following provisions: penalizing police for using cannabis, conducting random drug tests and the right to refuse job applicants due to lawful cannabis use. Although Representative Greenwald’s bill targets police officers, two other measures presently remain that would also impose employment-based restrictions on lawful marijuana use.
Ohio
The Coalition to Regulate Marijuana Like Alcohol (CTRMLA) filed a lawsuit to keep cannabis legalization on Ohio’s November 2022 ballot. In December 2021, CTRMLA turned in petition signatures to Ohio’s secretary of state’s office, but the office deemed the signatures insufficient. To advance the legislative review of their measure, CTRMLA turned in additional petitions on January 13, 2022. According to the state statute, however, a ballot petition must be submitted “no less than ten days prior to the commencement of any session of the general assembly.” The session commenced on January 19, falling outside of that ten-day certification window. As a result, CTRMLA contacted Franklin County Court of Common Pleas, requesting a ruling on a prospective challenge concerning the timing of the group’s initial signature submission to Ohio for the reform proposal.
Stay tuned for more updates on cannabis policy reform. If you are interested in learning more about NCIA’s government relations work and how to get involved please reach out to Madeline@thecannabisindustry.org.
Video: NCIA Today – Thursday, May 5, 2022
¡Happy Cinco De Mayo! NCIA Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.
CAOA Delays, House Negotiations, and a Cannabis Festival
Photo By CannabisCamera.com
By Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Hopefully you’ve had a chance to recover after 4/20, but here in Washington, D.C. the work never ends!
Over the last few weeks, there have been developments on the timeline for the Cannabis Administration and Opportunity Act (CAOA), updates on the path forward for SAFE Banking, and a slew of pro-legalization events took place in the D.C. Keep reading for the latest:
More Delays for the Cannabis Administration and Opportunity Act (CAOA)
In February 2021, Senate Majority Leader Chuck Schumer (D-NY) along with Sen. Finance Committee Chairman Ron Wyden (D-OR) and Sen. Cory Booker (D-NJ) announced that they would be introducing a comprehensive cannabis bill to deschedule cannabis, enact a regulatory framework for this new industry, and seek to repair some of the harms that the war on drugs has created. In July of that year, the trio released the long-awaited, detailed discussion draft of the Cannabis Administration and Opportunity Act (CAOA) and asked for comments and feedback from stakeholders (you can read NCIA’s here) to be submitted by September 1, 2021. Since then, the Senators have been diligently reviewing and working on the legislation.
The sponsoring offices had hoped to introduce the CAOA in the beginning part of the year, and more specifically April 2022, however, they recently announced that they are continuing their diligent work and will introduce the bill before August recess.
While this announcement can be frustrating at face value, I’m happy that the Senators are being thoughtful, careful, and considerate about crafting this legislation. Precedent matters a lot on Capitol Hill, so getting it right on the first try (or attempting to!) matters.
SAFE Banking & the America COMPETES Act
The House of Representatives has passed the SAFE Banking Act three times this Congress; first in April 2021 as a standalone bill by vote of 321-101 and most recently as an amendment to the House’s version of the America COMPETES Act, which is now being negotiated by a bicameral, bipartisan conference committee.
While many in D.C. had hoped that negotiations would conclude by Memorial Day, lead sponsor Sen. Todd Young (R-IN) recently said that a more realistic timeline for the bill would be the end of summer. This week, the Senate will vote on 28 motions to instruct- these are procedural, non-binding resolutions that guide the conference committee through the negotiation process. After that, the conference committee can begin meeting
National Cannabis Festival and more!
Founded in 2016, the National Cannabis Festival is an annual event held in Washington, D.C. with a focus on cannabis and music, advocacy, education, and activism. Now boasting well over 20,000 attendees, NCIA is proud to have been involved with the event since its inaugural year, and I even sit as an advocacy committee chair!
This year, the festival was back and better than ever with an entire week of events celebrating cannabis advocacy in the nation’s capital, including an incredible Policy Summit featuring members of Congress, advocates, journalists, and more.
Like I said – the work never ends in D.C., and the NCIA team is gearing up for another busy month filled with Evergreen virtual lobby days, Hill meetings, coalition building, and more! Want to get involved? Consider becoming a member today!
Member Blog: Hard to Get – Why Disposable Gloves are Scarce and Pricey
Disposable gloves are standard issue for the medical, food, and yes – cannabis industry. But thanks to COVID and subsequent disruptions in the supply chain, the market for procuring disposable gloves has gone from routine to challenging. In fact, the demand for quality disposable gloves has skyrocketed, more than doubling since the global pandemic’s arrival, thereby creating an unpredictable cycle of availability. Demand for single-use gloves is expected to continue increasing in the coming years, as the health and safety of workforces across multiple industries – including medical, food, and cannabis-related operations – are required and dependent upon their usage.
Let’s examine the factors that have made disposable gloves both scarce… and pricey, as of late.
Global Glove Origination
Approximately 99% of all disposable gloves are manufactured in southeast Asia, most notably Malaysia and Thailand. But for these regions, compared to the U.S., lockdown to prevent the spread of COVID infections has a much more literal meaning. The restricted movement, as well as outbreaks, led to output at 60% of its normal capacity. In addition, most experts agree that there’s clearly a shortage of workers – many of whom were immigrants affected by travel restrictions. It’s estimated that an additional 25,000 workers are needed to restore full production capacity.
Supply and Demand
As the demand for disposable gloves increased globally, it put added stress on manufacturers and the supply of raw materials, driving up prices tenfold compared to pre-COVID levels. Though glove costs have recently dropped, prices have not reached pre-COVID levels.
Cost of Gas
The raw materials of nitrile gloves are primarily petrochemical based, subject to the volatile price swings in the oil and gas industry. Combined with the tenfold increase in shipping costs, disposable glove prices are not likely to continue dropping.
Labor Violations
In the midst of this price spike, one of the top importers, Malaysia’s Top Glove, the world’s largest glove producer, was banned from importing gloves to the U.S. from July 2020 to September 2021, due to conclusive evidence of forced labor. However, this ban did not extend to other countries.
Knockoffs
When the pandemic nearly doubled the demand for disposable gloves and other PPE components, several new manufacturers with little to no industry experience, assisted by dealers with nothing more than a financial incentive, flooded the market with cheap, counterfeit, and reject-quality gloves. Spotting these unscrupulous suppliers can be done by looking for a few common signs, as they’re often given away by their offering of discount or wholesale pricing, especially in bulk. It’s estimated that the market has already absorbed an influx of gloves of a defective and dangerous quality.
Safeguarding Your Operation
Currently, poor quality gloves continue to flood the disposable-use market. In business, it’s human nature to seek the lowest price for inventory, but saving a little now may cost you dearly on the backend. Cost is obviously important, but consistent quality will keep you from having to replace gloves that rip and tear too easily. When sourcing disposable gloves, seek reputable suppliers – those who have a clear ownership origin, quality web presence and active social media accounts. Taking it a step further, you can inquire about factory audits and HACCP compliance certifications. The cannabis industry has already dealt with at least one recall due to glove contamination. And recalls can have negative financial and brand ramifications. Lastly, always remember when dealing with a new vendor – you can conduct your own product trial before ordering.
Steve Ardagh, “The Glove Guy,” is the founder and CEO of Eagle Protect, a disposable glove supplier dedicated to the responsible sourcing of quality products that ensure customer safety and impact reduction, ultimately mitigating customers’ risk. Eagle Protect is the only global PPE supplier that is a Certified B Corporation, a designation that a business has met the highest standards of verified performance, accountability, and transparency. He can be reached at steve@eagleprotect.com.
Equity Member Spotlight: Puff Couture LLC – LaVonne Turner
NCIA’s editorial department continues the Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
Tell us a bit about you, your background, and why you launched your company.
I am LaVonne Turner, President of PUFF COUTURE LLC. Before my interest in cannabis, my career was focused on marketing, communications, public relations, event management, and community advocacy. After working for non-profit and for-profit organizations, I became increasingly interested in public policy and community advocacy to help the underprivileged and unrepresented. I hold a bachelor’s degree in executive leadership/marketing, a master’s in public administration, and currently working on a master’s degree in clinical mental health counseling. I am a block club president and serve on a couple of boards and committees. I have spent many years mentoring children and youth.
My journey into the cannabis industry as an entrepreneur started when my mother began experiencing debilitating pain, and her only relief was prescribed medication. While I still haven’t found the right product to deal with her pain, I have taken great interest in the industry and the incredible products born from seeds. I plan to open a microbusiness and consumption lounge in Detroit, MI, that serves aromatic, exotic strains and infused products.
What unique value does your company offer to the cannabis industry?
PUFF COUTURE LLC is a minority-woman-owned cannabis company slated to open a microbusiness and consumption lounge in Detroit. We want to bring a sophisticated community-driven cannabis business that offers a contemporary atmosphere for clients. It will convey the importance of the cannabis flower by providing a chilled environment for clients to consume unique, flavorful, and aromatic cannabis. PUFF COUTURE will support mental health counseling, volunteerism, public policy, and minority representation in the cannabis industry, especially among women. According to a recent special report by MJBbizDaily Women and Minority Report, only 3.8% of Blacks or African Americans are cannabis business owners, the percentage of minority women in Michigan is even smaller; our responsibility is to open doors for future female entrepreneurs and people of color.
What is your goal for the greater good of cannabis?
PUFF COUTURE LLC would like to change the face of cannabis through participation and contributions to critical public issues that affect the community values of our clients and neighbors, as well as giving back through donations and mentoring. The organization will support issues affecting women who suffer from traumatic situations through our community advocacy campaign. Still, there will be plenty of time for spoken word, intimate art shows, parties, etc. PUFF COUTURE will take care of our people, support the cannabis industry, and create an atmosphere of excitement.
What challenges do you face in the industry, and what solutions would you like to see?
A few years ago, I couldn’t get anyone to advise me or take the time to mentor me. However, after many no’s, I have been blessed to partake in the City of Detroit’s Homegrown cannabis program and training by the Detroit Cannabis Project. LUME’s Vice President of Retail Operations, Michael Dowdell, has taken the time to speak with me and allowed me to observe the business sales and operations of one of the company’s recreational and medical stores. That first opportunity let me know I could continue to grow in the cannabis industry given a chance.
I have continued to expand my knowledge about cannabis, staffing, and cultivation through a mentorship provided by one of the award-winning co-owners of Oak Canna, LLC/CannaBoys, Jason Tueni. Mr. Tueni has devoted a great deal of time to educating me about caring for the flowers at every growth stage. I am currently interning at the cultivation center, which allows me to see everything first-hand, e.g., flowers, business, human resources, all aspects of creating and running a successful microbusiness and consumption lounge. These types of opportunities should be more readily available. I often hear people complain about not having access to mentors, which I completely understand. I joined the CRA DEI workgroup and from there was able to make a connection to LUME and Mr. Dowdell, who by the way is African American, and I asked for the opportunity. I did the same thing with Mr. Tueni. I was at a Weedmaps event and started talking to people and let them know I was looking for a mentor and from there, introductions were made. We met a few times for two to three hours, a couple of months after, and I asked if I could intern at the cultivation center and he said yes. We continue to meet, although not as often, and I see him on a regular basis. Hopefully, when the time is right, we will partner on a project.
Both of these events have provided a great deal of information for me in preparation for my future cannabis venture and I won’t stop reaching out for more knowledge and advice. Knowing how mentorship has helped me, I will continue to look for opportunities to build my business and while doing so pay it forward by mentoring future Detroiters interested in the cannabis industry. As important is my need to stay involved in public policy and community advocacy.
Why did you join NCIA? What’s the best or most important part about being a member of the Social Equity Scholarship Program?
I joined the NCIA to learn and network. Through the social equity scholarship, I serve on the DEI Committee and am also serving on the Cannabis Regulatory Agency-DEI Workgroup for the state of Michigan. The weekly social equity meetings held by the DEI Director are informative and build camaraderie among social equity entrepreneurs. The added weekly conversations help push to get to the finish line. I believe many social equity members will have an opportunity to work together in the future.
I look forward to growing with the National Cannabis Industry Association.
Committee Blog: Everything You Wanted to Know About Cannabis Facilities But Were Afraid to Ask Field Guide – Part 2 – Extraction Facilities
by members of NCIA’s Facilities Design Committee Jacques Santucci, Brian Anderson, David Vaillencourt, and David Dixon
Continuing our five-part series on the behind-the-scenes workings of the legal cannabis industry. This series focuses on all of the inner dealings and industry advice from established professionals to craft this unlimited How-to-Guide to assist you in setting up your own facility. These articles cover cultivation, extraction, infused products, and retail facilities as well as support activities. In general, remember to be compliant with all local rules and regulations and contact a licensed contractor and industry expert.
Part Two, Extraction: Top Things to Consider When Planning Your Cannabis Extraction Operation
The extraction environment is akin to an industrial process and should be approached away from a safety and chemical handling standpoint. Here are some general considerations as you begin to plan your extraction operation that we often see assumed or overlooked resulting in major unanticipated barriers that significantly impact decision costs and timelines. Always remember to be compliant with all local rules and regulations.
Interior Building Materials
The walls and floors should be designed to be easily cleanable. In areas with solvent use, should have floors and walls made with the material, and ultimately the method for effective and ease of cleaning such FRP (Fiberglas Reinforced Panels).
Facility Specifications
There are many established standards from organizations like the NFPA and ICC-IFC which are commonly cited and required by Fire Marshalls with appropriate fire engineering controls, room interlocks, etc. Knowing which classifications are required based on the room type has a major impact on facility specifications (e.g. C1D1, C1D2, etc.) and the ultimate design. This requires knowing which solvents you will be using (and equally important, solvents you will not be using) as well as identifying all of the activities you will be doing in your extraction/processing facility (winterization, purification, bulk or final product packaging, and more) and whether the rooms will be wet and dry (how will you be cleaning these rooms?). How you answer those questions will help you and your team select the appropriate room materials and overall design.
Electrical Power Ideal Recommendations
Evaluate your utility power infrastructure, including street transformers and available power to your site when designing your facility. The power demand for a cannabis facility is significant and grid limitations can destroy or significantly delay the ability for a business to operate.
Losing power due to weather or events outside of your control are another major risk. When considering alternative power generation, consider a generator with auto-transfer switching and the appropriate fuel type, depending on location and local weather. Contact a local licensed professional. A generator can be an invaluable insurance policy as even a short duration power outage can destroy an entire crop and any products that must be maintained at critical temperatures.
Equipment Rooms and Maintenance Rooms
Appropriate space for equipment and dedicated rooms for maintenance is commonly needed. These all come with different combustion air requirements, venting requirements, air exchange rates, vacuum lines, and more. You may consider a room for spare parts and tools.
Appropriate Storage Area: Biomass, Volatiles, Raw Ingredients, and More
Separation of raw materials with appropriate and dedicated storage areas is needed for the various types of raw ingredients and materials utilized within a cannabis facility. Volatile solvents require extremely specific storage requirements, which will become part of your Chemical Hygiene Plan once you are operational. Refer to your local Fire Marshall for code considerations and from code organizations like the ICC and NFPA.
Cleaning and sanitation agents should be segregated from materials that are utilized in final product formulations (e.i food ingredients, oils, etc.) and raw materials ahead of the design is critical to ensure appropriate storage requirements are met whether indoor or outdoor. Biomass storage can vary based on whether wet or dry and often require controlled temperature and humidity. Finally, do not forget the dedicated space needed for finished good inventory.
Electrostatic Discharge (ESD) Safety
Do you know that shock you get when you are in your car in the winter or flipping on a light switch? Innocent in everyday life, but potentially lethal in an environment such as extraction rooms where highly flammable solvents could be present. Consider rated and non-rated clothing and other personal protection measures.
Food Grade Oil Considerations and Inspections
Extracted oils that will be used downstream in edibles and beverages are akin to ingredients that require Food Safety endorsements such as cGMP.
Equipment Ratings
Before selecting equipment for use, evaluation criteria should be established based on your business needs and compliance. Some authorities having jurisdiction require extraction equipment to come with stamps, certifications, or endorsements from organizations such as ASME, UL, and NFPA as relevant to ensure equipment safety and fit for use.
Room Environmental Controls
Grinding rooms often need separate dedicated ventilation and filtration to be checked against grinding method/equipment and concentration of particulate (typically measured in parts per million (ppm) in the air. Dust collection systems for grinding equipment are effective ways to keep dust levels at manageable levels, reducing the need for time consuming cleaning procedures. Extraction and final product rooms may require additional ventilation considerations and monitoring sensors depending on the extraction method or final product type. Example: Solvents will require sensors and air exchanges located near the ground level since most solvent fumes tend to be heavier than air.
HVACD Management
Designing your facility involves HVACD (Heating, Ventilation, Air Conditioning, and Dehumidification) management that considers airflow controls areas, airflow, and fire protection within control areas. Rooms may require positive and negative pressures with calibrated pressure indicators. You should aim at having a leveled constant environment.
Safety and Injury Handling
Facilities need to have sufficient accessible First Aid and Burn Kits on site. Safety and Emergency Showers are often determined by code and the type of extraction solvent in use at the locations. Eye wash stations may also be required.
Spill and Solvent Safety
In areas where solvents are or may be used, you will need to have barrier/spill kits specific to the solvents and extraction materials on hand. This barrier can be built in or hand delivered per emergency. Solvent storage locations, depending on the type of solvent and hazardous rating.
Having one or two dedicated people to run point on spills can be part of a comprehensive spill procedure that would include evacuation of the area, assessment of the spill and of the clean up technique, disposal method, etc. There are many materials that are not compatible or properties that make them volatile under certain circumstances so having dedicated people to evaluate the situation will save you time, money, and any possible mishaps.
Solvent Storage
Indoor and outdoor solvent storage are dictated by NFPA, ICC-IFC, and local regulations. Storage types and limits are essential to check before buying or building a facility. Fire professionals base these limits on several factors of flammability including class and volatility. You may also need to adhere to SARA Type III reporting depending on the solvent and storage amounts. Do not forget about solvent tank types, whether they need to be mounted or chained to walls, security access controls, and SDS requirements.
Solvent Enclosure
C1D1, C1D2 is needed for solvent use. The actual type of solvents (e.g. CO2, Ethanol, etc.), and volume of solvent will dictate the different requirements for enclosures. This section pertains to areas in which the solvent would be transferred, mixed, extracted, recovered, etc. The type of enclosure is dependent on the type and class of solvent. Most enclosures will have volume limits, containment, vapor detector, electrical and ventilation requirements.
Emergency Ventilation
Ensure wall switch and fast ventilation, automated ventilation when sensors are activated during spill of contaminate.Sensors to be located where appropriate for the substance in use. Coordinated with the fire marshall to meet local requirements through design with architect and mechanical teams.
Employee Access Control
Limiting door access, proper security labeling, and key sets for employees need to be part of your overall security plan. LThe idea is to prevent unauthorized personnel from accessing the extraction space compliant with the local regulatory body.
Equipment Regulatory Listing
There are requirements such as UL certifications/marks which are dependent on the actual device and intended use. Always contact your local code enforcement office and a licensed contractor.
Committee Blog: Everything You Wanted to Know About Cannabis Facilities But Were Afraid to Ask Field Guide – Part 1 – Cultivation
by members of NCIA’s Facilities Design Committee
Jacques Santucci, Brian Anderson, David Vaillencourt, and David Dixon
Introducing our five-part series on the behind-the-scenes workings of the legal cannabis industry. This series focuses on all of the inner dealings and industry advice from established professionals to craft this unlimited How-to-Guide to assist you in setting up your own facility. These articles cover cultivation, extraction, infused products, and retail facilities as well as support activities. In general, remember to be compliant with all local rules and regulations and contact a licensed contractor and industry expert.
Part 1, Cultivation: The Top Things to Consider When Planning Your Cannabis Cultivation Facilities
As you are planning to start your own indoor cultivation facility, there are some often ignored basic parameters that should be taken into account in the design and decision-making process. We have listed the key parameters that will ease the process of going live and may save time and money while you design your facility and the building process. Always remember to be compliant with all local rules and regulations.
Lighting Recommendations
Depending on your goals, building setting, and local requirements, you have many options for lighting, from HPS light to LED lights. Lighting standards are measured in watts per square foot. Recommendations may vary per state or other criteria. For example, Massachusetts recommends an intensity of 36w/sft for energy consumption.
Water Recovery: Minimum Percentage
Cannabis is a water-intensive crop, and consideration of effluent capacity can be inefficient, expensive, and an issue for municipalities. Depending on your cultivation practices, you should consider a water recovery system and what percentage you are able to capture. There are two types of water recovery – leachate, and condensate. An effective system will recover at least 70% of the water for utilization, significantly reducing your water and sewer expenses. Your irrigation and fertigation selection will have an impact on your water consumption.
Generator Capacity: Minimum Recommendations
Your area or your business model may dictate for a generator – which is a critical Business Continuity consideration as a power outage, even if for a brief period of time can destroy a crop. Make sure to calculate the minimum capacity requirements of your facility. Do you plan to have it for emergency or stand-by usage? Typically, 50% of your short lighting load capacity of cultivation, 100% for AHU (air handling), and some back-office and security system, including cameras, access, and server needs.
Carbon Dioxide Enrichment: New Versus Recaptured
You can consider 75% new tanked- or generated- natural gas and 25% recaptured sources, for cultivation rooms, gas-fired chillers, and gas-fired boilers.
Carbon Dioxide Alarms Levels: Cultivation and Common Areas
Carbon Dioxide monitoring is critical for worker safety. You should be monitoring common areas to ensure that you are below 3,500 ppm. Monitoring should be tied to the fire alarm system for building evacuation, with 2,000 ppm alarm levels for the cultivation area. 5000 ppm limits are required by NFPA/OHSA. Alarms should contain visual strobes, red/green room access indicator lights and/or possibly an exhaust system that is triggered by an alarm
Renewable Energy: Minimum Energy Production Percentage
To demonstrate a commitment to sustainability, a minimum target of 10% of your facility’s energy consumption should be from renewable energy production: i.e. solar power, wind energy, geothermal, biomass, and/or battery energy.
Refuse Disposal: Recycling and Composting
Consider certified disposal of horticulture byproducts with a minimum of 25% recycling or composting by volume; rendered unusable. You will want to establish and verify that your shredder or equivalent system is capable of breaking up debris to a specified size.
Airlock Doors for In-Between Uses
You should install an airlock barrier, or at a minimum an air curtain, between the business and the production side, for outside and inside egresses, to keep a controlled environment. Keep in mind considerations for ventilation systems and cascading airflow.
Wall Material
For best performance to mitigate biological hazards and contamination, depending on your region, recommend installing insulated metal panels, that are non-porous, solid core wall, insulated metal panels (IMP), with surface mounted devices.
Security Entrance: Facility Safety
Consider creating a separate mantrap style entrance to allow for better safety at the entrance point, monitor visitors, keep a controlled environment as well as avoid weather-related issues, i.e. wet areas due to rain or snow, or temperature variance due to extreme heat or cold.
Limiting doors access and key sets for employees needs to be part of your overall security plan, with proper door labeling and authorization levels. The idea is to prevent unauthorized personnel from accessing specific spaces, for proper environment control and to be compliant with the local regulatory body. Remember to be compliant with local rules and regulations.
Security Camera: Minimum Area of Coverage
In most states, you will need security coverage for 100% percent of your faculty where cannabis products will be stored or displayed, with proper recording and monitoring. Keep in mind that your security room will likely need its own dedicated HVAC systems
Security Camera: Minimum Data Storage and Resolution
You will need to store all security camera footage on-site for a minimum of 90-days, or more depending on regulations. You may need to store the data offsite for five years for future legal needs. Footage quality may need to be shot in 1080p minimum. An ASTM International Standard Guide for Video Surveillance System provides additional parameters to utilize.
Security Alarm: Monitoring
Security alarm needs to be monitored by a reputable company. A service level agreement (SLA) or similar to ensure there are redundancies in the event of a failure should be considered, and redundancy or a backup system might be necessary.
Odor Control: Exhaust Air Management
Odor mitigation is a crucial part of all operations. All exhaust airflow must be oxidized or ionized. You also need a fogger system and carbon filtration. Refer to local municipal bylaws and regulations for more information.
For interior odor control and non-cultivation areas, consider cascading air flows from non-cultivation areas to provide a common method of control for pressurization control. Plan to control air flow and exhaust.
Fire Sprinkler: Maximum Bench Sizing
Sprinklers are designed to cover a limited surface area. When installed on cultivation tabletops wider than 48”, additional sprinkler coverage may be required.
Flooring Type: Continuous
Cultivation floors shall have continuous resin or epoxy coating with at least a four-inch lip onto the adjacent wall.
Energy Incentives: Minimum HVAC/D Efficiency Rating
Air Conditioning (AC) units should be no less than 16 SEER, High Point (HP) units no less than 9 HSPF. Incentives for this vary by state. Please check with your local utility company and regulatory commission for all available rebates.
HVAC Validation Requirements:
Bi-Annual Third Party Controlled Environment Validation using required Trend Data Metrics is the validation and calibration of control sensors, including temperature, humidity, CO2, and other devices such as scales, flow meters, integral valves, PPM sensors, EC meters, TDS meters, HVAC dampers and other applicable devices that may drift from factory or initial installation specifications.
Good Agricultural and Collection or Manufacturing Practices (GACP/GMP): Ready Versus Complaint
Your operation should be designed with documentation to prepare for GACP or GMP requirements. Depending on final product types, specific food-based GMPs with appropriate risk assessment programs (such as HACCP, and others referenced within the Food Safety Modernization Act) will prepare you for any federal or international trade opportunities in a federally legalized framework.
Employee Locker Access
Plan for gender-specific, male and female locker rooms, with six square feet per employee per shift expected to arrive at the facility at any given time. Employee supplied flock for locker or lock provided by the employer is a business decision. Keep in mind how you will keep the environment of your production facility under control. You might consider having locker access adjacent to the growing area with a proper gowning area.
Locker Room Type
Make sure your locker room is correctly set up for employees to be able to change in a safe way. Specifications for Locker Room and Gowning/PPE Areas should allow access to faucets for washing hands as well as bathrooms. Note gowning areas should be separate from the bathrooms directly off the locker room area.
Employee Shower Access
Per International Building Code (IBC) and State Plumbing Codes, calculate the number of employees and determine the number of showers based on code requirements as well as business policies. Having gender-specific showers is a recommendation as well as a business decision.
Emergency Eye Wash- Shower
For safety and based on OSHA standards, Integrated Pest Management (IPM), fertigation, and extraction operations must-have emergency eye wash showers. Eyewash stations need to be placed throughout the facility so that they are within 10-15 seconds walking distance from employees. Check local requirements for additional needs.
Note: in a facility where corrosives and skin irritants could pose harm to employees and require immediate remediations, you should consider emergency showers.
First Aid Kit Distribution
First aid kits should be available in all rooms where sharp tools and other hazardous materials are intended to be used. These kits need to be within 10-15 seconds of employee walking distances. Per OSHA requirements, first aid kits should be located in all trim, extraction, flower hallway, and shredding areas. This is overall a must-have in your facility.
Safety and Injury Handling
We recommend that you ensure that you have enough first aid and burn kits available throughout your faculty, based on your activity and the number of employees.
As the debate heats up on “how” rather than “if” cannabis legalization will happen, social equity and comprehensive reform are at the forefront of the minds of national legislators and advocates. Previously, in part 1 of this series, the DEIC examined the problems inherent in existing social equity programs and the merit of federal social equity in regulating interstate commerce. Sadly, as written currently, all proposed federal bills fail to meet the critical objective of creating as much NEW generational wealth as possible for those harmed by the war on drugs.Now, we examine the key components of a proposed framework to address these challenges, how to define social equity federally, and the merit of determining the types and numbers of permits to be issued.
Key Considerations for a Federal Cannabis Social Equity Program:
Fundamentally, any federal act for cannabis legalization should be a social justice bill that deschedules cannabis federally and that creates the most amount of new generational wealth for those most impacted by prohibition. Expungement for all persons with a past criminal record involving cannabis is the bare minimum these bills should do. However, proposed bills so far fall short of the latest innovative solutions to known problems in social equity programs and should be amended to include these key considerations.
Any proposed act must be amended to include provisions on regulating interstate commerce immediately after descheduling. The NCIA’s Diversity Equity and Inclusion Committee (DEIC) believes any federal act must prioritize social equity ownership of interstate commerce permits issued by the federal government. Learning from the municipal and state social equity programs, this policy paper seeks to propose amendments that meet these objectives, by instituting the following amendments to federal legalization bills:
Defining the regulatory agency for federal interstate commerce regulation and taxation
Alcohol and Tobacco Tax and Trade Bureau (TTB) and U.S. Small Business Administration (SBA) roles and responsibilities
Defining number and types of seats for a Federal Cannabis Social Equity advisory board
Ensure a diverse and representative Federal Cannabis Social Equity advisory board members, e.g., federal, state, tribal nations, diverse city representation, NCIA, and social equity cannabis owners, and operators.
Defining who qualifies as a social equity interstate commerce permit holder:
Outlining what states must meet as a minimum standard set by the federal government to participate with equivalent/reciprocal qualification.
May be determined by advisory board to define social equity qualifications
With minimum areas defined such as: income, arrest history, disproportionately impacted area(s), residency or heritage to avoid gentrification issues at large.
Defining permit types (similar to wine wholesale model) such as:
Importing
Privileges to buy from exporters directly and sell to distributors or transporters and licensees into a state system from another state
Exporting
Privileges to buy from operators and sell from a state system to an importer in another state
Transporting
Privileges to sell to or buy from qualified cannabis licensed businesses within a state system and to move product from or to licensees in a state or between importers and exporters interstate
Testing
State labs that meet national standards to ensure consistency with results for other permit types
May not be strictly social equity since existing labs are more specialized in converting to federal standards and adding this permit
Defining these basic requirements offers a framework for interstate commerce permitting and establishes the essential agencies required to enact a robust social equity program federally. More importantly, it stalls illegal and gray area activity from taking root under the guise of federal legalization by ensuring interstate commerce activity falls under a specific regulatory agency already well versed in interstate commerce permitting and regulation.
Suggested Social Equity Definition:
To define social equity applicant qualifications, DEIC suggests the TTB and SBA move away from diversity supplier program definitions which are too restrictive for a new industry to qualify. In order to accommodate the cannabis industry, DEIC recommends looking at other state definitions of social equity qualification that have proven to be effective.
Factors like living in a disproportionately impacted area for 5 out of 10 years, being arrested for cannabis or having a family member who was arrested, as well as income below the poverty line, should become qualifying factors.
Additionally, minorities, women, and veterans should be given additional consideration in the definition of who qualifies as a minority cannabis business.
High poverty rate, unemployment rate and participation in federal or state income-based programs, a history of arrests, convictions and other law enforcement practices in a certain geographic area, such as, but not limited to, precincts, zip codes, neighborhoods, census tracts and political subdivisions, reflecting a disparate enforcement of cannabis prohibition during a certain time period (war on drugs started in 1971), when compared to the rest of the state.
Utilize the advisory committee and collaborate with cannabis social equity groups to make sure gentrification and displacement are taken into account. Many areas have drastically changed over the last 5-10 years. Where a person spent their formative, childhood years should also be factored in. Guarding against ‘gerrymandering’ types of map cutouts, where folks who grew up literally surrounded by DIA’s, and who dealt with many of the same issues growing up, are somehow not considered to be disproportionately impacted.
We believe the federal government should leave regulations within each state alone during this multi-year implementation and defer to the TTB and SBA to work in conjunction with any Federal Drug Administration (FDA) regulations with their primary focus pertaining to interstate commerce and taxation as it relates to social equity permit issuance.
Defining How Many Permits to Issue to Social Equity Operators
To address the common shortfalls of state programs, the DEIC realizes that social equity applicants are already a minority stakeholder in existing cannabis licensing. In most states, sadly, constituting less than 5% ownership. This is a huge difference compared to the proportion of individuals in prison for the same activities a licensed business is allowed to conduct.
Accordingly, the DEIC recommends a direct balance in ensuring a lock-out period on issuing new permits and ensuring, during that time, that 95% of the permits go to social equity owners/operators.
While some may consider such a counter-balance to be extreme, more and more states are increasing the committed amount of licenses for social equity to ensure a fair counter-balance. If anything, mega-players should be competing with each other for a select number of limited licenses – not the other way around.
We also realize that, in order to generate investment or value behind interstate commerce permits, there could not be an unlimited number of them initially issued. While the advisory board may issue more in the future, we feel a bold stand to increase the number of valuable permits for initial social equity applicants nationwide is necessary to ensure a balance that reflects the oversight to include social equity business into the industry thus far.
DEIC suggests 1,500 permits as a starting point divided among the three primary types (import, export, transport) as a fair balance initially.
The above policies may seem bold, but they are designed to seek to balance the industry and state’s failure to allow social equity participation. Most cannabis states left out social equity operators by mandating residency and felony-free requirements.
The reality is that interstate commerce means selling the products already owned and produced by non-social equity folks. Further, if it was not for these legacy operators, there would not be a cannabis culture. A culture that has been co-opted from legacy social equity operators by mega operators who kept “undesirables” from the industry at its inception.
These policies seek to balance the needs of traditional cannabis businesses that would most benefit from interstate commerce, with the needs of social equity businesses to create equal opportunity. By limiting the number and availability of interstate commerce permits for at least a 5 lock-out year period, the policy ensures traditional operators partner with social equity permit holders to export, import, and transport their goods between various markets.
The policy helps ensure partnerships that are more equitable for both parties and, in doing so, seeks to avoid “predatory operating agreements” or “social equity colonialism” that dilute social equity operators who are not given the opportunity or resources to bring anything to the table. Therefore, the DEIC stands by lock-out periods and a dedicated high percentage of limited licenses for social equity interstate commerce permitting as a policy to balance existing inequity.
In the next part of this policy paper series, the DEIC will examine how this framework sets up social equity technical assistance, qualification, and a phased approach of implementation to ensure the widest net is cast and that social equity operators have ample time to qualify, are appropriately funded, and set up for success with an equal starting line for interstate commerce.
Member Blog: Cannabis M&A – Protecting the Valuation Calculus Using Cyber Compliance and Due Diligence
by Rebecca L. Rakoski, Esq. and Patrick D. Isbill, Esq. of XPAN Law Partners
When it comes to the intersection of law, business, and technology, the legal cannabis industry is arguably at the center of all three. Relying heavily on creative, innovative technology to distinguish itself while continually analyzing profitability forecasts to take advantage of new business opportunities and having to monitor at the same time the changing data privacy regulatory landscape, it can all seem rather daunting when added up. Securing trade secrets and overseeing reputational management related to cybersecurity and data protection are some of the challenges rooted at the forefront of this industry, especially after last year’s stunning pace of mergers and acquisitions. Increasing consolidation of fragmented segments of the cannabis industry is foreshadowing a strategic, long-term business approach to achieving higher profits and revenue, leaning on market advantages such as relatively favorable interest costs for now and lower valuations.
Data security and past cyber events play a significant role in these transactions, as do regulatory compliance and data privacy laws. One of the primary, if not foremost, objectives of any deal involving a merger or acquisition is of course valuation. Poor cybersecurity practices, lack of a comprehensive security and data protection program, and digitally unsecured proprietary assets on the part of the target company could spell unforeseen financial, not to mention legal liability, headaches for the acquiring organization.
The business of legal cannabis is after all a highly unique industry because of the already intense regulatory oversight and the enormous amounts of data inherently built in and circulating throughout its diverse industry sectors. From cultivation and laboratory research to manufacturing that incorporates processing for global distribution and all the way out to consumer dispensaries, the aggregate value of such data is almost nothing short of priceless. Simply put, data equals money in today’s global digital economy. So when the acquiring organization fails to adequately perform its due diligence when it comes to cyber compliance, it may be in for a rude awakening post merger or acquisition, especially if this data has been unknowingly compromised.
Every company should first seek to identify and classify the type of data it is acquiring to determine regulatory compliance. Personally identifiable information (PII) and/or protected health information (PHI) and where either comes from, e.g., a consumer or patient, will go a long way to understanding whether state and/or federal laws have been violated. Next, discovery of a past cyber event or breach is critical. Compromised data from inadequate cybersecurity or failure to report potential violations of state data privacy laws to any of the corresponding state enforcement agencies could result in hefty fines and unexpected assumption of liability, not to mention the legal costs to fix it after the deal is done.
Almost every cannabis business knows from the outset it has very particularized regulatory requirements, but such knowledge does not obviate it from complying with additional regulatory data privacy and cybersecurity obligations. Regardless of the side of the transaction, businesses need to keep several key end goals in mind during an M&A deal. Questions include but are not limited to the following: (i) prior cyber practices; (ii) prior cyber incidents; (iii) documented cybersecurity and data privacy programs; (iv) whether those programs are operationalized or just “there” for window dressing; (v) whether there is cyber-liability insurance; and (vi) the nature and type of contractual obligations. All of these elements will help to determine the level of data privacy and cybersecurity maturity of a business which, in turn, affects the value of the data and practices of the targeted organization.
Poor data security and privacy practices can lead to a devaluation of the business calculus and create an unforeseen situation where an organization suddenly becomes a liability rather than the intended asset. In the current shifting legal and technological environment, ignoring or leaving cybersecurity and data privacy due diligence in an M&A transaction to the last minute can be a costly enterprise. In addition, the nature and type of contractual obligations in and around data privacy and cybersecurity can also create a potential for substantial liability if the organization has not operationalized its privacy and security program. Each part of this due diligence is interconnected and can wreak havoc if not properly assessed and, in some instances, immediately addressed.
Like water running downhill, any variation in terrain going forward will cause a parallel, and potentially unpredictable, directional shift.
All in, the industry is keenly aware of what consumers value – privacy. For example, trust in the product sold and confidence that their identity is secure topmost consumer surveys on the topic. Any cannabis business understands this fragile balance, and any path to growth in the industry must account for it. Same applies to trade secrets. Often the linchpin of a merger or acquisition will be the result of interest in innovative research or breakthrough technology developed by the target company. If it is discovered later that this proprietary work was potentially compromised or publicly disclosed, then the initial value used as the basis for negotiations could diminish exponentially if the work has been appropriated by a business competitor or industry rival looking for a market share advantage.
Due diligence is already part of the fabric of M&A deals. Reports suggest the large volume of global mergers and acquisitions overall is expected to continue this year from last despite worries over regulations and rising interest rates. But focusing on accounting and finances without spending time on determining past commitments to cyber readiness and compliance can unravel even the best of intentions. Valuation is a key calculus in these deals. Understanding the true value of what is being acquired or consolidated is essential to taking advantage of business opportunities for growth and return on investment for an industry primed for both.
Rebecca L. Rakoski, Esq. is Co-Founder and Managing Partner at XPAN Law Partners, LLP. Rebecca counsels and defends public and private corporations, and their boards, during data breaches and responds to state/federal regulatory compliance and enforcement actions.
Patrick D. Isbill, Esq. is also Co-Founder and Managing Partner at XPAN Law Partners, LLP. Patrick’s practice focuses on cybersecurity and data privacy compliance and enforcement, addressing the business needs and demands of highly regulated industries.
This article does not constitute legal advice or create an attorney-client relationship. The information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
Video: NCIA Today – Thursday, April 7, 2022
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.
This episode of NCIA Today is brought to you by Senseon Secure Access, offering concealed protection, monitoring, and workflow management for dispensaries. Senseon is ready to provide you with an exceptional customer experience, plus improved efficiency and compliance, not to mention slim and modular aesthetics. Learn more about their security solutions and cost benefits at Senseon.com.
NCIA Partners with Green Enterprise’s HBCU College to Career Initiative
This week on Thursday, April 7, 2022 kicks off the first event in a partnership between NCIA and Green Enterprise’s HBCU College to Career Initiative to bring career empowerment to HBCU students and alumni (Historically Black Colleges and Universities) starting at Chicago State University.
This significant initiative expands opportunities for underrepresented Black and Brown people in the cannabis industry. In a series of on-campus events at HBCUs around the country, the College to Career Initiative will assemble prominent Black entrepreneurs, state officials, and thought leaders to discuss solutions to create a point of entry in the growing cannabis industry, as well as substantial pathways to success.
Join us on April 7, 2022 at Chicago State University for a dynamic day where you can get up close and personal with prominent Black advocates and entrepreneurs for career advancement in the industry!
You can expect to network throughout the day and join intimate conversations in the afternoon with experts on how to use YOUR unique skills to break into the industry. NCIA leaders will be speaking, as well as hosting “office hours” with students and alumni interested in discussing the best pathways to break into the industry. This event is a continuation of NCIA’s Equity Workshop Series, the live, in-person component of our equity scholarship and mentorship program.
Creating a Pipeline to Generational Wealth
“The goal here is to create a direct pipeline of opportunity from black and brown students and alumni to our member companies and resources,” says NCIA DEI Manager, Mike Lomuto. By now most of us are aware of the vast underrepresentation of Black and Brown communities in the upper levels of the cannabis industry. This initiative is a way to build a foundation, starting at the ground level with students coming out of educational institutions gaining direct access to opportunities that might otherwise be out of reach by bringing these prominent Black entrepreneurs and cannabis leaders in person to meet with these students.
When Mike and Andrew Farrior, co-founder of Green Enterprise Magazine, began conversations in the Fall, they aligned on the deep commitment to expanding real opportunities for folks to have access to building generational wealth. Green Enterprise, operated and produced by Digital Venture Partners and Black Enterprise, then announced the Green Enterprise College to Career Initiative. This series of on-campus events will tour HBCUs across the country in 2022, creating a point of entry in the growing cannabis industry, as well as substantial pathways to success. The timing of this couldn’t be more relevant, as many of the HBCUs are in the Northeast and Southeastern states that are coming online with cannabis programs, and as the tour gets established we will be there right on the ground providing access to the industry.
The Unique Opportunity for NCIA Members
NCIA will provide adapted versions of our Equity Workshop Tour at these HBCU events. The in-person component of our equity scholarship and mentorship program allows us to engage with social equity applicants and operators, as well as the community at large on the ground, in different regions in the country with the goal of addressing specific needs of the community while connecting them to resources. “So this is why it was such a good fit for us to make this partnership. We hope to connect with Black leaders in the industry who may be interested in joining NCIA and strengthening our mission together,” says Mike.
NCIA is composed of thousands of cannabis industry companies that are searching for interns, employees, and partners. NCIA has the unique ability to represent small businesses in all different sectors all over the country. There are many opportunities throughout the NCIA network for people to enter and advance in the industry from a variety of entry points. Being involved in this historic initiative allows us to bring people to the table that may not have otherwise had the ability to partner with Andrew and Green Enterprise’s initiatives. When Andrew brought this opportunity to Mike, and Mike subsequently brought it to NCIA’s member base, the response was immediate and exciting. “People are ready to just give and do whatever they can to help with this initiative, and bring the cannabis industry to these campuses in whatever way Andrew thought we should do.”
The HBCU College to Career Initiative Tour Dates
These historic events at HBCUs will be taking place throughout the remainder of 2022, and underline a variety of conversations and lectures covering a wide range of topics, from entrepreneurship to cannabis marketing, to building an inclusive industry that began at Southern University in Baton Rouge, LA in February and will continue on to Chicago State University this April 7th, presented by Cresco Labs. The CSU event will be held in conjunction with the predominantly black two-year college, Olive-Harvey. The tour will then make additional stops at Florida A&M University on April 20th, and Medgar-Evers College on April 30th, both being powered by Massachusetts-based operator, Curaleaf.
Cresco Labs, the presenting sponsor for Chicago State University and Olive-Harvey College, will promote significant conversations and initiatives and hand out materials to initiate in-earnest partnerships between cannabis operators and HBCUs and develop a direct, effective talent pipeline into the industry.
Spotlighted topics such as social impact and entrepreneurship, as well as, economics and investing, will be covered. The full schedule is available at GreenEnterpriseHBCU.live:
Chicago State University & Olive-Harvey College – Chicago, IL
Thursday, April 7, 2022
Florida A&M University – Tallahassee, FL
Wednesday, April 20, 2022
Medgar-Evers College – New York, NY
Saturday, April 30, 2022
Sponsorship and partnership opportunities are available for this specific initiative and NCIA’s programs. Also for our members interested in becoming involved, please reach out to Mike Lomuto, DEI Manager.
We’re excited to get our members engaged with this initiative to create solid pipelines at this historic point in the industry.
(Another) Historic Week In Congress for Cannabis Reform
Photo By CannabisCamera.com
By Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Usually, progress is slow in Washington, D.C. However, that has not been the case lately! Within the last week, the U.S. House of Representatives has passed both the Marijuana Opportunity, Reinvestment and Expungement (MORE) Act and the Marijuana Research Act! They passed by a vote of 220-204 and 343-75, respectively. Let’s take a look at the bills and what’s next for them:
The MORE Act
Last week, the MORE Act came to the House floor for the second time in history. It was first voted on in December 2020, when it passed by a margin of 228-164.
Revisions from the last session include the removal of a provision that would have allowed federal regulators to deny cannabis business licenses to applicants who have prior felony convictions. Other changes from the introduced text this session include revisions to property requirements, allowing operators to secure those locations after receiving a federal license.
A number of amendments were offered at a Rules Committee hearing to advance the bill, however, only three were ruled in order. The first passed on a roll call vote and was introduced by Rep. Josh Gottheimer (D-NJ), authorizing $10M for the National Highway Traffic Safety Administration to conduct a study on technologies and methods that law enforcement may use to determine whether a driver is impaired by marijuana.
Another amendment, introduced by Rep. Conor Lamb (D-PA) directs the National Institute for Occupational Safety and Health (NIOSH) to conduct a study on the impact of legalization to the workplace, using states that have legalized recreational use of cannabis as a guide, and requires NIOSH to develop best practices for employers as companies transition their policies related to cannabis, prioritizing employers engaged in federal infrastructure projects, transportation, public safety, and national security. Additionally, it directs the Department of Education to conduct a study on the impact of legalization on schools and school-aged children, using states that have legalized recreational use of cannabis as a guide, and requires the Department of Education to develop best practices for educators and administrators to protect children from any negative impacts.” It passed on a roll call vote.
Another amendment, which failed on a roll call vote was offered by Rep. Jamie Raskin (D-MD) would have required federal agencies to review security clearance denials going back to 1971 and retroactively make it so cannabis could not be used “as a reason to deny or rescind a security clearance.”
While there is currently no companion bill in the Senate, Majority Leader Schumer (D-NY) along with Senators Booker (D-NJ) and Wyden (D-OR) is expected to introduce a comprehensive cannabis reform bill over the next month.
Marijuana Research Act
More recently, the House also passed the Marijuana Research Act sponsored by Reps. Earl Blumenauer (D-OR) and Andy Harris (R-MD). This bill would remove barriers for researchers seeking to apply and get approved to study cannabis, set clear deadlines for federal agencies to act on their applications, and also make it easier for scientists to modify their research protocols without having to seek federal approval.
Last month, the Senate also unanimously passed a research bill: the Cannabidiol Marihuana Research Expansion Act, sponsored by Sens. Feinstein (D-CA), Grassley (R-IA), and Schatz (D-HI). It remains to be seen whether the two chambers will be able to negotiate a deal on these research provisions to send to President Joe Biden.
Whether it’s cannabis research or descheduling, the NCIA D.C. team continues to increase momentum for reform. Interested in learning more about our efforts in D.C.? Consider becoming an Evergreen member today!
As we approach the end of Q1 2022 and prepare to enter Q2, it’s become clear that this is going to be an important year for the cannabis industry. Cannabis business professionals and investors looking for signs of growth or stagnation in the industry will certainly be interested to see how things unfold. With that in mind,CannaBusiness ERP has put together a list of the top cannabis trends for 2022, and those trends appear to be pointing to more growth. However, it’s clear that difficulties for the cannabis sector are still imminent.
Cannabis Trends for 2022
It almost goes without saying that the cannabis industry is complex and not without its fair share of challenges as the most highly regulated industry on the market. For businesses looking to grow, keeping up with complicated and evolving regulations can be stressful enough on a business in and of itself. Cannabis cultivators, processors, and consultants can look to cannabis industry trends to inform their operational decisions.
Increased legalization in the United States
Support for legalization in the USA continues to rise. In fact, a2021 Gallup poll found that 68% of Americans are in favor of legalizing cannabis. Not only is this a record number of supporters, but this percentage also reflects a growing sentiment among Americans regarding the use of legal cannabis.
The changing tide towards legalization is clear – more states passed legislation to legalize cannabis either medicinally or recreationally in 2021, with several more introducing legalization bills in2022. Because states operate independently of each other, every state will have its own policies as well as regulatory and compliance requirements, which can make things very confusing for cannabis businesses, especially multi-state operators (MSOs).
Leading cannabis business experts are predicting strong sales growth this year due to the growth in legalized markets for cannabis. In fact, legal cannabis sales reached $19.5 billion in 2020, and expertsare projecting sales to reach $30 billion in 2022. Washington State alone, which legalized cannabis ten years ago in 2012, is expected to generate $1.5 billion in sales, up from $1.2 billion sales in 2020. But Washington’s projected sales are small when you compare them to California’s projected sales of $7.6 billion. And as more states legalize cannabis, more sales will surely follow.
Another contributing factor to increased cannabis sales is related to increased demand and a growing number of product types. More consumers are learning why cannabis can be beneficial to them, including more restful sleep, lowering stress, lessening pain symptoms, and recreational use. Additionally, with so many products on the market, cannabis consumers have many options to choose from, ranging from edibles to tinctures to topical ointments and more.
Cannabis experts are predicting a growth in cannabis consumption lounges – the cannabis equivalent of a bar or restaurant that allows consumers to use cannabis on-site. According to theCannabis Industry Journal, the popularity of these lounges is growing because they provide consumers with a legal and safe space to consume cannabis. Just as with alcohol, the lounges are regulated according to laws set by each state.
Increasing sales means cannabis businesses are at a critical junction and need to scale operations to meet the growing demand. One way cannabis growers and processors can capitalize on the demand is by streamlining the business end-to-end withcloud-based cannabis business management software. Otherwise known as Cannabis Cloud ERP, it manages production, cultivation, compliance, inventory, financials and traceability, sales, purchasing, and more, all in one system that lives in the Cloud.
Increased legislative bills and pressure for federalization
Under U.S. Federal Law in the Controlled Substances Act, cannabis is still considered a Schedule I substance. However, as the number of states legalizing cannabis either recreationally, medicinally or both has increased, so too has broader support for federalization in the U.S. government. In fact, there are several bills in the U.S. congressional houses that may positively impact the cannabis industry, especially with banking challenges.
Due to the Schedule I federal classification of cannabis, many banks will not work with cannabis companies, creating tedious banking hurdles that are difficult to solve. TheNational Law Review writes, “Yet, in comparison to other industries, legitimate licensed cannabis-related businesses remain hobbled by the difficulties they face in accessing traditional banking and financial services – largely due to the fact that ‘marijuana’ is still considered illegal on the federal level under the Controlled Substances Act (“CSA”). Currently, financial institutions (including federally insured banks) are hesitant, and oftentimes unwilling, to work with cannabis-related businesses due to fear of reprisal from federal banking regulators.”
Congressional representatives have introduced a decent amount of bills geared towards making much-needed changes to banking processes for cannabis, such as the SAFE Banking Act of 2021, passed by the U.S. House of Representatives in April 2021. It is currently awaiting action in theU.S. Senatewith broad support from both sides of the aisle. If it passes both chambers of Congress, the act will allow cannabis companies to have business-critical access to banking and financial services and would reduce their need to operate as cash-only businesses and remove yearly challenges with tax accounting and reconciliation.
In addition to the SAFE Banking Act, there are other bills like U.S. Senate Majority Leader Chuck Schumer’s Cannabis Administration and Opportunity Act (CAOA), which is a push for federal cannabis legalization as well as an equity play. If passed, it is a measure towards ensuring small businesses and minority-owned businesses have access to financial services.
However, even with the tide of public opinion and legal momentum shifting in the industry’s favor, there remains a challenge with the U.S. tax code. Due to IRS Code Section 280E, if a business is trafficking certain controlled substances, like cannabis, that business is unable to deduct business expenses on their taxes. California has taken steps to address this by signing bills that help cannabis businesses overcome this code, but this is still a prohibitive factor for cannabis companies across the U.S.
Fortunately, cannabis companies that invest in a comprehensive Cannabis Cloud ERP solution with a reputable and experienced industry partner are better able to handle any hurdles that come their way.
Increased Merger and Acquisition (M&A) activity
Merger and Acquisition (M&A) activity has been steady in the industry and 2022 will see even more M&A activity. According toMJBizDaily’s article, “Marijuana M&A sizzled in 2021 and is poised for a hot 2022. Marijuana merger and acquisition activity proceeded at a torrid pace in 2021 – and could accelerate in 2022 – thanks to lower interest costs and pressure on larger companies to expand their footprints and boost revenue.”
Citing prominent cannabis acquisitions in 2021, such as Jazz Pharmaceuticals’ acquisition of GW Pharma (for $7.2 billion) and Trulieve’s acquisition of Harvest Health (for $2.1 billion), it is apparent that M&A is not going to slow down. According toBusiness of Cannabis, several deals are already taking place in 2022. Massachusetts-based Curaleaf acquired Arizona-based Bloom Dispensaries for $211 million, adding a total of 13 Arizona dispensaries and 121 dispensaries nationwide to Curaleaf’s portfolio.
For cannabis companies dealing in M&As and becoming Multi-state Operators (MSOs), it is essential to have a comprehensive, full-suite Cannabis Cloud ERP system that can run all the companies in one system. It is a crucial ingredient to manage their M&A transactions and handle their financial statements, compliance, business transactions, and more.
Most important of all, cannabis companies need to choose the right cannabis ERP.
Jennifer Spanos is the VP of Product and Vertical Strategy at CannaBusiness ERP. She has 14+ years of experience in cannabis and food manufacturing software and operations, working to maximize the efficiency and profitability of customers’ businesses.
CannaBusiness ERP: The Right Cannabis Business Management Software. Cannabis companies can grow their business with an ERP solution designed for the cannabis industry and for MSOs expanding into new markets. Learn how CannaBusiness ERP can set businesses on the right path. Manage financials, operations, quality, compliance, traceability, customers and more.
CannaBusiness ERP iscannabis business management software that is built-inSage X3 and configured byNexTec industry experts to deliver a complete cannabis business solution. Our specialization in developing solutions for the cannabis cultivation and processing industry has resulted in some of the most respected companies around the world managing their day-to-day operation using CannaBusiness ERP.
To learn more about the fast-paced movement in cannabis legalization and how Cannabis Cloud ERP software can help your company keep pace,reach out to us. We’d love to show you what CannaBusiness ERP can do for your business.
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By Sadaf Naushad
LaKia Bourne has 20+ years of experience as an accomplished and trusted accounting professional. As a women-owned and minority-owned accounting firm, LaKia has a passion for working with other small businesses and engaging in the local community, and her values drive her overall career goals and mission to uplift businesses and encourage financial competency through reliable accounting services.
NCIA’s editorial department continues the Member Spotlight series by highlighting our 
Hello, I’m Adrian Adams, EdD. I spent a decade teaching Biology and Chemistry as well as coaching football. I chose to spend several years as a stay-at-home dad (the hardest job by far) and then worked in the pharmaceutical industry. I know many of the physicians in my area. While at dinner one night with a couple of doctors, the conversation revolved around having to combat the misinformation that patients come in with from “Dr. Google.” Minutes later, one doctor asked the others what they were saying to the increasing number of patients who come in asking about cannabis therapy. There was a prolonged silence until another doctor said “I just tell them I don’t know anything about that and to look online.”
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Gary Cohen is the CEO of 
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NCIA’s editorial department continues the Member Spotlight series by highlighting our 
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PUFF COUTURE LLC is a minority-woman-owned cannabis company slated to open a microbusiness and consumption lounge in Detroit. We want to bring a sophisticated community-driven cannabis business that offers a contemporary atmosphere for clients. It will convey the importance of the cannabis flower by providing a chilled environment for clients to consume unique, flavorful, and aromatic cannabis. PUFF COUTURE will support mental health counseling, volunteerism, public policy, and minority representation in the cannabis industry, especially among women. According to a recent special report by 
Patrick D. Isbill, Esq.
Jennifer Spanos is the VP of Product and Vertical Strategy at