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 here on Facebook for NCIA Today Live.
NCIA’s #IndustryEssentials webinar series is our premier digital educational series featuring a variety of interactive programs allowing us to provide you timely, engaging and essential education when you need it most.
Got questions about how influencer marketing can help your cannabis brand? Interested in working with a cannabis influencer but don’t know how?
You’ll get all your questions answered in this edition of our NCIA Committee Insights series originally aired on Tuesday, June 28, 2022 in which members of NCIA’s Marketing & Advertising Committee convened an all-star panel of innovative influencers who’ve worked with the cannabis industry’s leading brands.
Tune in to the conversation featuring moderator Allison Disney as she speaks with the amazing Alice Moon, Shayda Torabi, and Monica Lo to discuss how to reach and engage cannabis users with original branded content.
What You’ll Learn:
WHY influencer marketing should be in your marketing mix
WHO is most influential in cannabis conversations online
WHAT a successful influencer marketing partnership looks like
HOW to engage the right influencer partner(s) for your brand
By Tara Coomans, CEO of Avaans Media
Member of NCIA’s Marketing and Advertising Committee
You may look at these 6 cannabis PR ideas and wonder what they have to do with PR, but your reputation is holistic and dynamic, and these PR tips add up to big value.
2022 has been a mixed bag for the cannabis industry. If you are feeling the pinch then you’re probably looking for ways to increase revenue without incurring considerable extra costs.
Corrections are quite literally a matter of time – it’s just part of capitalism. But with every correction comes a recovery and THAT’S what you should be planning for right now. It might seem difficult to plan for that day, but now is the time – especially since your competitors are probably cutting marketing budgets, if you maintain yours and mix in these ideas, you’ll be exceptionally well positioned for the happier days ahead.
Here’s some good news, see how the experts are bullish.
MJ Biz projects the cannabis industry’s impact will still be near $100 billion by 2022, and nearly $158 billion by 2026.
According to Viridian Capital Advisors, a financial and strategic advisory firm for the cannabis market, investors are encouraged to invest in cannabis stocks now, because they forecast a 2023 & 2024 with a 25% increase in revenues for the cannabis sector, with flat margins. More good news U.S. cannabis stocks with trade at EV/EBITDA multiples of 5.7x (a 60% increase over 2022) for 2023 and 4.6x (a 50% increase over 2022)for 2024.
If you’re a smaller brand, keep at it, Viridian says MSOs will continue to lose share to small operators in 2022.
According to Gallup, the percentage of U.S. adults who say they have tried marijuana is sitting at 49%, the highest measurement to date.
These projections show some pretty impressive growth – so don’t act too rashly yet. But, you should absolutely consider adding these tips to your planning so you can excel during this time and maximize brand value. Frankly, you should do these things in the best of times too, because they’re fruitful and evergreen ideas.
“People will forget what you said, people will forget what you did, but people will never forget how you made them feel.” -Maya Angelou
Right now, we need to commit to the industry associations that are actively working to improve and defend our industry on the local level and the national level. When you join, ask how you can more actively support the organization. By supporting the organization, you’ll not only strengthen its mission, but you’ll also be able to get to know the people better too. Double down with your time and you’ll find the returns are immeasurable. Take full advantage of the membership benefits, if there are ways to share your point of view, maximize those. As the industry consolidates, people are looking to do work with people they trust and the best way to encourage trust is to be present, take part, show your commitment to the organization, the mission, and the people who are contributing to the industry. At Avaans Media, we’re big fans of the way National Cannabis Industry Association (NCIA) treats its members.
When was the last time your CEO attempted to make budtenders feel special? Now is a great time. Budtenders, like it or not, are the face of your brand to the consumer and trust me, they feel stressed about the cannabis industry’s challenges too. Why not do something no one else will do for the front line during when things get rough: treat them with respect. Small efforts can go a long, long way right now. I’m not talking about training, I’m talking about thinking of ways to thank budtenders right now, genuinely show your appreciation. It could be as simple as a surprise visit to every dispensary with gift cards. Sure you can go bold and that’s fantastic too, but if you can’t be bold, that’s not an excuse to do nothing. Everyone else will do nothing, do more and get more.
While we’re at it, let’s talk vendors. Sure, go ahead, negotiate good terms – AND uphold your end of the bargain. No one will forget that you drove a hard bargain, but that’s business. But go the extra mile and hold up your end of the deal as if your life was on the line because, from a brand perspective, it is. The last thing you want right now is lackluster partners or partners who don’t really love you, what you want right now is passion, the vendors who are going the extra mile for you-but to do that, you need to treat them well too. Any partner who will go through the craziness of a correction while looking out for you is worth their weight in gold, treat them that way. Pay on time, acknowledge their efforts, and the importance of the relationship. Put a little free-but-important muscle into it and watch how that pays dividends.
If you have to separate from employees or partners, do it with class. Be communicative and as fair as you can possibly be. Anything you do when severing a relationship, especially when it’s abrupt, will be especially remembered. So take a hard look at what your brand is worth and treat goodbyes with respect and dignity. If you’re letting employees go, be sensitive to timing. If you’re canceling a contract, have a real discussion with your partner about how to do it fairly. It’s easy to feel shame about these conversations, but don’t hide from them. Yes, these conversations are the worst kind to have, but during the tough times, it’s what you do more than what you say that people will remember.
Customers are the obvious driver of revenue. Now is a great time to make being your customers more fun. Think about what’s REALLY important to your customers. What drives their motivations? Reward cost-conscious customers with small incentives like purchase cards that can be turned in for promotional products. If your customers are creative, how can you encourage them to spend their creative energies on their brand commitment? It could be making the inside of your packaging a game, it could be encouraging them to share your brand through social media. And by the way, track your most passionate brand advocates on social media and never forget to celebrate them and acknowledge them. No cannabis brand is too big to thank its customers right now.
“When they go low, we go high,” -Michelle Obama
You might not have had the time last year to really see where your best success stories were, but now is the time to look – and celebrate – what worked by actually increasing the heat of what’s doing well. Invest in things that are working well. Increase ROI of the things that are already returning value by committing to them at a whole new level. If your brand is great at social media, keep at it and make it better. Issue a special version of your most popular product line. Really taking a stand and focus on something you do well will make you stand out from the pack and return more ROI as your competitors struggle to figure out how to manage the dynamics of this marketplace.
Consumers know, especially your most passionate consumers, they can tell when you’ve made substitutions and formulation changes. As tempting as it may be to cut corners on the product right now, don’t. Keep your customers happy by maintaining quality while your competitors decrease theirs. Keeping the quality up doesn’t cost extra, but decreasing quality will cost you in the short and long run.
Incentivize your sales, marketing and PR teams & vendors with trackable KPIs and hold them accountable. Self-serving as this sounds, if you devest cannabis PR, marketing and sales now, you’ll struggle to regain market share when the market starts its inevitable upward tick. Resist the urge to reduce these expenses because the hidden costs are ginormous and tend to extrapolate themselves in silent but deadly ways over years, not months. I’ve seen this happen over and over again, eliminating these roles, or worse, hiring someone for cheaper, costs companies more. Instead, attend sales, marketing, and PR meetings and show that you’re in touch with the marketplace and work collectively to address issues early. Make sure you’re keeping a close eye on benchmarks and competitors so you have a real idea of how you’re faring in comparison.
Kindness, professionalism, and time don’t cost extra, but they can be the difference-maker. Now is a great time to really make your brand stronger. Now is a good time to focus on the solutions that will bring you the most value and even increase trust so you can maximize your opportunities during a rebound.
Tara Coomans, is CEO of Avaans Media, a digitally forward PR agency that specializes in emerging industries, from startup through IPO, including cannabis PR, since 2015. Services include bespoke PR for ambitious cannabis companies as well as PR Sprints exclusively for consumer brands and products. Avaans Media is based in Los Angeles, with distributed team members around the country including Washington D.C., New York, Oregon, Illinois, and Colorado. Coomans is on NCIA’s Marketing & Advertising (MAC) committee and leads the MAC Experts Directory subcommittee for 2021. Coomans is a frequent writer and speaker on public relations, marketing, and social media topics.
In this edition of our NCIA Committee Insights series originally aired on Wednesday, September 28, 2022 members of NCIA’s State Regulations Committee convened a panel of government affairs, business development and licensing experts for an in-depth discussion focusing on cannabis ballot initiatives up for a vote this coming November.
They provided a detailed overview on the status of each campaign so that you’ll learn how best to position yourself for success and what you can do to help push these efforts across the finish line. If you’re considering business Arkansas, Maryland, Missouri either of the Dakotas then this session is specifically geared for you.
At the conclusion of the discussion they hosted a moderated Q&A session to provide NCIA members an opportunity to interact with leading minds from the cannabis regulatory and licensing space, join today to contribute to future conversations!
Learning Objectives:
• Provide practical information to NCIA members about the cannabis ballot initiatives and potential new business opportunities.
Presentation Slide Deck: https://bit.ly/3RD8ivn
Panelists:
Sumer Thomas
Director of Regulatory Operations
Canna Advisor
Nicola Batten
CEO & Founder
koLaB Consulting
Larry Luksha
Government Relations & Business Development
Veritec Solutions
Joseph Smith
Senior Managing Associate
Thompson Hine LLP
NCIA Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. This week Bethany is joined by NCIA CEO Aaron Smith to talk about the importance of having your voice heard on Capitol Hill at our upcoming 10th Annual Cannabis Industry Lobby Days on September 13-14. Join us every other Thursday on Facebook for NCIA Today Live.
by Gary Paulin, VP of Sales and Client Services at Lightning Labels
With expansive product choices, it’s no longer enough to rely solely on product quality and availability. Today’s maturing cannabis marketplace requires differentiation to resonate and succeed.
Three pillars of that differentiation are stellar customer service, total transparency, and excellent education. At the core of each, sincerity and truth must predominate. In this age of “fake news,” anything that doesn’t seem trustworthy and true likely will backfire on the company sooner or later.
It only takes one unsubstantiated quality control or product claim to hit the social media lie detector, then potentially go viral. At the very least, one consumer badmouthing your company via word-of-mouth and/or digital messaging will harm your reviews and ratings. In most cases, the damage will be undetectable until it reaches a level where revenues and reputation are noticeably impacted.
For example, when someone complains about lengthy waits to receive live phone support (including disconnects while waiting), it’s okay to say something like, “I get it. We’ve been having challenges. Now that we’re on the phone together, let’s address your needs right away. And, please give me your phone number, just in case this call drops. I’ll call you right back.”
“Full disclosure” should be at the core of all things educational, both in information repositories and customer service support. For example, CBD can make some people cranky and anxious. Full disclosure must override the desire to sell. By fully informing a consumer of risks as well as rewards, the experience is much more likely to result in high marks for the company.
Conversely, incomplete or inaccurate information provided by salespeople motivated only by making sales will backfire when less than optimum outcomes occur. In contrast, a salesperson willing and able to fully educate will help build long-term customer relationships with the company.
There are companies that have weathered supply chain and workforce shortage issues — and even inflationary pressures — well. One that comes to mind is Costco. Unlike many retailers during the pandemic, their quality of service has remained high. Product availability and selection have been maintained. Prices, although subject to some upward movement, don’t seem to have risen as much as most retailers.
Clearly, Costco found solutions instead of blaming challenging conditions and using those as an excuse for failure. Follow this example. Find ways to do more with less, get creative about becoming more efficient, and plan ahead so that emergent problems don’t become overly taxing.
Cannabis companies that excel in being trusted, liked, and respected will outperform their competitors willing to live with mediocrity.
Gary Paulin is VP of Sales and Client Services at Lightning Labels, a Denver-based custom label printer that uses state-of-the-art printing technology to provide affordable, full-color custom labels and custom stickers of all shapes and sizes. Contact: sales@lightninglabels.com; 800.544.6323 or 303.481.2304.
By Jodi Green, Miller Nash LLP; Shay Gilmore, The Law Office of Shay Aaron Gilmore
Members of NCIA’s Risk Management and Insurance Committee
Although the concept of state-legal cannabis has been around in some shape or form since 1996, cannabis remains illegal to consume in most public places. In other words, legal cannabis consumption remains relegated to back alleys, derailing efforts to “normalize” cannabis use. Tourists visiting popular cities where weed is legal are caught in the unenviable Catch-22 of being able to purchase, but not publically consume, the product. And those who attempt to use cannabis in public still face criminal penalties in some states, with minorities three times more likely to be targeted for arrest, perpetuating racial disparities at a tremendous social cost.
Enter the cannabis lounge. Cannabis lounges — also known as “consumption lounges,” cannabis cafes, or some variation on that theme — are in simplest terms the cannabis equivalent of a bar or restaurant. Depending on state and local regulations, lounges offer users the chance to congregate in a public place and smoke a joint, try out a $500 gravity bong, or sip on a cannabis drink. With any luck, consumers may enjoy their cannabis with a snack or dinner, but mixing with alcohol is typically not allowed.
As with any “new” risks, some cities, states, and insurers are… concerned. Despite some obvious tax and social benefits, detractors cite a host of reasons to prevent lounges from coming to a city near you, including at the forefront: fears of public nuisance (odors, theft, and disruption) and overconsumption — especially because most states insulate cannabis cafes from liability for harm caused by obviously intoxicated or underage users, unlike dram shop laws for alcohol.
As another NCIA member recently pointed out, even in states that do allow cannabis cafes, regulatory bodies continue to struggle with how to shape the laws and regulations governing lounges to afford adequate consumer protection while allowing businesses to thrive. Moreover, without a better understanding of the regulatory landscape, some insurers — whose business model hinges on the ability to accurately price a risk — may be unwilling to play in this new cannabis lounge market.
Alaska led the country in 2019 in licensing on-site consumption. A handful of states and localities have followed Alaska’s guide, and more are anticipated to join this year, including Michigan and New York. We compare a few regulatory schemes below and also consider the impact of dram shop legislation on risks faced by the industry.
California, governed on the state level by the Medicinal and Adult Use Cannabis Regulation and Safety Act, delegates to localities the right to open consumption lounges. Put simply, cities have to affirmatively “opt in” to allow lounges. With a few contingencies — including that patrons must be 21 or older and no alcohol or tobacco can be sold on premises — “a local jurisdiction may allow for the smoking, vaporizing, and ingesting of cannabis or cannabis products on the premises of a” licensed retailer. See BPC § 26200(g).
To date, only a few localities have opted in to allow cannabis lounges, including San Francisco, Oakland, and Palm Springs. West Hollywood, in efforts to create an epicenter for canna-tourism, plans to allow up to 16 lounges within its jurisdiction. Because state law provides little regulatory guidance for lounges, localities generally provide more specific guidance. As an example, West Hollywood’s local municipal code requires security guards on site, as well as within a two-block radius surrounding the business during operation, and allows the sale of cannabis to an individual “in an amount reasonable for onsite consumption.” West Hollywood Municipal Code §5.70.041. Only one lounge is currently open in West Hollywood, the Artist Tree’s Studio Cannabis Lounge, which offers not only lounge access but cannabis yoga, live music, and comedy shows, along with a revolving selection of local art. The Woods, another West Hollywood dispensary with a soon-to-open courtyard lounge space, is also slated to open in 2022.
Although California law significantly limits third-party liability for alcohol-related accidents, it does not afford cannabis owners the same protection. For example, California Civil Code §1714 explicitly states that furnishing alcohol “is not the proximate cause of injuries resulting from intoxication,” which has essentially absolved bars, restaurants, party hosts, and most others of potential liability for selling or furnishing alcohol to customers and guests with an exception for liability arising from the furnishing of alcohol to an “obviously intoxicated minor.” See California Business & Professions Code § 25602.1. Without similar protections for cannabis lounges, injured parties could attempt to sue under a negligence theory if a business or employee serves an intoxicated patron who causes harm.
As of January 1, 2020, local jurisdictions in Colorado can opt-in to the state’s cannabis hospitality business license regime (Colo. Rev. Stat. § 44-10-609), and as of March of 2022, the City of Denver has approved cannabis hospitality businesses for operation. Denver operators include the first social equity applicant in Denver approved for a hospitality license, the Tetra Lounge, although from its website Tetra Lounge’s website describes itself as “a private lounge,” requiring a monthly or annual membership fee and a liability waiver to gain access.
As to dram shop liability, although Colorado law authorizes damages against a licensee for willfully and knowingly selling or serving alcoholic beverages to a visibly intoxicated person, the Colorado Legislature caps liability at $150,000 (Colo. Rev. Stat. § 12-47-801 (3)(II)(c)). This damages cap improves (i.e., reduces) the ISO hazard grade, resulting in the improvement of insurance options available for liquor liability. The legislature has not adopted the same or a similar damages cap on liability for cannabis consumption establishments.
In June 2021, Nevada’s Governor signed Assembly Bill 341 into law, authorizing the Nevada Cannabis Compliance Board (“CCB”) to license and regulate consumption lounges across the state, subject always to local approval. The State plans to issue up to 65 lounge licenses (40-45 for lounges attached to existing dispensaries, 20 for independent lounges) with 10 reserved for social equity applicants.
Most recently, on June 28, 2022, the CCB voted to unanimously approve a host of regulations for cannabis consumption lounges. Nevada’s extremely detailed state regulations prohibit the sale of “single use cannabis products” with more than 3.5 grams of “usable cannabis” and 10 mg of THC for edibles; prohibit the removal of any cannabis products from a lounge; require a mitigation plan for impaired driving and detailed employee training for overconsumption; and require consumer education and warnings to customers, among other things. As with other states, Nevada allows local jurisdictions to prohibit consumption lounges and to implement more stringent regulations than state law.
Unlike other states, however, Nevada law carves out protections for cannabis lounge operators just as it does for alcohol. Nevada law already protects businesses that serve or sell alcoholic beverages from injuries inflicted by an intoxicated person. And while any person who knowingly furnishes an alcoholic beverage to any person under 21 years of age is guilty of a misdemeanor, the law provides only for criminal penalties, not civil liability. The Nevada Supreme Court has repeatedly refused to impose responsibility on vendors selling alcohol absent a legislative provision. See Snyder v. Viani, 885 P.2d 610 (Nev. 1994) (holding consumption is the proximate cause of alcohol-related injuries and dismissing the negligence claim against a tavern owner for alcohol service). The same rules will apply to cannabis operators.
Over two years after full legalization of adult-use commercial cannabis in Illinois, cannabis lounges in Illinois are still relatively rare, with the first Chicago-area marijuana consumption lounge opening on April 20, 2022. Like other states, the State of Illinois does not directly license lounges, but it allows local governments to opt in.
Illinois creates a cause of action against sellers for injury by an intoxicated person. § 235 Ill. Comp. Stat. 5/6-21. The standards for liability under the Illinois dram shop law include: (1) sale of alcohol to any person who, while intoxicated, causes injury, and (2) any person owning, renting, leasing, or permitting the occupation of any building or premises with knowledge that alcoholic liquors are to be sold therein, severally or jointly, along with the person selling or giving liquor. In Illinois, the Dram Shop Statute provides the exclusive remedy for alcohol related injuries. See Charles v. Seigfreid, 65 NE.2d. 154 (Ill. 1995). The Statute also provides stringent limitations on recovery of damages. There is no equivalent in Illinois for cannabis entities.
As with cannabis law generally, lounge operators face a patchwork of state and local regulations that vary tremendously by jurisdiction. In most places, cannabis lounge owners are not protected by dram shop/gram shop laws that otherwise insulate bars and restaurants from liability for overconsumption. This means that companies must be vigilant in protecting themselves from liability by instituting compliance and risk-management procedures.
In some instances, such as California’s West Hollywood, which has far fewer safeguards and guidelines than Nevada, operators are largely left to their own devices in implementing adequate risk transfer and risk management, compliance, employee training, and consumer education to limit risk of liability. While the West Hollywood municipal code requires lounges to limit cannabis sales of cannabis “in an amount reasonable for onsite consumption,” the “reasonableness” standard is rife with ambiguity and could lead to disputes regarding liability and assumption of risk if a patron overconsumes.
Evaluating and preventing overconsumption and intoxication will be particularly difficult for cannabis when: patrons have varying experience levels with cannabis; products can be sold in more than a single serving, and no specific consumer education is required. Thus, even in locations that have more stringent regulatory oversight, companies would be wise to consult with experienced counsel and consultants to avoid or limit potential risks associated with regulatory uncertainty, civil liability, and government penalties for non-compliance.
This brings us full circle to the question of insurance. Even in the states that allow consumption lounges, very few insurance companies provide coverage for on-site consumption (although some do). If an exclusion prohibits coverage, the company may not have coverage for important and sometimes catastrophic events, such as property damage by fire, theft/robbery, cyber events, sexual harassment or discrimination claims by employees or others, and bodily injuries to, or caused by, patrons (on and off premises).
Most existing property, general liability, products liability, and other insurance policies — including those written for the cannabis industry — expressly exclude coverage for on-site consumption or bodily injury caused by intoxication. In fact, some existing cannabis insurance companies include a “health hazard” exclusion in their policies, which exclude coverage for any bodily injury arising in any way from the use of cannabis, including any health injury. Cannabis insurance policies may also exclude coverage for intentional or illegal acts, which some insurers may try to apply to any claim involving cannabis on the basis that the sale of cannabis violates federal law (the Controlled Substances Act), even if it is state legal.
For current licensees that are planning to open an attached or adjacent consumption space, current insurance policies may not cover injuries arising in the lounge space. Further, any failure to identify a change in business type could prompt an insurance carrier to deny coverage for subsequent claims based on a theory of misrepresentation.
In closing, cannabis owners should attempt to negotiate separate and/or broader coverage that carves out coverage for their cannabis-related activities, including on premise consumption, with their current insurer or seek to obtain coverage from a different carrier. Experienced insurance coverage counsel can assist with identifying reputable insurance brokers and negotiating policies that provide such coverage. Because of the limited options, companies would be wise to begin the process of identifying experienced insurance coverage advisors at the beginning of their licensing journey.
NCIA Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. This week Bethany is joined by NCIA CEO Aaron Smith and Deputy Director of Government Relations Michelle Rutter Friberg. Join us every other Thursday on Facebook for NCIA Today Live.
NCIA’s Service Solutions series is our sponsored content webinar program which allows business owners the opportunity to learn more about premier products, services and industry solutions directly from our network of established suppliers, providers and thought leaders.
In this edition originally aired on Wednesday, July 13, 2022 we were joined by e2b Teknologies whose team of leading integration & technology experts discussed some easy steps to prepare your business for funding and accelerated growth. As you all know, competition was stiff for funding prior to 2022 but with the current economy and rising interest rates, capital is much harder to acquire today. You should be taking steps get noticed and get the MONEY you need to grow your business now.
Presentation Slide Deck: [View Here]
After viewing you’ll walk away with a better understanding of:
• How to leverage a team properly
• What’s most important – It may not be what you think.
• What’s necessary in terms of reporting, compliance, and record-keeping
• Evaluating potential technology partners
Sit back and settle in for an informative and timely program outlining the challenges facing operators and how you can position yourself for success with the right tools to help succeed at scale.
Panelists:
Joshua Gilstrap
Marketing Manager
e2b Teknologies
Mary Jo Mahood
Practice Manager
e2b Teknologies
Lynne Henslee
President
e2b Teknologies
Tyler Evinsky
Sales Manager
e2b Teknologies
Sponsored By:
Want to know more about the products and services offered by e2b Teknologies? Head to https://thecannasuite.com/ to learn more today!
NCIA’s Service Solutions series is our sponsored content webinar program which allows business owners the opportunity to learn more about premier products, services and industry solutions directly from our network of established suppliers, providers and thought leaders.
In this edition originally aired on Wednesday, June 28, 2022 we were joined by the International Institute for Conflict Prevention and Resolution (CPR) to discuss the benefits of using alternative dispute resolution (ADR) methods (including arbitration and mediation) in cannabis contracts, thus bypassing the courts.
The cannabis industry continues to grow rapidly, both in the United States and globally. However, cannabis companies face issues when entering into contracts that they hope to enforce. Because the federal Controlled Substances Act prohibits cannabis sales as a matter of federal law, many courts will not enforce a contract between cannabis companies, even if state law permits the legal sale of cannabis. Therefore, cannabis investors, businesses, and those who do business with them need a tool that makes their contracts enforceable.
Benefits of using ADR methods include greater enforceability plus faster speed to a decision, decision-makers with industry expertise, privacy and confidentiality, and the parties’ ability to create a process to fit specific needs and timelines. Participants will also learn how to include an ADR clause in their contracts, so they can take advantage of these benefits.
Panelists:
Mia Levi
Vice President of Global Development for Dispute Resolution
International Institute for Conflict Prevention and Resolution (CPR)
Robert Copple
President @Copple & Associates PC
Sponsored By:
Want to know more about the products and services offered by International Institute for Conflict Prevention? Head to https://www.cpradr.org/dispute-resolution-services to learn more today!
by Sadaf Naushad, NCIA Intern
As the middle of May approaches, cannabis advocates, lobbyists, associations, and many more continue to educate congressional offices on the importance of cannabis policy reform.
So far, 37 states have legalized medical marijuana, and 18 states – including the District of Columbia – permit adult recreational cannabis use. With more businesses operating within the industry, one major issue remains: enacting cannabis banking legislation.
The Secure and Fair Enforcement (SAFE) Banking Act addresses the ongoing hurdles between financial institutions transacting with cannabis-related businesses. Congressional lawmakers have been working to include the SAFE Banking Act as a provision to the House’s U.S. Innovation and Competition (COMPETES) Act.
This week, 24 U.S. Senators focused their attention on pressuring congressional leaders in ensuring that cannabis banking provisions are enacted into law as part of the broader-scale, House-passed America COMPETES Act.
Led by U.S. Senators Jeff Merkley (D-OR) and Jacky Rosen (D-NV), the 19 Democrats and five Republicans wrote a letter to the leaders, outlining the significance of the SAFE Banking Act, along with its potential impacts on the emerging industry.
The rapidly developing field has led to remarkable job growth, generating significant tax revenue as a result. Thus, if implemented, the SAFE Banking Act would authorize banks, credit unions, and other financial institutions to provide banking services to legally-operating cannabis businesses without facing punishment by federal regulators. Additionally, the banking provision attached to the America COMPETES Act “fosters innovation, supports small businesses, and raises revenue in states that have chosen to legalize cannabis, while reducing safety risks to industry employees and the public alike.”
As of now, financial institutions remain unwilling to transact with cannabis businesses. Due to the indistinct federal and state laws, banks and credit unions fear the regulatory risks associated with the inconsistent policies. Allowing legal cannabis businesses to operate in compliance with state law in obtaining financial services without federal penalties would confront public safety matters, ultimately assisting communities to lessen cash-motivated crimes.
According to the 24 senators, law enforcement administrations have previously addressed the risks accompanying an unbanked cannabis system, many of which include theft, robbery, and violence perpetrated against employees. They emphasize the need to transfer the substantial amount of cash within the industry into the banking system to ensure safe monitoring of accounts pursuant to present federal anti-money laundering regulations and the Bank Secrecy Act.
The National Cannabis Industry Association’s (NCIA) Government Relations team in Washington, D.C. continues to educate Senate offices this week through our Virtual VIP Lobby Days. As we continue to speak with Senate offices on the inclusion of cannabis banking provisions in the America COMPETES Act, our VIP participants are relaying their day-to-day struggles of operating in the cannabis industry. Additionally, participants are pressing for federal de-scheduling, and making sure our nation’s leaders understand the challenges that small and medium-sized cannabis businesses face every day.
Stay tuned for more details about our next Lobby Days coming this September. For more information on NCIA’s Government Relations works or how to get involved please reach out to madeline@thecannabisindustry.org.
by Matt Hostacky, Regional Sales Manager, Flex IP Solutions/Cannabiz Text
Text messaging is the next wave of communication to customers. 98% of all texts get received. 92% are read within 5 minutes. And 45% receive a response, and if you think that your customers want to engage their favorite businesses this way, you’d be correct. 85% of people polled want text message marketing from their favorite companies.
But how do you get started? How does it work? Are there technology requirements? Etc. Here are some of the common questions we get to help you navigate this great communication tool for your business.
1) Make sure you’re collecting phone numbers from your customers today.
2) Have a marketing disclosure statement that customers sign either electronically or physically so you are legally allowed to market to them.
3) Have said customers and phone numbers in or able to be exported to an excel or .csv file so you can upload them as contacts.
4) Have a plan. Don’t just set up a system and start sending texts. Understand why you want to text, how you will text your customers, and what you will be texting your customers.
So why is compliance so important? We’ve all received annoying texts we didn’t ask for letting us know we’ve won a cruise or there is a sale on cheap erectile function pills. The FCC and Mobile carriers are already working to put more measures in place to mitigate the number of robo-texts and SPAM that is being sent. This is called 10DLC Campaign Registry. 10DLC Campaign Registry is too much to cover in this blog but you can find out more here 10DLC Campaign Registry.
If you’re soliciting anything to your existing customer base you must have consent, see the TCPA and CAN-SPAM acts. The best practice for this is what is called a “double opt-in”. A double opt-in is having the customers’ consent twice. The first form of consent is typically in some marketing waiver that is signed or checked during the buying process, it’s no different than getting consent to call or email promotions. The second opt-in is during the texting process. Typically, the first text received will have a message that asks the customer to reply “YES” to continue to receive texts. You usually see this with keywords that ask the person to text a word to a specific number, when that happens an automated message will then ask the person to reply with “YES” to continue to receive messages.
Another form of compliance is opting out. You must always have a “please reply “STOP” to stop receiving texts…” message in your messages. The first question you should ask about any SMS/texting solution is if this is built into it, meaning if someone replies back with STOP at any time, does it remove them from your marketing list even if you don’t have the wording in the text? If the answer is no, it’s not a system you want to use. Once again the TCPA and CAN-SPAM acts mandate that you give the consumer a way to opt-out of receiving messages from your business. And you’ll want a system that captures and can report on this as well.
Something to understand is that certain things are still illegal to promote via text, i.e cannabis. Mobile carriers (the companies that transport the SMS messages) like ATT, TMobile, and Verizon have filters that are looking for hot button or trigger words. So words like cannabis, marijuana, weed, edibles, and ganja are going to get flagged. This doesn’t mean that you can’t still use text message platforms. It just means that instead being obvious about what you text out you become a little more vague. Your customers will still know there is a sale on edibles if you say something like “2 for $20 on ABC brand yummy treats this week”.
Compliance doesn’t have to be all doom and gloom. Make it fun. The most successful businesses do an initial promotion or giveaway to get folks to opt-in to their text marketing. Another great tip is to put your business’ name at the front of the text with a colon so everyone knows who the text is coming from. i.e. ACME: Acme widgets on sale this week 20% off! Remember your customers want to hear from you, they want to stay informed of any new products or promotions… that’s why they’re your customers. They just don’t want to be bombarded with SPAM on their personal devices at all hours. So be courteous and make sure the number of text promotions is not too much and are being delivered at appropriate times.
By now most folks are aware of the two most prominent use cases for business texting, 1) marketing and 2) appointment reminders. But there is a wide world of other use cases for texting that you may not have even thought about. And these use cases can help separate your business from others by delivering a “wow” customer experience.
Instead of phone calls, why not answer questions about your product or service using texts? The advantages of using text for customer service are:
Yes, this is different from marketing because marketing is one-way. With two-way texting you can interact with your customers the same as you would in-person or via a phone. Your sales force can provide the presales support that your customers expect but with the convenience of a text or picture message.
If you’re in the business of deliveries or in-home service these are a must for a great customer experience. Send pictures of your delivery driver in advance. Let your customers know when their package will be or has been delivered.
During the COVID-19 lockdown, almost every business’ processes changed. Masks needed to be worn, social distancing observed, and a lot of businesses went to calling or texting when a customer or patient could be seen. The businesses that had an SMS platform ready to go didn’t miss a beat. There were signs like “Text our main number to let us know you’ve arrived” for things like veterinarian offices, healthcare, retail stores, and restaurants.
Business SMS is still relatively new, but the use cases continue to grow. Communication has moved to a person’s mobile device now and we don’t check or pay attention to email like we used to. People expect real-time alerts and notifications on their phones. Leveraging business SMS in multiple ways can provide a memorable customer experience to your patrons which will, in turn, create repeat customers.
Matt Hostacky, Regional Sales Manager, Flex IP Solutions/Cannabiz Text
Matt Hostacky, an IT and telecommunications industry veteran, takes a consultative approach to solve real-world business challenges with technology solutions. He serves as Regional Sales Manager for FlexIP Solutions Inc., a provider of managed communications services customized for businesses of all sizes and optimized for best value and performance. Hostacky advises customers on communications and collaboration strategies that leverage solutions, such as Cloud PBX, Unified Communications as a Service, Contact Center as a Service, Collaboration as a Service, SIP Trunking, Secure SD-WAN, Business Continuity and Disaster Recovery, and Business Text Messaging.
By Kara Bradford, Viridian Staffing
Chair Emeritus of NCIA’s Human Resources Committee
It’s that time of year again, the busy fall harvest season. While indoor growers can harvest year-round, the fall can create significant workforce challenges, especially for outdoor producers and processors. Here are three tips to make sure you are ready to go for the fall harvest!
Plan ahead! If you have not already thought through your fall harvest plan, you will want to figure this out immediately. Most cannabis companies need additional workers during harvest season, unless their grow schedule is structured where they are harvesting on a regular basis, depending mostly – if not entirely – on their permanent employees for harvesting, de-leafing, trimming, etc. However, given the increased demand for workers by outdoor growers, even in a normal year, the demand for labor often exceeds the supply, placing added pressure on anyone competing for this talent.
Every fall we receive a rash of calls from producers, who failed to plan ahead, requesting workers that same week, if not the same day. Unfortunately, by this time, nearly all the available labor, especially those with experience and skill, have already been scheduled and committed elsewhere. In rare cases, staffing companies might be able to provide workers if they had another client in the area back out, at the last minute due to a heavily damaged crop or not being ready for harvest at the time they originally projected, however, cannabis growers shouldn’t count on this. A good rule of thumb is to provide at least 2-3 weeks’ notice, minimum, to request your harvest crews during the fall, and the further in advance the better. Many cannabis companies that have struggled in the past with worker shortages during the fall have started locking in their fall staffing as early as spring.
COVID-19 has created an even more significant labor shortage. Before 2020, we saw thousands of workers coming into the United States from other countries to take their ‘vacations’ working on unregulated market farms doing harvest work and trimming and getting paid cash. Due to COVID-19 travel restrictions keeping much of this seasonal labor out of the U.S., the regulated and unregulated market were increasingly forced to compete for the same domestic talent with the unregulated market often winning this battle as they were paying tax-free cash at higher wages, given their relatively lower costs compared to the regulated market. Thus, many cannabis companies ran into situations last year where, unless they were able to pay premium rates for harvest workers, their in-house staff were forced to work a ton of overtime to make up for the shortfall. We hope that in 2021 this won’t be the case, however with COVID-19 numbers rising again, this is something that cannabis companies should plan and budget for just in case.
If your cannabis operations are relatively remote or not within an easily commutable distance from a large population center, you may need to go the extra mile to make it easier for workers and staffing companies to assist you. If nothing else it is essential to take an inventory of nearby resources and be prepared to communicate them easily. For example, if you can’t provide lodging to your seasonal workers, you will want to create a list of local hotels/motels, RV Parks, and campgrounds that offer services. Many of these workers are accustomed to traveling from site to site in RV’s, camping, etc. Create a list of grocery stores, gas stations, and other retail establishments the crews may need to access. If there aren’t any lodging options close to your farm, and you have the means, you might want to consider buying some land nearby and building some basic lodging. We have even seen some cannabis companies open a cafe or restaurant close to their farm when there weren’t any good or healthy options in the area so that workers would have a place to go on their lunch breaks or after work. The more of a positive experience you can provide to these workers, even though they are seasonal, the better. Production will typically be quicker, you may gain a customer and even an ambassador for your product, and that worker may be excited to return for years to come, which will keep you from having to deal with some of the labor shortage issues other producers struggle with.
Have a contingency plan. Many of you already know this, but you should always have a plan B and plan C, maybe even a plan D. 2020 and 21 have definitely been years of fires, hot temperatures, and floods. If air quality is deemed especially poor in your area, due to smoke, many harvest workers won’t be able to work outdoors as worker’s compensation policies won’t cover workers laboring in such conditions and few people will want to. We’ve also noticed an uptick in state governments coming out with restrictions and safety guidelines during times of poor air quality or extreme heat. If you’re in an area that has a fire season, you’ll want to have a plan for workers during this time. Perhaps you will need to have them work indoors when the air quality is poor, focusing on things like bucking, trimming, and packaging; then back outside to continue the harvest when conditions allow.
Given the increase in COVID-19 cases, you’ll definitely want to have SOPs and contingency plans in place in the event your crew is exposed to COVID-19. To be proactive, you should also take precautions to protect workers from exposure before it occurs including having masks and hand sanitizer supplies on hand in abundance. Contingency plans could include having a partnership with a staffing firm to provide workers for your fall harvest or offering overtime and bonus incentives for your regular workers to pick up the slack, if necessary. If you’re working with a staffing company, most crews of harvest workers will have a team lead who is there to assist with any HR-related issues that might come up (i.e., sick workers, injury, etc.). However, if for some reason there is not a team lead assigned for your crew, you’ll want to make sure that the workers have a point of contact at your company for any HR-related issues that come up.
Last but not least, if you’re looking for great, experienced harvest talent, especially when it comes to trimming, you will need to budget for the kind of talent you want. With the most talented crews, you’ll likely need to pay some form of a retainer upfront as many of them have trimmed more seasons than adult-use has been around and have not always been paid for their work. Last year, we typically saw trimmers making $15-$25/hour. This was before bonuses. Companies who want to incentivize things like speed and quality increasingly offer bonuses for the quantity and quality of output. This has resulted in the best workers making nearly $50/hour!
The Godmother of Cannabis Industry Recruiting, Kara Bradford, MBA, MM, is Co-Founder & CEO of Viridian Staffing. Founded in 2013 as the first professional, full-service staffing, recruiting & HR consulting firm in the Cannabis industry, Viridian Staffing has led the way in providing temporary, temp to hire, direct placement & HR outsourcing services. Kara has been an HR professional, specializing in Talent Acquisition, Talent Management, Workforce Planning, Employer Branding, Compliance, Federal/State Employment Laws, and Organizational Design for over 15 years. Her career has spanned multiple Fortune 100 companies & start-ups in a wide variety of industries. More importantly, she has more experience recruiting in the cannabis industry than any other Recruiter globally. Kara has an MBA in Human Resources & Organizational Behavior and is LinkedIn Recruiter Certified. Kara is active in many organizations, including NCIA, The Cannabis Alliance, Women of Weed, etc., and was the Founding Chair of the NCIA’s Human Resources Committee.
By NCIA’s Retail Committee
Have you ever wondered where or how a cannabis retail business banks? You should know that it’s complicated because of federal prohibition. So what do you do? Some are finding workarounds and loopholes, others are able to obtain services with smaller financial institutions for exorbitant costs, while many others struggle to maintain an expensive, risky, and dangerous cash-only ecosystem.
The 2020 elections set the creation of four new regulated state cannabis markets in motion, and four more state legislatures followed suit in the first half of 2021, making the last year arguably one of the most consequential and momentous periods for the cannabis industry and policy reform.
However, cannabis is still illegal at the federal level, classified as a Schedule I substance under the Controlled Substances Act, despite state-level regulated cannabis markets in more than half the country. This prevents banks from doing business with cannabis companies because of fear of prosecution or reputational risk, as these businesses aren’t viewed as legal under outdated federal laws.
The cannabis industry is optimistic about the future, though, thanks to an increasing interest in cannabis, public safety, and economic development in Congress. Lawmakers in both chambers are actively debating comprehensive legislation to remove cannabis from the schedule of controlled substances and regulate it federally while repairing some of the harms caused by prohibition, but there are also incremental reforms in play that have a track record of success in the House as well as bipartisan support. Chief among them is the Secure and Fair Enforcement (SAFE) Banking Act, which would provide safe harbor for financial institutions that wish to work with state-legal cannabis businesses and allow them to provide services to the industry without fear of prosecution. This legislation originally passed the House in 2019 and was the first piece of standalone cannabis policy reform legislation ever to receive a vote or be approved by a full chamber vote.
Since then, cannabis banking has been approved in the House three more times in various forms, mostly recently when it passed the SAFE Banking Act again – and with record bipartisan support – earlier this year. The bill is now awaiting consideration in the Senate, but has yet to be taken up by the Senate Banking Committee.
Loans, capital markets, and credit card processing are common interests for cannabis companies. Access to traditional lending is particularly important for small businesses that usually lack connections to angel investors and venture capital. However, some of the benefits of this legislation are of special interest to cannabis retailers. Check out what some of the Retail Committee members are considering to be important aspects of broadened access to banking and financial services:
“As a retail cannabis business operator, safety is of our top priorities as it directly affects our staff, our patrons, and our bottom line,” said Larina Scofield, director of retail operations at Lucy Sky Cannabis Boutique dispensary chain in Colorado and vice-chair of NCIA’s Retail Committee. “We are required to operate as a predominantly cash business in a high-risk industry that can sometimes lead to criminal targeting; this can put not only our business at risk but also the potential individuals on-site if a targeted crime were to take place.
“There is also no doubt that operating a cannabis business is costly, due in part to the fact that we do not receive the same benefits and protections that other businesses have; cannabis companies are also subject to higher fees in order to get similar services, if those services are available at all. Lucy Sky is fortunate enough to have banking and armored services, as well as a cashless ATM service to allow for safer money handling, but this does not come without a price… a high price. Our company pays top dollar every year in order to have banking and secured payment delivery (something that is not seen in traditional businesses), in order to provide safety for our business and to the individuals who frequent our facilities.
“SAFE Banking would mitigate that and allow for retail cannabis companies to operate without having to “constantly look over their shoulders” so to speak. It would provide an enormous sense of security in an already high-risk business, it would allow for small business owners to receive proper funding to allow for safer operations, and it is truly crucial in the progression of the industry as a whole.”
“Less cash during COVID-19 is always a plus. The goal is to limit contact, and we all know cash is constantly being passed from person to person. There are plenty of studies highlighting how many germs really are on physical cash. Researchers found plenty of questionable microbes on $1 bills in a more recent study. In a world where we are all concerned about our physical health, the time is now to reduce physical cash in cannabis businesses. Or at least, give people the choice to go cashless if they want to. Let’s also not forget the security benefits of carrying less cash on the premises”, said Byron Bogaard, CEO of Highway 33, a cannabis dispensary in Crows Landing, California, and chairperson of NCIA’s Retail Committee.
“Golden State Greens had a spike in deliveries during the COVID pandemic but were still forced to collect cash and signatures from customers. When online orders can process card transactions we can make a true contactless delivery where both payment and signature are managed from the customer’s device. This will increase the safety of our drivers by maintaining safe distancing practices and allow new types of deliveries to drop boxes or to customers’ homes similar to Amazon,” said Gary Strahle, chief growth officer for California dispensary Golden State Greens.
Beyond these major issues, there are a number of potential outcomes that could impact retailers as well.
Revamping the relationship between cannabis businesses and banks will likely trigger higher competition for banking services, resulting in lower fees. This would clearly benefit small businesses but could also have an impact on the frequency and nature of mergers and acquisitions in the cannabis space.
Regulatory frameworks will certainly change, and outstanding litigations will most definitely become more complex. Chargebacks from credit transactions will be a constant problem, due to the level of surveillance and data collection they will more easily be disputed.
Better access to banking also positions technology companies for success, as there will be a high demand for mobile wallets, online ordering, and automatic recurring memberships. We can’t predict everything, and there might be more hurdles to cross than we realize, but the technologically-agile retailer may benefit most. Studies show that most of the Top Fortune 500 Companies use software platforms such as Salesforce to manage their enterprise, however many of the canna-specific solutions are missing much of the integration and scalability needed to immediately handle broadly increased access to the banking system.
The SAFE Banking Act is critical to the cannabis industry’s success, and your voice will tip the scales. Reach out to your members of Congress, especially your Senators, and tell them what safe banking means to you as a cannabis retailer. Remember, policy needs to support logic over emotion. Emotions are important, but remind Senators of the logic behind implementing safe banking solutions for cannabis businesses:
If your senator already supports the SAFE Banking Act, please politely ask them to prioritize this legislation in the current session.
by Elise Serbaroli of Strimo, interview conducted May 2021
Elise Serbaroli is a member of the NCIA’s State Regulations Committee, “Informing Local Governments” subcommittee, which aims to bridge knowledge gaps between operators and regulators in the cannabis industry. This is done through interviews with current cannabis regulators in various U.S. states, sharing best practices and lessons learned.
Dasheeda Dawson is a cannabis regulator in Oregon and co-founder of the Cannabis Regulators of Color Coalition (CRCC). As cannabis czar for the City of Portland, she is the highest government official overseeing and advising on cannabis regulation for the municipality. Ms. Dawson brings an incredible breadth of experience to the cannabis space. A self-proclaimed “corporate to cannabis crossover”, she is perfectly positioned to navigate and lead the complexity that is the legal cannabis industry. Before becoming a best-selling author (“How to Succeed in the Cannabis Industry”), she held leadership roles at Victoria’s Secret and Target. Her career is built off of a solid educational foundation, including a Princeton degree (Molecular Biology & African-American studies) and an MBA from Rutgers.
For the five years prior to formally getting into the industry, I was what you would call a “closeted cannabis consumer/patient.” I have early signs of MS and my mom was actually the one that insisted I give it a try. At the time, I was working at Target in Minnesota. Cannabis was my saving grace for maintaining productivity and overall capabilities. My mom passed away unexpectedly in 2016 and it jolted me out of the standard corporate trajectory I had been on. I ended up moving to Arizona and became a medical cannabis patient there, jumping into the advocacy side of the industry. Arizona legalized adult-use this past November!
Certainly not! Straight out of the gate, I got a lot of work as a consultant in the industry, using everything that I had done in my corporate career, including business strategy and supply chain management. I had owned everything for my categories at Target and when you’re the business owner, you lead and oversee the entire cross-functional team. I applied that to the cannabis space as quickly as I could, working for a lot of clients and gaining an entrepreneurial education from working with large cannabis enterprise clients, small operators, multi-state operators, Native American tribes, even government. I gained the truest sense of how NOT to do it. In a corporate role, you usually write a report about what you have learned, insights, etc., and then you move forward. My workbook, now in its 3rd edition, was really built off of those lessons learned.
When COVID hit, my book tour was abruptly stopped overnight! At the same time, I was selected to become the Cannabis Program Supervisor for the City of Portland. I was only the third Black woman at the time to be selected to oversee a cannabis regulatory office. I believe that now there are more, but women and people of color are scarce in these positions. Most of the regulators are white men, many of whom come from another regulatory agency, like liquor or law enforcement. In order to assure that cannabis regulation is equity-centered, you need people at the table that will center equity. This last year has been amazing. I have a lot of runway and support to be exactly who I am, which is the Weed Head (TM). I refuse to be anything else and I’m in a bureau that allows me to do that.
On the state level, the Oregon Liquor Control Commission is currently passing legislation to become the Oregon Liquor AND CANNABIS Commission (OLCC), primarily because cannabis is providing substantial revenue for the state. Most of those people are liquor regulators, and they have organized a sub-group, focused only on cannabis. It started off with four people and now there are 50!
As Portland’s cannabis czar, I am a municipality leader, similar to Cat Packer in Los Angeles, and operate independently of the OLCC. Portland represents approximately 40% of the total cannabis revenue for the state and I oversee the entire cannabis program, including regulatory, licensing, compliance, community impact, and equity initiatives for Portland’s medical and adult-use programs.
In the city of Portland, cannabis regulation and oversight was placed in the Office of Community and Civic Life, as opposed to in the Office of Finance and Revenue or the Office of Business Development Services, which is where they license other businesses. This placement is partly due to the idea at the time that the cannabis industry was going to be disruptive to the community. Many individuals were worried about safety for communities. Our office has been trying to decrease the stigma and canna-phobia around the plant, offering education and equity initiatives. We were the first city to have community reinvestment grants tied to our cannabis tax revenue. These grants are administered through the SEED (Social Equity and Educational Development) Initiatives and grant fund.
CRCC and CannRa are two independent organizations, which happened to both launch at the same time. This caused some confusion in the industry. They are not mutually exclusive memberships! In fact, two of our founding members are also founding members of CannRa. The regulators roundtable was the predecessor of CannRa and that association aggregates insights and learnings state by state. The Oregon Liquor Control Commission (state-level) is a member of CannRa.
CRCC centers equity and support of legalization, while also aggregating insights and learnings state by state. If you are a regulator of color, at the state or local level, it makes sense to join the Cannabis Regulators of Color Coalition. We know that legalization is a requirement to start to undo the harm done through the war on drugs.
Centering equity involves re-thinking how we regulate this industry. One challenge is getting people to realize that this is a regulatory agency, like any other government regulatory agency. The Department of Motor Vehicles (DMV), a regulatory agency, gives out licenses and adjusts to assure that no group is precluded from access (adjusting for wheelchairs, visual and hearing impairments, etc.). Yet, in cannabis, we are regulating the industry without dealing with the inequities in the industry. Some of these inequities are directly linked to the historical prohibition of cannabis and the war on drugs, which we define as the racially-biased enforcement of cannabis prohibition.
Supporting equity also includes gender inequities, economic inequities, and disability inequities, to mention a few, that will positively impact everyone in the industry, including and especially patients themselves. Exclusionary practices would not be tolerated if it was an agency like the DMV. With cannabis, we are over-regulating the industry and excluding many people from participating, which is to the detriment of the market and the community. CRCC is focused on equity-centered regulation for the cannabis industry.
Well, there’s a misconception about the size of companies in this industry. As an industry, we have to be careful about supporting legislation that only benefits large corporations. More than 75% of cannabis businesses have annual revenue of $2 million or less. Compared to small businesses in other industries, for example, in agriculture ($6 million or less) and retail ($14 million or less), cannabis businesses are very small, so everyone needs to push for legislation to benefit these small businesses in whatever regulatory framework is set up on a federal level. This is one step in leading the industry towards a more equitable path.
One aspect of inequity is how cannabis businesses of different sizes are treated. On average, very small cannabis companies have an after-tax rate of 70%, so when you’re going to the table for the regulatory framework, push back on the tax structure, push back on mechanisms that are inherently disadvantageous to small businesses. Surprisingly or not, most Black, Indigenous, or Latinx businesses are also small businesses, so you are positively impacting racial equity.
If you, as a cannabis business, think you’re a big fish, trust me, Big Tobacco, Big Alcohol, Big Pharma, Big CPG (“consumer packaged goods”) – Target has $70 billion in annual revenue – are coming, so a big fish in this cannabis pond is setting itself up to be eaten by much bigger fish and bigger sharks. If we leave back doors open for the larger cannabis businesses, we’re leaving that same back door open for a Walmart or an Amazon. Large corporations are already investigating and supporting cannabis. They plan years in advance for large takeovers and once it starts, it’s a stampede of well-financed, organized strategic efforts.
At a state level, the industry and those who want to support the industry, need to be careful to not overtax the small businesses and to vote to provide a framework of support mechanisms for small cannabis businesses.
Some of the early legalization efforts required vertical integration. Because of the way the state and local jurisdictions are regulating and taxing, forcing vertical integration is not a small-business-friendly approach to licensing. This was the case in some earlier states, but we’re also seeing newer states like Georgia taking this approach.
By breaking up the licensing into different parts of the supply chain (like California), you open up possibilities for smaller businesses to operate. If the state is giving out micro-business licenses, there should also be a track to grow into a larger size so that there is no ceiling on those businesses’ growth prospects. For example, in New Jersey, advocates fought to amend provisions that failed to create a way to sell out of a micro-license for a growth event.
Everybody has a different opinion depending on which economist you talk to about how you tax up and down the supply chain. I’d like to see states have tiered tax by production weight. Once you start doing it by the percentage of THC, you’re negatively impacting businesses and patients. It’s meant to be a deterrent and is an example of the government intending to overregulate in an area that it doesn’t fully understand. But usually, those penalties wind up impacting the smaller craft businesses. Too many people are assuming that consumption in the adult-use market is just for recreational purposes, but there are plenty of small niche operators aimed at a specific medical community and they are producing small batches, for example, with high THC, but their clientele may be negatively impacted, simply as a function of the way the tax law was written.
It’s certainly a long and hard process when dealing with big issues and change. For operators, NCIA is a good place to start. There is also the M4MM and the MCBA. Folks should really try to connect with the local- and state-relevant organizations. Building and operating in coalitions can be very powerful. On a national level, be sure that any group you are part of is actually going to D.C. and is having conversations with the legislators, because at the end of the day, whether it’s cannabis or any other business, you need to be involved with influencing the policies that impact your industry. Everything starts with the law and civic engagement.
Elise Serbaroli leads Global Business Development at Strimo, where she provides cannabis businesses with software solutions around inventory management, cost accounting, QA, and compliance. She’s back in the USA after over a decade of experience in Spain, Germany, Switzerland and Ecuador.
Understanding the importance of efficiency, scalability, and profitability, Elise created solutions to financial and legal processes for the R&D team at CPW, a joint venture of two of the world’s largest food companies, Nestlé & General Mills. As a systems coordinator, she gained a deep appreciation for food safety, GMPs and regulatory compliance. Her supply chain software experience builds off of her Business Development role at Tradeshift, the world’s largest network for digital B2B payments.
By Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Last week was undoubtedly one of the most exciting weeks in federal cannabis policy ever! On July 14, Senate Majority Leader Chuck Schumer (D-NY), along with Sen. Cory Booker (D-NJ) and Senate Finance Committee Chair Ron Wyden (D-OR), unveiled long-awaited draft legislation that would remove cannabis from the schedule of controlled substances while allowing states to determine their own cannabis policies. Let’s take a look at what we know:
You’ll recall that back in February, the trio of Senators announced that they were working on a comprehensive cannabis bill. Since then, NCIA and other advocates have (im)patiently been waiting to see what shape that would take – I was calling it the best-kept secret in Washington! However, at long last, the discussion draft of the Cannabis Administration and Opportunity Act (CAOA) was released.
A discussion draft is exactly what it sounds like – prior to introducing this language as formal legislation, the Senators have shared it in this form, allowing stakeholders, the public, and others the opportunity to weigh in and provide their expertise and feedback.
As I mentioned above, the CAOA removes cannabis from the list of controlled substances, effectively legalizing it at the federal level while still allowing states to set their own policies. According to the bill’s detailed summary, it has a few goals:
“… [it will] Ensure that Americans – especially Black and Brown Americans – no longer have to fear arrest or be barred from public housing or federal financial aid for higher education for using cannabis in states where it’s legal. State-compliant cannabis businesses will finally be treated like other businesses and allowed access to essential financial services, like bank accounts and loans. Medical research will no longer be stifled.”
The bill also includes:
The discussion draft comment and feedback process will be ongoing until September 1. Until then, NCIA will be working with our board, Policy Council, committees, and our members (particularly our Evergreen members!) to solicit their expert input on some of the areas the Senators have expressed interest in. After that deadline, the Senators will take their time to review submissions and subsequently formally introduce the revised language later this year. Stay tuned via our newsletter, blog, and upcoming events to learn the latest on this and how you can actually submit your thoughts to us!
In this edition of our Committee Insights series originally aired on Wednesday, June 9, 2021 members of our the Scientific Advisory Committee gave an update on testing standardization in the cannabis industry.
They reviewed which standards are in development from international Standards Development Organizations, such as ASTM International and AOAC International. They also discussed recent events that are leading to the creation of more test method standards, such as vapor emissions testing motivated by EVALI cases. They end with a conversation about what the Industry might look like in regard to testing once more standards are published.
Presentation Slide Deck: https://bit.ly/3h0TmHq
Attendees will gain these key insights:
• Understand the meaning of “standards” and “standardization”
• Learn about the test method standards that are in development by ASTM and AOAC
• Learn about recent events that are leading to the creation of more test method standards
Panelists:
Tiffany Coleman
Director of Quality and Processing
Carbidex, Franklin Fields, BioBizz, The Botanical Co.
Jim Makoso
Director
Lucid Labs
Luke Mason
Owner/Lab Director
Aurum Labs
Alena Rodriguez
Managing Director
Rm3 Labs
In this edition of our Committee Insights series originally aired on Tuesday, May 25, 2021 members of our the Cannabis Cultivation Committee convened a panel of certification experts for an educational webinar regarding Third-Party Cannabis Certifications.
Throughout this webinar, panelists explore several types of certifications along with the associated benefits. These certifications include but are not limited to cGMP, CSQ, and Sun+Earth Certified.
Presentation Slide Deck: https://bit.ly/2TZhGlb
Panelists:
Andrew Wood
Account Manager
ASI, LLC
Jacob Policzer
Director of Science and Strategy
The Cannabis Conservancy
Chrystal Ortiz
Owner
Herb and Market Dispensary
Kara Lavaux
Cannabis Compliance Expert
Allay Consulting
Tyler Williams
Founder and Chief Technical Officer
Cannabis Safety & Quality
By Morgan Fox, NCIA’s Director of Media Relations
On April 19, the House of Representatives approved legislation once again that would provide legal protections for financial service providers to work with cannabis businesses that are in compliance with state laws. The Secure and Fair Enforcement (SAFE) Banking Act, or H.R. 1996, was reintroduced in March by a bipartisan group of sponsors and had 177 total cosponsors by the time of the vote.
The legislation was approved by a vote of 321-101 and included 106 Republicans voting in favor of the measure, a small majority that represents a growing trend of increasing conservative support since the last time this bill was approved in the House in 2019. No Democrats voted against the bill. This is the fourth time that the House has approved the language of the SAFE Banking Act, initially as the first standalone cannabis policy reform bill ever passed by either chamber of Congress two years ago and two more times last year as part of pandemic relief packages that were not approved in the Senate.
In the time that elapsed between the last vote on the SAFE Banking Act and this one, a number of factors have added momentum and boosted the pressure on federal lawmakers to more seriously consider cannabis policy reform generally and bills like the SAFE Banking Act.
First, cannabis businesses were nearly unanimously declared essential in states with regulated markets during the pandemic, adding to the legitimacy of the industry in the eyes of many while providing uninterrupted healthcare, jobs, and tax revenue in a very challenging economic and public health environment. However, despite increased sales over the last year, the operational costs required to keep employees and customers safe have taken their toll, compounded by the added costs and other challenges associated with limited access to banking services or traditional loans.
These obstacles were felt even more keenly by cannabis businesses because they could not avail themselves of the federal stimulus packages approved by Congress, such as PPP or funds available through the Small Business Administration. Helping to ease the worsening financial burdens facing the cannabis industry during such a difficult time was a major reason for the inclusion of SAFE Banking language in the House-approved aid bills. Recently, standalone legislation has also been reintroduced by Small Business Committee Chair Nydia Velazquez to allow direct and indirect cannabis businesses to be able to access SBA-backed loans and other assistance programs.
Unfortunately, the inclusion of cannabis language in House stimulus packages was used as a political attack tool in the leadup to the election by some lawmakers, likely leading to a postponement of a House vote on the MORE Act, which would remove cannabis from the schedule of controlled substances and help repair the damage done by prohibition. Those attacks significantly died down in November, however, when five states approved adult-use or medical cannabis ballot initiatives by heavy margins, including the red states of Mississippi, Montana, and South Dakota. These victories paved the way for the historic passage of the MORE Act in the lower chamber in December. Three additional state legislatures have passed adult-use laws since then, including the first Southern state of Virginia.
This combination of political will, the feasibility of passing cannabis policy reform measures both comprehensive and incremental, and the introduction of eight new regulated cannabis markets in just a few short months has lawmakers of all stripes taking a much closer look at this issue than ever before. Even staunchly opposed legislators are being forced to reexamine their positions on bills that would directly benefit their constituents and businesses in their states, particularly in light of the urgent need for jobs and taxes as the pandemic response begins to pivot toward economic recovery. This is on top of record public support nationally for legalization. It is becoming increasingly clear to lawmakers that standing in the way of reform is a losing proposition.
With the passage of the SAFE Banking Act, it is likely that the House will move its attention to amending and approving the MORE Act for a second time, as well as considering several other pieces of cannabis-related legislation. The fate of the SAFE Banking Act now lies with the Senate. Senate Majority Leader Chuck Schumer said recently that he would prefer to wait for further consideration of that or other incremental reforms until after the introduction of his much-anticipated comprehensive descheduling bill in the coming weeks. We are confident that debate and progress on these bills is not mutually exclusive, and moving both pieces of legislation through the upper chamber simultaneously is both possible and likely, especially given the broad bipartisan support that the SAFE Banking Act enjoys.
by Anne Davis, Bennabis Health
The use of medical cannabis in chronic conditions is well-known, and some estimates are that medical cannabis can be an adjunct to more than 100 medical conditions. Frequently mentioned conditions include neuropathic disorders such as multiple sclerosis, neuropathy, PTSD, anxiety and depression and certain epilepsies among young children.
Although cannabis is still federally illegal, multiple studies of patients with multiple sclerosis and their providers have acknowledged that cannabis may have a role in improving symptom control, particularly pain, muscle spasticity, and more.
Anne Davis is a successful attorney, mother and community leader in New Jersey. In 2007, she focused her practice on the legal, regulatory, and advocacy issues surrounding use of medical cannabis. In this role, she became a national figure, presenting at conferences, and a sought-after contributor to health care law and advocacy initiatives.
Fast forward to 2013: Anne was thriving in her career and caring for her 2 daughters, ages 8 and 19-a critical time for her young family, whose needs were typical of busy and actively involved children and parents. In 2013, Anne was diagnosed with relapsing-remitting MS.
Devastated by the diagnosis, Anne began to research the impact of the medical regimen, prescribed medications and ongoing testing and lab work that would be required. Anne would need frequent lab tests to ensure treatment was not harming her vital organs, a potential side effect of many medications used in treating MS.
After careful consideration, Anne decided to use her professional knowledge about medical cannabis for herself, a decision not supported by her neurologist and care team.
Much like Anne, studies indicate that most patients conduct their own research when considering medical cannabis. The advice from friends and family are the most frequently cited resources when considering cannabis. A 2014 study indicated that only 18% of patients discussed use of cannabis with their healthcare provider, and less than 1% received assistance from their healthcare team on the kinds of formulations available. This leaves patients in a precarious and potentially harmful situation. Patients rely on and trust their healthcare team.
Surprisingly, despite lack of support and collaboration with their healthcare team, a survey of MS patients conducted in 2019 showed that more than 40% of patients said they used medical cannabis in the past 3 months. This is a striking number, indicating that patients are seeking non-traditional resources in managing their care. These data beg the question: Why are MS patients trying medical cannabis? Are their current prescriptive medicines not working? Do they have ongoing and unresolved symptoms that interfere with their quality of life? What is motivating patients to pay out of pocket costs for medical cannabis on top of their co-pays and health insurance premiums?
For Anne, the answer was “to avoid potential side effects” of her prescription medicines.
“I knew from my years in the industry cannabis was effective and had zero side effects. I was well aware of the research that indicates that cannabis has neuroprotective qualities, in addition to symptom relief. For that reason, I decided to use it every day as part of my treatment plan.
As an MS patient, cannabis is an integral part of my daily life. I use it every night before bed to help with fatigue, muscle cramping and spasticity. It also significantly helps elevate my mood, especially on days when I feel a sense of overwhelm. For me, I struggle with cognitive issues the most from MS. It depends on where the lesions occur in your body, or specific regions of the brain that determines what is impacted the most. It is important to live a healthy lifestyle. For me, that consists of exercise, nutrition, avoiding saturated fats, sugars, beef and dairy. I have reduced stress in my life, get enough sleep, meditate and stay positive. Add cannabis, and I feel like I am doing everything in my power to live my best life.”
Anne is often asked what strains work best? The fact is, there is not one in particular. “I prefer to change strains often. It seems that you build up a tolerance when you use the same strain every day. The therapeutic benefits are best from a blend of strains. I prefer high THC as my use is primarily in the evenings. The level of relaxation that I can experience helps me to fall asleep, stay asleep and get a good night’s rest. I have heard of pharmaceutical companies getting in the cannabis industry and making the argument that cannabis should be mass-produced and you should have the same consistent THC and CBD levels with every plant. Nothing can be further from accurate. Patients need and want variations.”
“First, celebrate and recognize your work, no matter if it is behind the counter, in the boardroom, growing, cultivating, and supporting advocacy that directly benefits patients like me. No matter your role in this industry, behind at the end of the supply chain is a patient seeking resolve from one or more symptoms. It could be the nausea associated with cancer, the pain from glaucoma, the night terrors from PTSD.”
“Continue to grow and produce quality products. What is a quality product in the opinion of a patient? In my experience, it consists of large green or purple buds with aromatic terpenes. I strongly believe in the “entourage effect “so I like both high THC and CBD combined, another reason that I prefer to mix cultivars and create blends.”
The industry can also advance healthcare and consumer knowledge about cannabis in all its forms. Although peer reviewed articles and scientific evidence are less available than we would like, helping patients and their providers understand what and how to use medical cannabis is essential to its acceptance as an alternative treatment option.
Anne continues to successfully use medical cannabis today. Anne’s neurologist, who was originally against her decision, has since advised her that she made the right choice.
Anne M. Davis, Esq. has been practicing law for 20 years. For the past 12 years, she has been recognized as one of the state’s leading experts in marijuana law and policy. In that role, Davis has presented workshops and seminars nationally about marijuana law reform. Since her diagnosis with MS, she has dedicated her skills and experience to create programs and expand access for medical marijuana patients. As part of that mission, she is a Patient Advocate for Bennabis Health, the first health care plan in the nation covering medical marijuana.
As a community leader, Anne serves as a CASA (Court Appointed Special Advocate) working with foster children; she teaches CCD at her local Church, and has served as a Girl Scout leader for 11 years. Anne was recognized as a “Woman of Distinction” by the Girl Scouts at their annual Gala in 2020. Working with children, keeping them safe and giving them the best opportunities possible are some of her top priorities.
By Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Last week was an historic one for cannabis policy around the nation. The second largest adult-use market, New York, successfully legalized cannabis and has already been signed into law by Governor Andrew Cuomo (D). New Mexico’s legislature also passed adult-use legislation which awaits Governor Michelle Lujan Grisham’s (D) signature shortly. Lastly, Virginia Governor Ralph Northam (D) signaled that he wants the state’s new adult-use cannabis laws to go into effect sooner than originally anticipated. Keep reading below for a brief summary of what’s happening in each of those states, and what it means for federal policy.
Last week, New York became the 16th state to approve a law creating a regulated adult-use cannabis market when Gov. Cuomo signed the Marijuana Revenue and Taxation Act (MRTA). This legislation would make possession of up to three ounces and limited home cultivation legal and will automatically expunge convictions for behavior that is legal under the new law. Notably, the new law also allows for cannabis consumption almost everywhere that tobacco consumption is allowed.
Equity was at the forefront of New York’s bill: forty percent of tax revenue will be directed toward communities disproportionately impacted by cannabis prohibition, and provisions in the MRTA seek to award half of all business licenses to social equity applicants. The importance of this can’t be overstated: nearly 60,000 people – the majority of whom are people of color – are arrested for marijuana violations in New York every year, the effects of which can permanently damage their ability to obtain employment, housing, and education, among other collateral consequences.
A 2020 report by Arcview Market Research and BDSA projected that the New York cannabis market will be worth more than $1.6 billion by 2025. The state plans to tax cannabis at 9% at the state level with an additional 4% made available to cities and counties, and with additional incremental taxes levied based on the type of product and the amount of THC contained in them.
New Mexico is now poised to become the 17th state to legalize adult-use cannabis upon Gov. Lujan Grisham’s signature. The legislature advanced two measures to the governor’s desk: the first legalizes and regulates cannabis possession, production, and sales for adults over the age of 21, while the second facilitates the automatic review and expungement of the records of those convicted of low-level marijuana offenses.
The state’s Cannabis Regulation Act allows for the possession of up to two ounces of cannabis for adults 21 and over, permits the home cultivation of up to six plants, and, unlike New York’s legislation, prevents local governments from opting out of retail sales. Legal retail sales are scheduled to begin in New Mexico on April 1st, 2022 (no jokes here!).
Marijuana Business Daily projects an adult-use cannabis market in New Mexico could generate $350 million in annual store sales by its fourth year of operation.
You’ll remember that back at the end of February, Virginia’s General Assembly convened a special session where they passed adult-use cannabis legislation. The legislation detailed the regulatory and market structures for the state, outlined social equity provisions, repealed criminal penalties for the plant, and, perhaps most importantly, is subject to a second review and vote by the Assembly in 2022. Lawmakers also established a January 1, 2024 enactment date for the law, however, much of this is now in flux thanks to Gov. Northam.
Last week, Northam asked the General Assembly to speed up the legalization of marijuana in the state, making it lawful for an adult to possess up to one ounce on July 1, 2021, instead of waiting until early 2024. Additionally, Northam has proposed a quicker route for expunging marijuana-related incidents from criminal records and allowing home cultivation of up to four plants per household also as of July 1, 2021.
The Governor’s request is in the form of a proposed amendment to the legalization bill the General Assembly passed last month. It’s also important to note that Northam’s proposals include changes to several other aspects of the legislation. One would empower the Cannabis Control Authority — the new regulatory agency that will be created to oversee the industry in the state — to suspend the licenses of businesses that don’t allow workers to organize, pay less than a prevailing wage, or classify more than 10 percent of workers as independent contractors.
The General Assembly will take up these proposals when it reconvenes April 7 for a one-day session to consider any vetoes or amendments Northam has proposed to this year’s legislation.
Once New Mexico and Virginia’s cannabis legislation is signed into law by their respective governors, nearly 45% of Americans will live in a state with legal cannabis, and it could reach a majority before the end of the year. This has what I like to call a “trickle up” effect for members of Congress, meaning that federal legislators begin to pay much more attention to cannabis-related issues once these policies are passed in their home states. You can certainly expect more members to begin signing onto legislation like the SAFE Banking Act and signaling support for comprehensive legislation like the MORE Act and the upcoming Schumer/Booker/Wyden bill that have yet to be introduced but are highly anticipated. As always, the NCIA team in DC will continue to keep our finger on the pulse to keep you and your business informed!
by Frank Nisemboum, c2b teknologies
Amid increased anxiety and stress resulting from one of the most turbulent years in recent history, Americans everywhere have been turning to cannabis products to help them make it through. Bearing witness to a 71% increase in cannabis product sales nationally, according to industry experts at Leafly, the U.S. cannabis industry grew beyond expectations in 2020.
While dramatic increases in product demand may seem like a cannabis business owner’s dream, maintaining compliance with unstable and unstandardized cannabis regulations can bring on more than a few nightmares. Every state seems to have different guidelines, requirements, and procedures than the next, with some in-state laws differing even between municipalities.
Although maintaining compliance may seem like an unnecessary challenge without an immediately obvious return on investment, the real nightmare for cannabis operators begins once they’re found in violation. Non-compliance consequences usually include huge fines, the temporary loss of business, and even business license forfeiture.
As a cannabis professional, you know that regulatory compliance isn’t optional and instead, an absolutely critical function of every cannabis operation. From cultivators and manufacturers to distributors and retailers, no business in the seed-to-sale supply chain can expect longevity in this industry without a plan that ensures adherence to local, state, and federal laws.
One of the most common complaints regarding regulatory compliance involves the amount of time you have to spend on compliance: maintaining adherence, staff training, and preventing non-compliance violations. Let’s face it, this is a burden that doesn’t seem to directly correspond to a return on investment, particularly if you are a smaller cannabis business operating on thinner margins than some of the big guys. When time is among the most valuable things you have, wouldn’t you rather focus on front-end concerns that yield the more obvious benefits to the bottom line?
Often it’s the level of cannabis regulation complexities that takes so much time and energy to overcome. Without approval and regulation on the federal level, requirements can drastically vary by state, subject to rapid changes by state and local legislatures. Maintaining compliance becomes a more significant challenge if you are a growing business with an eye toward expansion into more than one location in multiple jurisdictions.
Together with medical privacy requirements, food safety, occupational safety, tax regulations, and other conditions, it seems like you’re spending more time investing in learning and implementing compliance initiatives than in product, facilities, or operational investments.
COVID-19 certainly didn’t make any of this easier. These regulations have proven to be the most unstable, with many state and municipal governments behaving inconsistently, seemingly unsure of what they were doing week to week.
On top of existing regulations before the pandemic, many cannabis businesses found ways to quickly adapt to new health regulations, mandatory facility closures, and point of sale changes. Dispensaries once focused on efficient customer service in limited-space shops now have to ensure social distancing, customer turnover, enhanced sanitation, and new capacity limits.
The hard truth of the matter for cannabis businesses moving forward is that regulatory compliance will continue to be one of the most critical leadership focus areas. With more states poised to follow legalization trends in the next few years and lasting changes from an ongoing pandemic, the complaints concerning regulatory compliance are likely to get louder and more frequent.
However, you can meet these challenges through systematic planning and the right cannabis tools to continue growing within the industry while striving for perfect compliance records.
The most impactful steps you can take as a cannabis business include acknowledging the significance and planning for 100% compliance. Not only does compliance protect your business from incurring hefty fines and licensure consequences, but regulations also work to protect the safety of customers and staff.
Regulatory compliance isn’t just about avoiding fines and protecting a business’s finances — it’s about providing a quality product consistently in a safe and secure environment. Tainted products can injure consumers, while children and animals are at risk of accidental consumption resulting from insufficient packaging.
As a cannabis operator, once you adequately acknowledge the implications of maintaining compliance, you can begin developing a plan to make it happen. Depending on the scope and size of your operation, requirements specific can vary from one cannabis business to the next. If you run a cannabis business with front-end sales, for example, you may be required to follow regulations that a delivery-only company would not be required to follow.
Ensuring your compliance plan focuses on the applicable statutes for your business type will save time, energy, and vital resources. Consulting with cannabis compliance experts is an economic investment every cannabusiness owner should make. They’ll teach you about meticulous record-keeping while helping you examine local regulations and understand the requirements specific to your business type.
Vice President of ERP Sales, Frank Nisenboum, is a trusted advisor at c2b teknologies who has guided organizations of all sizes enabling them to establish a technology presence and expand their business through technology. His proven ability to analyze the current and future plans of a company and work with team members to subsequently bring technology solutions to the organization result in improved processes and controls that assure continued growth and profitability.
Frank has worked in the ERP and CRM software selection, sales and consulting industry for almost 25 years. His strong ability to understand, interpret and match the needs of an organization to the right solution make him an asset to all of his clients.
c2b teknologies integration and engineering experts have partnered with leading cannabis industry experts to develop a software solution that provides a complete cannabis operations system. The best-in-class solution not only handles tracking of seed-to-sale activities but encompasses your entire cannabis operations with compliance needs handles along the way. Our passion for solving problems drives us to deliver innovative solutions for everyone we work with. Visit c2btek.com for more information.
by NCIA’s Cannabis Manufacturing Committee
Product safety isn’t an endpoint, it’s a journey. That’s what we told you in the 2021 series premiere, and it continues to hold true. In the last post, we revisited the Vaporizer Liquid Formulations portion of the NCIA’s policy council white paper to provide guidance to the industry. This time, we’re republishing the Vaporizer Delivery Devices section below. We’ve learned more about EVALI since its original publication, and while some of the specifics may be a little dated, the principles remain relevant to helping you understand vapor product safety.
Over the course of the next several months, we’ll bring you new content with the following working titles.
The Importance of Testing Vapor Products as a System
Edibles Stability – Microbial Growth Due to Insufficient Packaging
Terpene Limits Across Multiple Product Formats
So, while we wait with bated breath for this exciting new content, enjoy the excerpt below!
Excerpted from The Key To Consumer Safety: Displacing The Illicit Cannabis Market Recommendations For Safe Vaping. Access the full report and citations.
While the technology used to vaporize cannabis extracts have been around for many years, advancements in vaporization technology and supply chains over the past decade have led to widespread adoption and growth of vaporization as a preferred method of cannabis consumption. Vaporizer devices offer the benefits of being discreet, allowing for metered consumption, and eliminating carbon associated with combusting cannabis flower. However, not all vaporizer devices are created equal and manufacturers should develop an understanding of the nuances of different vaporizer devices to ensure the delivery of a safe and high-quality experience. Aside from considering experiential qualities such as taste and the amount of vapor produced, manufacturers should consider at least the following three categories of issues that can present safety risks.
Vaporizer devices should be mechanically and electrically safe. This starts with relatively basic considerations that include ensuring the device is mechanically sound, does not leak alkaline or heavy metals, and is not configured in a manner that presents a safety hazard. In the early 2010s, there were many reported instances of vaporizer devices exploding. This was primarily due to improper electrical design and battery cell protection. Battery cells that are not protected from drawing current beyond their rated capacity or are allowed to drain too deeply present a safety risk. In fact, this risk led to the development of the UL 8139 standard for e-cigarette battery safety and the FDA recently relaxed its prohibition on e-cigarette battery changes in order to allow manufacturers to comply with this standard. UL 8139 is applicable to vaporizer devices and anyone who sources or develops a vaporizer device for the cannabis market should voluntarily comply.
Vaporizer device hardware should be tested for the presence of heavy metals. Currently, some manufacturers use Restriction of Hazardous Substances (RoHS) testing or rely on vendor representations that the components and materials being used are certified as FDA food-grade. The California Bureau of Cannabis Control mandated heavy metals testing standards for the three categories of cannabis products, including inhalable cannabis products, starting on December 31, 2018.
Vaporizer device hardware that comes into contact with cannabis formulation should also be free of other contaminants. It is important to consider both contaminants that could be immediately detectable in vaporizer devices as well as those that can be released or created over time. Vaporizer devices are designed using a variety of industrial manufacturing processes, some of which can leave residual oils, biological agents, or other substances in the device. It is important that device manufacturers clean incoming components, assemble them in a clean environment, then store and ship them in a manner that prevents re-contamination. Depending on the nature of the component, one or more of a cleaning bath or ozone treatment may be used for cleaning. After cleaning, assembly of vaporizer components should be performed in a cleanroom environment under appropriate current Good Manufacturing Practices (cGMP). Unfortunately, simply asking a device manufacturer whether it operates in such a manner is not sufficient to be certain that it does. There is no substitute for first-hand inspection of manufacturing processes. While it may not be practical for U.S.-based cannabis manufacturers to maintain a constant presence in the country of manufacture, it is possible to hire local agents who are skilled in audit practices and can perform unannounced inspections to verify that desired practices are implemented within the supply chain.
As noted above, hardware may also introduce contamination into the formulation over time, either through the process of leaching heavy metals or through chemical reaction. Leaching is a process whereby soluble constituents that may be present in materials dissolve into a formulation. A well-known example was the discovery that plasticizers present in certain plastic food and beverage containers were leaching and then being consumed. As a result, new types of plastics were developed for improved food safety. Vaporizer components that contact cannabis formulations may present a similar issue and leaching may be tied to metals, ceramics, plastics, or other materials. In addition to leaching, certain materials may react with cannabis formulations, especially those with high terpene content which tends to be more volatile. Moreover, metal components in contact with formulations may be especially susceptible to leaching and lead to contaminants such as heavy metals in the formulation.
The good news is that it is possible to address this risk of leaching through the use of appropriate base materials and or plating. Base materials such as stainless steel are good candidates because of their low tendency to react with formulations. Plating other materials with corrosion-resistant metals is also possible; however, care must be taken to specify the right material and plating thickness while also ensuring the plating is not damaged during assembly.
With proper material selection and design, it is possible to reduce the risk of such contamination, including through conducting stability tests. In a stability test, a formulation is placed into the vaporizer device for a period of time, then removed and tested for contaminants. A good guide is to design the stability test to align with the desired shelf life of the product. That doesn’t necessarily mean the test needs to be as long as the rated shelf life. Typically, elevated temperature tests are used to determine stability and can cut the duration of the test to 50% or less of the desired shelf life. In addition, by taking measurements at intermediate intervals, stability can be better characterized and the point at which contaminants would exceed their respective limits can be projected.
The most fundamental, yet perhaps the most underappreciated aspect of vaporizer devices is how they vaporize cannabis formulations. Setting aside dry herb vaporizers, all liquid cannabis vaporizers basically work by bringing the formulation into contact with a hot surface in order to heat it and thus create vapor. While this may seem straightforward, there are a number of subtleties that affect the outcome. First, the temperature of the hot surface must be hot enough to heat the liquid, yet not so hot as to cause components of the formulation to degrade into byproducts that could be harmful. In fact, one study demonstrated how changing the voltage, and thus the temperature of an unregulated vaporizer device can affect the production of such degradants. While more advanced vaporizer devices attempt to control vaporization temperature by using heating elements made of specific materials that indirectly measure temperature and regulate the power delivered to the heating element, the majority do not.
Different formulations have different compositions and contain constituents that vaporize and degrade at various temperatures. This means that to fully control vaporization, the vaporizer device must be configured precisely to the requirements of the formulation in use. Second, many vaporizer devices do not heat uniformly. Rather, the heated surfaces heat unevenly, creating hot spots that can locally trigger thermal degradation. Temperature control circuits typically measure an average temperature and do not prevent such hot spots. Finally, the majority of vaporizer devices, whether they contain fiber wicks or ceramic, rely on capillary action to bring the formulation into contact with the heated area or surface. During a puff, capillary action is also what replenishes the formulation at the heated surface, and such capillary replenishment takes time. Depending on the viscosity of the formulation and the duration of the puff, a heated surface that was initially saturated with the formulation can become dry and hot during the course of a puff. Experienced users sometimes refer to this as a “dry hit,” which can be perceived when a cartridge runs dry or during a long puff. Dry hits can result in increased thermal degradation.
Armed with this understanding of the nuances of vaporizer devices, one can appreciate how the common business model of selling cartridges with a universal 510 threaded connection that can be used in conjunction with any number of batteries, any number of power settings, and filled with a variety of formulations makes it difficult to guarantee what is produced during vaporization. In order to understand and control the output of a vaporizer device, the system should be designed, configured, and tested as a whole; cartridge and battery, plus formulation. Closed systems with proprietary connectors and one-piece designs do not face the cartridge-battery mismatch challenge, but should still be tested in conjunction with the target formulation using a reasonable worst-case puff duration. And while new systems under development that employ non-contact heating methods may not present the same temperature control challenges, they too should be validated as a whole.
The Cannabis Manufacturing Committee (CMC) focuses on reviewing existing business practices and state regulations of concentrates, topicals, vaporizers, and edibles, ensuring the manufacturing sector is helping shape its destiny.
By NCIA’s Human Resources Committee
COVID-19 vaccine policies are just the latest challenge for employers as the world continues to adapt to life after coronavirus. COVID-19 has forced employers to be much more actively engaged in monitoring our employees’ health and your company’s approach to a vaccine policy may continue to reflect the unusually intimate partnership between employers and employees in protecting the health of our communities.
Business owners may be eager for operations to return to normal after nearly a year of intense focus on disruptive business practices made necessary while we responded to the COVID-19 pandemic and its implications for the workplace. While a widely vaccinated public has been promoted as the light at the end of this tunnel, over a third of Americans are reluctant to get the vaccine. This is where employers can make a difference in the trajectory of our national vaccine project by encouraging, and even requiring, employees to be vaccinated. Cannabis industry operators should be especially concerned about crafting a careful approach to vaccine policy as many of our workers have been declared essential throughout the pandemic and we provide services to some of the most vulnerable in our communities including those with chronic illness, the elderly, or those with compromised immune systems. Yet, in many states, cannabis business owners and human resources departments continue to struggle with unclear guidance about when our employees will be able to get the vaccine.
Employers will have to navigate a number of competing interests and obligations to craft a sound and responsible vaccine policy. On the one hand, employers are obligated to provide a workplace that is “free from recognized hazards” (OSHA General Duty Clause), i.e. persons infected with the coronavirus. On the other hand, employers are generally more hands-off when it comes to personal health decisions like whether or not to get vaccinated against certain illnesses, and indeed we have an obligation to protect our employee’s privacy and right to refuse vaccination due to a religious objection or medical condition. There is no shortage of advice available to cannabis companies but much of this advice fails to explore the real-world challenges that HR practitioners and business owners will face as they navigate vaccine issues with employees on the ground over the coming months, partly because we are wading into uncharted waters. Below is a brief summary of what information is available to guide employers right now.
The Equal Employment Opportunity Commission has provided guidance for employers navigating their approach to vaccination at the workplace. In general, the EEOC supports employers’ right to encourage or require employees to get vaccinated against COVID-19, as well as take other precautionary measures recommended by the Centers for Disease Control. There is a persuasive business necessity to, at a minimum, encourage employees to get vaccinated against COVID-19, and cannabis companies may find that their employees are relatively prioritized in many state vaccine distribution plans due to the prevalence of designating cannabis workers as essential, though guidance specifically pertaining to cannabis workers is slow-coming and vaccine availability has gotten off to a rocky start with an uncertain supply of vaccines. At least for the time being, multi-state employers will have to continue to adapt to a patchwork of various approaches to state vaccine distribution plans just as they have for managing the workplace throughout the pandemic.
Employers must also proceed cautiously when responding to employees who refuse vaccination. Some employees who resist vaccination will have a legitimate right to be accommodated due to a sincerely held religious belief or a medical condition that prevents them from taking the vaccine. Employers must be ready with a flexible policy that allows qualified personnel to engage in an interactive process with these employees to discover and document the nature of their objection and then to negotiate a reasonable accommodation. For those positions that have already been eligible for temporary work from home arrangements, for example, an extension of this arrangement might be a reasonable alternative to vaccination. Other accommodations can be made for employees who must interact with the public or their coworkers to perform their essential job functions, such as leave of absence, but how soon such an employee would be excluded from the workplace given the scarcity of vaccine availability and under what conditions this employee would be allowed to return to the workplace are still open questions.
The Society for Human Resources Management (SHRM) published research earlier this month revealing that the majority of employers plan to encourage but not require their workforce to be vaccinated against COVID-19. This approach seems to dodge some of the more troubling aspects of rolling out a mandatory vaccine program and reflects the reality that many employers can use a combination of other means to reduce the risk of transmitting the virus such as the continuation of work from home policies, virtual services, contactless product delivery, etc. A mandatory program would force a confrontation between those employees who are unwilling to get vaccinated and the company’s managers tasked with tracking vaccination, avoids potential workers compensation claims that might arise from adverse reactions to the vaccine, and provides relief for the potential administrative burden of tracking employees’ proof of vaccination. A voluntary vaccine policy also restores some of the onus for making an informed decision about vaccines on the employee rather than the employer assuming all the responsibility, and potential liability, for forcing a decision to become vaccinated on the workforce. Keep in mind that even under mandatory vaccination policies, some employees will inevitably not get vaccinated and the company will need to work with those individuals on a case by case basis to determine what reasonable accommodations, if any, can be made for those workers. Employers who mandate vaccines as a condition of employment will also likely need to pay for vaccination if there is a cost in the future as well as provide paid time off for employees to go to vaccine appointments. A voluntary policy may make it easier for the employer to be flexible and compassionate toward the varying needs and attitudes of our employees while navigating the continually evolving state of vaccine availability and public health advice.
Throughout the pandemic, employers have operated with ambiguity and uncertainty. This (hopefully) final stage of the pandemic will be no different. As we craft our vaccine policies, we should be prepared to deal with the unexpected and adapt to change as new information is available or revised. This is where I believe that cannabis companies have a real advantage. In this industry, flexibility and innovation are essential skills and we as professionals in this industry are well-practiced at pivoting with little notice. I am confident that cannabis operators will rise to the challenge of navigating vaccine distribution while protecting our workers and our customers with the same aplomb that has helped our industry thrive during the challenging last 12 months.
Melissa Hafey is the Director of Human Resources for Blackbird. Blackbird is a software and services company that provides marketing tools and transportation solutions for cannabis operators. Melissa is a passionate advocate for creating meaningful work in rewarding work environments. Her experience includes change management, benefits administration, HRIS implementation, recruiting, workplace diversity initiatives, and human resources management across multiple states including California.
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
It’s hard to believe that somehow it’s March again, but all the while, the NCIA team in D.C. has been hard at work lobbying and advocating on behalf of you and your business. Things are really beginning to warm up and spring into action, so keep reading below for a quick update on where things are at with SAFE Banking, comprehensive reform, appropriations, and more!
Bill reintroductions in both chambers have been off to a slow start. Between a new session, most people still working remotely, a delayed organizing resolution in the Senate, and a somewhat contentious COVID relief package that’s finally passed, members of Congress and their staff have been incredibly busy. But, now that that’s all behind us, I’d suggest preparing for many cannabis bills to be introduced soon.
Specifically, you can expect the reintroduction of the SAFE Banking Act to happen in both the House of Representatives and the Senate within the next couple of weeks. When the bill was introduced in the House during the 116th Congress, it had over 100 cosponsors. In the Senate, it was introduced with more than 20 — that’s more than a fifth of the entire chamber! The bill later went on to be passed by the entire House of Representatives in September 2019 by a vote of 321-103.
You’ll remember that the SAFE Banking Act addresses urgent public safety concerns by allowing tightly regulated marijuana businesses the ability to access the banking system and make our communities safer. The bill also provides protections from money laundering laws for any proceeds derived from these state-legal marijuana businesses. The bill also includes the Financial Institution Customer Protection Act and protections for hemp and hemp-derived CBD-related businesses, which sometimes still struggle in accessing financial services despite the legalization of hemp in the 2018 Farm Bill.
Don’t expect any big changes, however — the bill this Congress includes minor technical changes to the safe harbor language, strengthened hemp provisions, and other technical updates.
While SAFE Banking’s timeline is clear, the same can’t completely be said for more comprehensive reform. When I say comprehensive reform, I’m talking specifically about bills that would remove marijuana from the Controlled Substances Act like the MORE Act and the upcoming Schumer-Booker-Wyden bill.
In the House, we are continuing to work with various committees and members to determine the best path forward for the MORE Act and what changes should be made. I wouldn’t be surprised if that bill gets reintroduced sometime this spring, but the process is truly still in flux, so I also wouldn’t be surprised if it was postponed awhile. This will be determined by the lead sponsors’ offices and also by the congressional calendar and how various bills/issues move through the legislative process.
In the Senate, we’re excited to be working with Leader Schumer (D-NY) and Sens. Booker (D-NJ) and Wyden (D-OR) on their new cannabis bill. That bill will draw heavily on provisions from the MORE Act, but will also include expanded language on taxation and smart regulations. Now that the COVID relief bill has passed into law, I think we can expect to see their bill be introduced sometime in the near future.
It’s spring, which means it’s appropriations season here in D.C.! These bills are legislation that “appropriates,” or sets aside, federal funds to be divided between specific federal government departments, agencies, and programs. For a refresh on the history of appropriations, click here, or, if you’re interested in how these provisions relate to cannabis, click here.
While the appropriations amendment that protects medical cannabis businesses, patients, and programs has been in law since 2014, we’ve had difficulty expanding those provisions and passing new cannabis-related amendments due to the formerly-Republican controlled Senate. However, now that Democrats control both houses of Congress, we’re excited to go back to the drawing board and get creative with the appropriations process to help provide some certainty and relief to the cannabis industry.
We’ll be looking at amendments pertaining to adult-use cannabis programs, banking, veterans access, allowing Washington, D.C. to finally implement a functioning 21+ cannabis program — and that’s just scratching the surface!
All of this is to say: things are really springing into action in D.C.! Prepare for many cannabis bills to begin getting reintroduced, and remember that the appropriations process takes months, so stay tuned via our blog, newsletter, NCIA Connect, and the new NCIA Mobile App to remain in the loop and get involved!
by NCIA’s Cannabis Manufacturing Committee
Product safety isn’t an endpoint, it’s a journey. And let’s face it, there is years-worth of research left to do on the safety of cannabis products. That’s why it’s important to stay up to speed on the latest thinking from leaders in the industry. In 2021, the National Cannabis Industry Association’s Cannabis Manufacturing Committee intends to help you do just that by providing information and approaches aimed to help you continue to improve the safety of your manufactured cannabis (marijuana and hemp) products while providing your customers with increasingly trusted experiences. This Manufactured Product Safety Series will consist of blogs, podcasts, and expert panel discussions focused on providing insight into topics relevant to a wide range of manufacturers.
Over the course of the next several months, we’ll bring you content with the following working titles.
Vapor Liquid Formulations
The Importance of Testing Vapor Products as a System
Edibles Stability – Microbial Growth Due to Insufficient Packaging
Terpene Limits Across Multiple Product Formats
But while we’re busy crafting these new pieces, we want to take advantage of our past publications to keep important safety topics front and center. Back in January of 2020, in response to the then-emergent EVALI outbreak, NCIA’s Policy Council created a whitepaper to provide guidance to the industry and regulators. We’re republishing portions of this whitepaper starting with the Vaporizer Liquid Formulations section below. We’ve learned more about EVALI since its original publication, and while some of the specifics may be a little dated, the principles remain relevant to helping you understand product safety.
Disseminating our knowledge of this topic also helps promote better regulation. Examples of what can go wrong are the Oregon Liquor Control Commission’s (OLCC) recently adopted regulations that effectively ban the use of propylene glycol (PG). Granted, they were addressing a difficult issue and made some good decisions, but had they read this piece, they might have better understood that PG “degradation has been shown only with temperatures in excess of what is typically produced by well-controlled hardware.” Even in studies where the temperature was not well controlled, thermal degradants were detected in amounts that are lower in the vapor stream when compared to combustion and inhalation of plant products, such as cannabis flower. And given that PG has been “used at up to 90% concentration in e-cigarette products for the past decade without reports to date of significant health issues,” it is unwise to ban an ingredient option that may turn out to have a better safety profile than even certain native terpenes, some of which may have to be added at abnormally high concentrations in order to achieve the desired viscosity, without further research.
So with that in mind, stay tuned for the next piece in the series and enjoy the excerpt below!
Excerpted from THE KEY TO CONSUMER SAFETY: DISPLACING THE ILLICIT CANNABIS MARKET RECOMMENDATIONS FOR SAFE VAPING
Access the full report and citations.
The cannabis-derived ingredient in cannabis oil vaporizers is a concentrate that is produced by extracting the cannabinoids and other compounds from the plant. With the exception of supercritical CO2 extraction, most other common extraction methods use butane, alcohol, or hexane as solvents for the extraction of cannabis oils used in vape pens. Extraction processes using these solvents may result in a small presence of the solvent in the extracted oil. Any residual solvent must ultimately be removed prior to any product being sold to consumers. States that have legalized and regulated cannabis typically have specific requirements regarding allowable concentration levels of these solvents. These states also require full analytical testing by licensed independent labs, including reporting of residual solvents, to ensure that only safe levels of any solvents are present in the final formulation of cannabis vape products.
The type of cannabis concentrate used in a vaporizer is important to consider. Some require diluents or other additives to be effectively vaporized while other types of concentrates (eg: live resin) have the appropriate viscosity to be used in vaporizers without adding any diluting non-cannabis ingredients.
Propylene Glycol (PG), Vegetable Glycerin (VG) aka Glycerol, and Polyethylene Glycol (PEG)
Similar to what we are seeing in the commercial e-cigarette industry, some manufacturers of cannabis extract-containing vape pens choose to add ingredients that help adjust the viscosity of the cannabis oil. This allows the oil to flow evenly through the atomizer when heated. Some of these additives may also contribute to a vapor “cloud” when exhaled. PG, VG, and PEG are the most commonly used cosolvents or diluents. PG and VG are on the FDA’s Inactive Ingredient List for inhalable drug products and are allowable only at fairly low concentrations in drug products, but have been used at up to 90% concentration in e-cigarette products for the past decade without reports to date of significant health issues. PEG is not on the FDA’s list and less is known about its inhalation toxicity. Therefore, PEG should be viewed with more caution, even at lower concentrations.
The state of Colorado has paved the way for the industry on forward-thinking cannabis regulations and remains an industry leader. Governor Polis, his cannabis advisor, and the Marijuana Enforcement Division should be commended for creating an environment in the state that fosters business development while simultaneously protecting consumers. After discussions between Colorado regulators and stakeholders about additives, and given the lack of sufficient safety reviews of these ingredients, the state of Colorado prohibited Polyethylene glycol (PEG); Vitamin E Acetate; and Medium Chain Triglycerides (MCT Oil) in inhalable concentrates and products effective January 1, 2020. Colorado further banned non-botanical terpenes, any additive that is toxic, and any additive that makes the product more addictive, appealing to children, or misleading to patients or consumers. Other states should consider following Colorado’s lead.
The creation of degradants through overheating is also an important consideration. For example, overheating PG and VG may result in their degradation into molecules with established toxicity profiles such as glyceraldehyde, lactaldehyde, dihydroxyacetone, hydroxyacetone, glycidol, acrolein, propanal, acetone, allyl alcohol, acetic acid, acetaldehyde, formic acid, or formaldehyde. However, this degradation has been shown only with temperatures in excess of what is typically produced by well-controlled hardware. Because PEG is a polymer of glycerin, its degradation upon heating is similar to that of VG and it forms the same unwanted toxic molecules.
Investigators at the FDA and CDC recently found that some cannabis-containing vape products from the illicit market contain a molecule called vitamin E acetate (VEA), also known as Tocopheryl acetate. Vitamin E is a common name for several similar types of chemicals called “tocopherols.” Vitamin E occurs naturally in certain foods, such as canola oil, olive oil and almonds, but also can be made synthetically. Tocopherols are used as nutritional supplements, and manufacturers put tocopherols in food and cosmetics. VEA is the acetic acid ester derived from vitamin E and is also not known to cause harm when ingested as a supplement or applied to the skin.
VEA’s safety when inhaled has not been evaluated. Numerous published studies indicate that the inhalation of vaporized oils, including certain tocopherols, are harmful to the lungs and numerous cases of lung injury after their inhalation have been documented since 2000. Tocopherols such as VEA adhere to an important fluid in the lungs called lung surfactant. Lung surfactant enables oxygen to transfer from air into your body. Studies have shown that tocopherols impair gas transfer in the lungs. Currently, it is believed that inhalation of significant amounts of certain tocopherols can lead to the death of lung cells and initiate a massive inflammatory reaction that can further contribute to lung damage and functional impairment. Accordingly, VEA should not be used as an additive in any inhaled product. Following the FDA and CDC’s investigation, Colorado added VEA to their list of prohibited ingredients in inhalables to their regulations effective January 1, 2020.
Some manufactures of cannabis extract-containing vape pens choose to add flavoring agents to the cannabis oil to give them a distinctive flavor, similar to products in the electronic cigarette industry. These additives tend to produce flavorings that are appealing to some consumers. While a number of flavorings have been used for many years without incident, the safety of the majority of flavorings when added to vaporized products – alone or in combination with cannabis extracts – have not been fully and scientifically evaluated.
In one study, certain chemicals that are used in flavorings for vanilla, cherry, citrus, and cinnamon can create compounds called acetals when they are mixed with solvents such as PG and VG. Acetals are known to cause irritation when inhaled and can lead to chronic inflammation in the lung. The long-term
effects of these flavoring agents on lung function are unknown. A separate study showed that some popular flavorings may increase the risk of cardiovascular disease when inhaled, although several other studies show no negative effects.
As approximately 17 million Americans use vape products, many of which contain flavors, and only around 2,000 cases of e-cigarette, or vaping, product-use associated lung injury (EVALI) are currently being reported, it appears unlikely that all flavoring agents in all hardware devices are linked to EVALI. However, until more detailed safety studies have been completed on these product lines, manufacturers should proceed with caution.
Terpenes are a class of molecules found in many plants, including cannabis, that are responsible for the aroma of the plant. Plants evolved to make terpenes to attract pollinators and to deter herbivores and unwanted pests. Terpenes are biologically active and help contribute to many of the physiological effects of inhaled cannabis. Isolated terpenes have been widely used as fragrances in perfumes in the cosmetic industry and in medicine, such as aromatherapy. Although many terpenes are considered “Generally Regarded As Safe” (GRAS) by the FDA, some terpenes are toxic when inhaled/ingested at high concentrations. While most cannabis goods on the market contain levels of terpenes similar to those that occur naturally in the cannabis plant (~1-5%), some products contain terpenes at much higher concentrations (upwards of 25%). High levels of terpenes and other molecules can also occur if chemical procedures such as distillation are used to concentrate cannabis or hemp oil.
In general, terpenes are benign at low concentrations; however, overexposure to concentrated terpenes has the potential to lead to negative effects, including hypersensitive (allergic) reactions in chemically sensitive people. Additionally, some vape pens do not have the means to adequately control the temperature and can heat the cannabis oil to a very high temperature. In certain instances, this has been shown to lead to thermal decomposition of some molecules in cannabis extracts, such as terpenes, resulting in the formation of new molecules with established toxicities. It is also worth noting that even when these new molecules have been shown to form, they have been detected in amounts that are lower in the vapor stream when compared to combustion and inhalation of plant products, such as cannabis flower, or tobacco leaf.
Cannabis contains terpenes, such that cannabis oil extracts used in vape products typically also contain these molecules, depending on the extraction method. Typically, the distillation process causes a loss of terpenes. Some vape manufacturers now recover cannabis-derived terpenes during the distillation process and then re-introduce them back into the final formulated product. Because of poor process control, one potential safety concern from this procedure is that these cannabis-derived terpenes have an undefined molecular composition and the specific concentration of any terpene in the crude mixture likely varies from batch-to-batch due to numerous experimental variables. For example, many manufacturers that are producing large volumes of vape products by necessity must make the oil extracts from a mixture of cannabis strains. Since every cannabis strain contains different terpene profiles, this means that formulated products made from these strains will also vary in their terpene profiles from batch-to-batch.
The potential for terpene profiles changing during the manufacturing process could pose a potential safety concern. Additionally, new isomers, oxidative by-products, or degradative terpenes may be present in these captured terpenes, which could possibly present hazards never presented by merely combusting and smoking the cannabis plant. Some states that have regulations on cannabis require analytical testing of formulated products, including the reporting of terpene concentrations, but this is not yet the universal standard. Vape manufacturers must exercise caution and be required to analyze terpene profiles of products they make in order to begin to develop a better understanding of this subject. Adhering closely to terpene concentrations known to be present in cannabis flower is a good practice.
One widespread misconception in the cannabis vape industry is that cannabis-derived terpenes are somehow safer or better for you than non-cannabis-derived terpenes. There are few cannabis-specific terpenes because most terpenes are also present in other plants. Most cannabis vape manufacturers that operate at a large scale, therefore, prefer to use terpenes isolated from non-cannabis sources to introduce into their formulated products. There are several reasons why this is popular in the industry. High purity terpenes (e.g. >99% pure) are sold by numerous retailers, which allows these terpenes to be re-introduced into cannabis vape products at defined and safe concentrations. Also, the cost of using non-cannabis-derived terpenes is far lower than the cost of isolating and using cannabis-derived terpenes.
For example, the terpene D-Limonene is present at extremely high levels in citrus fruits, and therefore can be isolated to high purity easily and inexpensively from them. In contrast, in most cannabis strains D-Limonene is only found at relatively low concentrations, and therefore one would have to use massive amounts of cannabis material to isolate significant quantities of this terpene required for companies that are operating at scale.
The origin and concentration of non-cannabis-derived terpenes that manufacturers use in their formulations is nevertheless important. Non-cannabis-derived terpenes from overseas often have several residual solvents in them, including ethanol, hexane, xylenes, benzene, butane, and toluene. Moreover, some retailers of non-cannabis-derived terpenes do not list the actual concentration or purity of terpenes in their products. It is imperative that cannabis vape manufacturers purchase and use non-cannabis derived terpenes that are accompanied by a COA that reports the purity of the terpene, any solvent(s) that may carry the terpene, and be required to adhere to the same purity standards and mandatory analytical testing requirements as cannabinoids. Reputable companies will also supply a safety data sheet (SDS) that describes the known toxicities of that terpene by different routes of ingestion, including inhalation.
Cannabis manufacturers that make formulated vape products should be aware of any toxic liabilities of non-cannabis-derived molecules introduced into these products. Vape products should also undergo analytical testing for cannabinoids, terpenes, and contaminants. Finally, analytical tests for aerosolized cannabis, similar to those used in the e-cigarette industry, should be developed, implemented, and mandated to address safety concerns. The industry needs to build the volume of inhalation safety data required for all of these ingredients, hardware, and end product combinations.
by Morgan Fox, NCIA Director of Media Relations
The last few weeks have seen quite a bit of excitement for the possibility of comprehensive federal cannabis policy reform being closer than it has ever been, but what about the states?
Historically, the vast majority of progress has been made at the state level, and this year is shaping up to be another one full of victories for legalization advocates as state governments struggle to support their economies, create new tax revenue and job sources, and tackle long-overdue criminal justice reforms.
The overwhelming approval by New Jersey voters of a referendum to make cannabis legal for adults last year has put the spotlight firmly on the Northeast and mid-Atlantic regions. With state legislative sessions already underway, a number of states are already prioritizing legalization much more heavily than in years past even as New Jersey lawmakers struggle to pass enacting legislation to carry out the will of the voters in a fair and equitable manner. It is pretty clear that New Jersey’s neighbors don’t want to be left behind when it starts reaping the benefits of regulated cannabis markets.
Early this year, New York’s Gov. Andrew Cuomo released a statement outlining his plan to make cannabis legal in the state, and just recently added amendments that would allow delivery, clarify the tax system, and reduce penalties associated with some cannabis activities. There are still some concerns with this plan, including the amount of funding that would actually go toward repairing the disparate harms caused by prohibition and the lack of legal home cultivation. Regulated cannabis in New York could be worth more than $3.5 billion and create more than 60,000 jobs, making it one of the largest state cannabis markets in the country.
Meanwhile, in Delaware, a legalization bill that was approved in the state House in 2019 is slated to be reintroduced by the sponsor in the coming weeks. This bill would come on the heels of a report released last month by the state auditor which estimated that Delaware could take in $43 million annually with a 20% excise tax, and create more than 1,400 jobs over a five year period. In what seems to be a disturbing trend in some state legislatures this year, this bill is not expected to initially include home cultivation either.
In Connecticut, however, a new adult-use bill has been introduced that would center on restorative justice and social equity in the industry and would allow adults to grow limited amounts of cannabis in their homes. This bill has strong support in the state legislature but may soon have to compete with Gov. Ned Lamont’s proposal, which is expected to be released soon.
Nearby Pennsylvania is likely to consider adult-use legislation this year, with Gov. Tom Wolf (along with the incredibly supportive and newly internet-famous lieutenant governor) urging lawmakers to address the issue and – earlier this month – calling it a priority for his state’s annual budget proposal. Rhode Island lawmakers are expected to consider legalization again this year as well, and with the departure of Gov. Raimondo, it is more likely that the emphasis will shift away from a state-run model and back to regulating private businesses.
Farther South, Virginia made headlines this month by becoming the first state in 2021 to have both chambers of its legislature approve adult-use bills. Lawmakers are committed to ironing out the differences between the two bills this month during an extended session. With Gov. Ralph Northam in full support, Virginia stands poised to become the 16th state overall to make cannabis legal for adults and the first state to do so in the South, and it would be only the third to regulate cannabis through its legislature.
Adult-use legislation has also been introduced in Maryland, with supporters and cosponsors optimistic that it could be passed this year, though lawmakers there are not as far along in the process as their neighbors in Virginia. And in medical news, advocates in South Carolina are taking another shot at passing a medical cannabis bill there.
There are signs of progress from elsewhere in the nation as well. After running out of time in an emergency session last year, New Mexico’s governor and lawmakers wasted no time in getting back to legalization efforts this year. There are currently several bills being considered, and it appears very likely that some form of adult-use will be approved there this year.
This is just a snapshot of the momentum and positive movement we are seeing at the state level this year. If you are interested in up-to-date information about all cannabis-related state legislation in the U.S., please consider subscribing to Marijuana Moment’s bill tracker.
Unfortunately, the news isn’t all good.
In South Dakota, where voters approved both medical and adult-use initiatives in November by wide margins, advocates have suffered a temporary setback on the adult-use front. After a pair of law enforcement officials sued to have the adult-use bill thrown out because it addresses too many issues for a constitutional amendment, a circuit court judge ruled in their favor earlier this month. This situation is extremely disheartening and outrageous: the will of the people was overturned by a judge who was appointed by a governor who not only actively campaigned against the ballot initiative but also paid for the lawsuit to overturn it with taxpayer money! However, supporters have appealed the decision to the state Supreme Court.
In Montana, where voters also passed an adult-use initiative in November, supporters are faced with another lawsuit on similar grounds that was filed by opponents. However, observers are skeptical of that suit being successful, and lawmakers are moving ahead with developing enacting legislation.
And in Idaho, where a medical cannabis initiative was prevented from getting on the ballot last year, prohibitionist lawmakers are moving forward with a bill that would prevent any future legislation to make cannabis or any other currently illegal substance legal. If passed, this bill would be put before the voters in 2022, where it could very well be on the same ballot as a medical cannabis referendum.
Despite efforts to overturn progress and maintain failed and harmful cannabis policies, things are generally looking up and we expect several states to pass laws to stop arresting cannabis consumers and establish legal, regulated marketplaces in the near future.
One last item, so as not to totally leave out federal news: this week, NCIA joined members of Congress, advocates, and other industry leaders in calling on Pres. Biden to pardon all non-violent cannabis convictions and commute the sentences of anyone currently serving time.
Stay tuned for further developments!
While the NCIA team was hoping to welcome all of our members to Washington, D.C. this spring for our 10th Annual Cannabis Industry Lobby Days, we have made the difficult yet necessary decision of postponing the event until further notice due to the COVID-19 pandemic.
This was not a decision made lightly, as our annual fly-in is an integral part of our government relations efforts on Capitol Hill. However, with congressional buildings being closed to the public, new virus variants, and continued community spread, we believe this is the smartest and safest decision for our members, elected officials, and their staff.
That being said, the NCIA government relations team continues to virtually lobby and “meet” with various stakeholders, coalitions, and congressional personnel to further cannabis policy reform every day, thanks to the financial support of our members. We are working hard to reintroduce priority bills, include the SAFE Banking Act in the next pandemic relief package, and are helping to craft new, exciting, progressive legislation that focuses on de-scheduling cannabis and creating a thriving, diverse, and equitable industry.
Stay tuned via our newsletter, website, and NCIA Connect to learn more about NCIA’s Lobby Days and what’s next. We can’t wait to host all of you back in our nation’s capital, but in the meantime, please stay safe and stay healthy!
by Jimmy Young, founder of Pro Cannabis Media
Thanks to Democracy and the grassroots efforts of cannabis advocates from coast to coast, there are now 15 holes in the cannabis prohibition wall (legal states), and 36 cracks (medicinal programs). So when will that wall come down and how fast? More importantly, what will the industry look like when the dust settles?
Over the past few weeks, cannabis media pundits from all over the world have chimed in with their predictions for 2021. (Some even pontificated before knowing the results of the Georgia State runoffs in the Senate.)
With President Joe Biden now in the White House and the Democrats controlling both houses of Congress, cannabis advocates are wondering when, and if, we will see federal legalization of cannabis in 2021. Will it succeed or will our dutifully elected politicians do something that will derail the will of the people during this Green Wave of reform?
Already, a Republican congressman from Florida, Greg Steube, decided to file the first draft of reform to a committee that will move cannabis from schedule 1 to schedule 3 on the Department of Justice list of “controlled substances.”
But for many, this does not go far enough. I recently interviewed the Media Relations Director of NCIA, Morgan Fox, who told me, “It’s not something the NCIA or other Cannabis advocacy groups is going to support….we are all focused on de-scheduling, (this draft) it just doesn’t go far enough.”
So what position are lobbyists in Washington, D.C. taking now that their arguments for reform may find a more supportive group to talk to? What is the best thing for the industry? What’s the right thing to do?
I also interviewed Michael Correia, the Director of Government Relations for NCIA, who explained that the target should be for full legalization, but that at the heart of the issue, there is something more important that needs to be dealt with – racism. In my interview with him, he said, “…let’s just stop arresting people for this. Stop arresting people in this war on drugs so no one’s lives are ruined because they’re consuming a natural plant, that 30 plus states have said, Hey, we’re okay with this. There shouldn’t be these differences. So just stopping, arresting these people, and then worrying about what’s the next step?”
Why does he feel so strongly about this? The evidence is overwhelming that law enforcement has used simple possession as a profiling tool to fill our privately run prisons with black and brown people over mere cannabis possession. “The vast majority of these arrests (92%) were for simple possession of the drug. 500,395 of [the 545,602] arrested for cannabis [crimes] were simply found [to be] in possession of cannabis.”
So are you convinced now that cannabis, a plant, is not illegal because it is considered a drug, but rather because of a racist system and the fact it can be used as a means to profile and jail black and brown people? Do you want more evidence of the racial bias in cannabis arrests? Check out this 2020 report on the racial makeup of those simple possession “crimes.”
So what’s the 2021 plan for lobbyists, policymakers, and elected officials? What exactly does this industry look like if one of the following changes happens in the next year or two?
Each one of those changes is not only positive for this young industry but will have a ripple effect that will impact other industries. The trickle-down effect for any of these changes being implemented will impact the private prison system, banking, and financial markets, big alcohol, big pharma, social equity, expungement of past convictions, interstate commerce, and the international markets.
The cannabis lobbyists know that with Democrats in charge of the direction of the Congress over the next two years, this is their opportunity for serious reform. After all, the House passed a legalization bill, the MORE Act, in December of 2020. In 2019, the previous year, the SAFE Banking Act was also approved by the House, but neither even got to the floor of the Senate because of the then-Majority Leader Mitch McConnell’s anti-marijuana stance.
2021 is now upon us, and “grown-ups are now back in charge in D.C.” However, many advocates I’ve talked with are understandably wary and skeptical about the Federal Government dictating governance of this industry if cannabis is federally legalized and falls under the control of the alcohol and Beverage Commission.
Most cannabis advocates can at least agree that cannabis should be removed from the schedule that was created by the Controlled Substances Act in 1971. This change alone would allow banks to do business with the cannabis industry and allow for the removal of the restrictive 280E tax code that has limited the profit margins of already existing businesses.
Here are some links to other predictions from leading media sources about what cannabis reform democratic control of Congress may lead to:
Marijuana Moment: What The New Democratic-Controlled Senate Means For Federal Marijuana Legalization In 2021
Politico: Democratic-led Senate could clear a path to marijuana legalization
Forbes: Democrats Win The Senate: The Impact On Marijuana Policy
So after reading all this information, here’s what I think will happen over the next four years.
It’s 2021, the year of the cannabis plant as a political issue is here and reform is as pungent as the odor of this amazing plant. Stay tuned, this will be an ongoing theme in D.C. politics this year as we all hopefully witness another chapter in the historic end to prohibition.
Jimmy Young is the founder of Pro Cannabis Media. An Emmy Award-winning talk show host from New England, and a resident of Massachusetts who holds a medical card after 4 major surgeries in 22 years.
The founder of Pro Cannabis Media is the current host of In The Weeds with Jimmy Young, a weekly podcast distributed over the CLNSMedia.com, site, iTunes, Spotify, Googlecast among others. In July of 2019, he teamed up with the founder of Cannabis.net, Curt Dalton, to host a two hour live monthly Weed Talk Show where the two Massachusetts natives have interviewed some of the biggest names in Cannabis, like Steve DeAngelo, Bruce Linton, and Tommy Chong. Locally local cannabis advocates and representatives from the medical establishment in the Bay State have all appeared on that show that is now being distributed nationwide. Young also produces a weekly news video, called News Dabs, highlighting and commenting on the biggest stories around the world in the emerging cannabis universe.
by Tara Coomans, CEO of Avaans Public Relations
Member of NCIA’s Marketing and Advertising Committee
As a country, the U.S. is experiencing what can best be described as the “age of distrust.” While public distrust in institutions has been escalating for at least a decade, according to the annual Edelman Trust Barometer which has tracked trust in media, governments, businesses, and nonprofits since 2000. Social unrest and a global pandemic have escalated this distrust. Never has the public eyed institutions or businesses with such suspicion.
Meanwhile, in our industry, the vaping crisis of summer 2019 hit our industry below the belt, aided by some bad actors knowingly flooding the illicit market with products that couldn’t meet stringent state testing. That crisis created a crisis of confidence in the overall cannabis industry-leading it into a bleak period which was only partially buoyed by the declaration that dispensaries were considered “essential businesses” during the COVID-19 pandemic, pro-cannabis outcomes in both voting booths and Congress, many thanks to NCIA’s national and local efforts. By supporting NCIA, you’re signaling industry commitment and that you value growing trust within the industry.
Now, against the national backdrop of distrust and a COVID-19 vaccine that offers a glimmer of hope, it’s time to evaluate ourselves and our industry’s actions. Never has it been more crucial for all brands, but particularly our industry, to lean into actions and communications which consistently and powerfully earn the trust of investors and consumers. As an industry, we’re on an important precipice, what we do next will either ensure our credibility or tarnish it for years to come.
For CEOs, CMO’s, and experts in our industry, the time is now to act and communicate from a place of authentically aligned communications. This alignment will require hyper levels of empathy and a constant pulse on the state of affairs affecting your customers. Consumer behavior is in flux now.
The COVID-19 pandemic has changed consumers and now is the time for brands to align. According to the Edelman Barometer special report, Brands Amidst Crisis:
Because consumer behavior is in flux, it’s never been more important to ensure internal and external values and communications align. Ironically, ensuring alignment supports the flexibility needed to respond quickly to changing behaviors or unexpected upheaval.
Aligned communications means we act internally and externally in a consistent and emotionally intelligent manner that earns trust. It’s not just good for our industry, trust in brands has very real bottom-line implications including increased sales, increased investor opportunities, and reduced customer acquisition costs. In fact, according to Edelman Trust Barometer, high trust consumers have 75% more brand loyalty.
Outstanding packaging and even quality products are the minimum expectations for today’s brands. But even those choices come under scrutiny from consumers if they don’t mirror consumer expectations and lifestyle. Therefore, earning trust starts at the very beginning. The earliest choices are powerful signals to consumers about brand values.
It isn’t enough to simply sponsor a campaign or align with a social movement. While those choices can be powerful quivers in your trust arsenal, it feels and sounds hollow when the brand is suddenly thrusting itself into a conversation without looking at itself first. Consumers are increasingly aware of “trust washing.”
92% of employees expect their employer’s CEO to speak up for issues ranging from income inequality to diversity and training for future jobs. An aligned trust-based strategy starts on the inside. Take a solid look at the ethos and ethics within your own company.
What are your company’s values?
What do you stand for?
How do you signal trust internally and how do you reward it?
Does your internal communication stand for your values?
The reason this internal step is critical is no matter what, your brand ethos is distilled into consumer interactions and communication, whether those communications are with dispensary workers or directly to the consumer, the experience will always stay with the brand. Imagine a dispensary worker making recommendations to a new-to-cannabis buyer, naturally, the dispensary worker has a huge amount of influence on the consumer’s impression of a new brand. And new-to-cannabis buyers are most likely to be loyal to their first brand, assuming the product meets expectations.
Personal experience is the number one way to build trust with consumers. 59% of customers say personal experience matters the most.
What consumer interactions signal trust?
How do you manage poor reviews?
How do you handle customer inquiries?
How does your owned media reflect not only your brand values but those of your customers?
Personal experience is absolutely about product experience and brand interactions. Brand interactions at events will take on more importance in cannabis. Consumers will want to engage in an experiential way with cannabis brands and it won’t be at cannabis events exclusively, consumers will expect to see cannabis brands in all the same places they see alcohol brands, even if sales and sampling aren’t available, which means experiences will need to be multi-sensory and strongly personal. Choose your experiences carefully based on your brand audience and ethos.
Earned media is second only to personal experience incredible trust-building. During the COVID-19 pandemic, trust in publications increased by 7%. Brands should look for opportunities in earned media that reflect their values. Branded content is another area where brands can use the credibility of publications.
Experts are still considered credible sources (52%) and they far surpass celebrities (35%) and influencers (36%). As you consider brand strategies in 2021, take a careful look at who you’re leveraging and what role they play. Choose your experts carefully and ensure they are fully vetted. NCIA’s Marketing and Advertising Committee is developing an “experts directory” of carefully vetted industry professionals, this will be a key resource not only to event organizers, but CEOs and CMOs looking for credible, authentic experts.
Our industry has so much to offer consumers, we provide very real opportunities for consumers to enhance their lives. We have been active on numerous social justice fronts from the very beginning. We may come from a historical place of rebellion, but often, even that rebellion came from a place of empathy and not just income. Consumers today are responding to companies who double down on trust and an aligned brand value system. There’s every reason to think the cannabis industry can do this better than anyone. Together, let’s lean into our values and seed trust not just in our companies, but in our industry.
*All statistics come from Edelman Trust Barometer 2020, unless otherwise noted.
Tara Coomans is the CEO of Avaans Media (formerly known as Primo PR), which has been working with hemp and THC brands and services since 2015 from startup through IPO. Founded in 2008, Avaans Media brings a digitally forward and purpose-driven perspective to public relations. Avaans Media is based in Los Angeles with clients and team members distributed around the country including Washington D.C., New York and Denver.
Coomans is on NCIA’s Marketing & Advertising (MAC) committee and leads the MAC Experts Directory subcommittee for 2021. Coomans is a frequent writer and speaker on public relations, marketing, and social media topics.
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