Best Practices for Cannabis Companies and Consumers During COVID-19
In this time of national crisis, the cannabis industry has come together in a continued commitment to ensuring the health and wellbeing of the public. Cannabis companies have donated personal protective equipment to first responders, hired workers laid off in other industries, and some businesses have even adapted some of their manufacturing capabilities to produce hand sanitizer. As this pandemic has affected every aspect of our lives, we must all do our part to flatten the curve. We are working with state health officials and medical and public health professionals to ensure continued safe access to cannabis medicines and products. To this end, we are providing information to help keep you healthy and ensure safe and responsible cannabis use.
What can the industry do to keep our communities safe?
Industry has been proactive in implementing social distancing measures in accordance with guidelines issued by the Centers for Disease Control (CDC) to ensure the health and safety of our communities, including those most vulnerable to COVID-19.
Proactive measures include:
Increased sanitation and safety measures pursuant to regulations set by the Occupational Health and Safety Administration and local health departments.
Screening employees for symptoms of illness.
Limiting customers and employees in stores, and to the extent allowed by local law conducting transactions through delivery and curbside pickup.
Provide additional or distinct store hours for high-risk groups, like customers over the age of 60.
Calling on cannabis authorities to reduce medical caregiver and patient application fees to limit travel by vulnerable members of our community.
What can cannabis consumers do to stay safe?
(1) Consult with a medical professional before consuming cannabis if you are experiencing one or more of the symptoms of COVID-19.
(3) Do not share joints, pipes, vapes, or other products shared mouth-to-mouth.
(4) Avoid group consumption and follow social distancing guidelines.
(5) Get cannabis from licensed and regulated sources.
(6) Cannabis patients and consumers should consult with medical professionals and CDC guidance to identify the safest methods of use.
(7) If possible, consider choosing non-pulmonary methods of cannabis for consumption
(8) Don’t spread false information about cannabis as a cure or treatment for COVID-19
Important Note from the International Association for Cannabinoid Medicines (IACM):
“There is no scientific evidence that individual cannabinoids – such as CBD, CBG or THC – or cannabis preparations protect against infection with the SARS-CoV2 virus or could be used to treat COVID-19, the disease produced by this virus… Please do not pass on false information that is circulating on the Internet [about cannabis preparations and cannabinoids as a cure or treatment for the SARS-CoV2 virus/COVID-19 disease].”
If you want to open and operate a regulated cannabis business, there’s no avoiding local government. Every state grants different amounts of power to towns and cities, with some allowing localities to ban cannabis businesses outright, and others simply giving them the same power over time, place, and manner of operations that they have for other businesses. But since cannabis can be a hot-button issue, a proposal to open a cannabis facility often attracts far more attention than opening any other type of business.
To help NCIA members and other cannabis entrepreneurs navigate local government, we at the State Regulations Committee have launched a series of blog posts, with each taking a close look at a different type of cannabis license. Last month, we published our first post, “Working With Your Local Government as a Cannabis Cultivator.”
Today, we’re moving one step down the supply chain and talking about cannabis processors (sometimes also called manufacturers or infusers). Since state programs vary widely, with some licensing cannabis processors independently and others combining processing with cultivation (or even a single vertically integrated license), we will be focusing on the operations rather than the licenses themselves. If you’re seeking a combined license, be sure to read the blog for each activity your business will be allowed to engage in — while there is some overlap, there are also some major distinctions in how different operations can most effectively interact with municipal officials, and you will need to be well-versed in answering questions unique to each phase of your business.
ECONOMIC IMPACT
Like the three rules of real estate being “location, location, location,” the three rules of economic development are “jobs, jobs, jobs.” When proposing a new business in a town or city, local officials are going to want to know how many jobs it will bring, as employment can put money directly into the hands of their constituents and have ripple effects throughout the local economy.
In addition to the raw number of jobs your business will create, it’s also important to highlight the qualifications for those positions. Processing facilities often need to have highly qualified individuals with PhDs or other certifications to manage production processes, and officials will be happy to see the salaries that come along with such positions. Entry-level jobs, such as working production lines, are also worth talking about — even though they have lower salaries than someone with a doctorate, it’s usually much easier to hire local talent for these positions. Any commitment to hiring locally as much as possible is usually a big plus to politicians. Additionally, be sure to mention how much these new employees will add to the local economy, through all the typical living spending they will do.
Setting up and maintaining your facility will also have a major economic impact, especially in smaller communities. If you’re constructing a building to suit, get estimates from your contractors about the jobs your project is supporting, and let officials know how much you’re investing in the build-out. If you’re moving into an existing space, you’ll almost certainly be doing significant renovations to meet the state’s strict safety standards, which is also worth talking about. Towns and cities that are struggling economically will often be very happy to see unused commercial space become occupied, especially if those properties are being improved. If possible, also identify local contractors (like electricians) or suppliers (like lumberyards) you will use for construction.
Finally, there are direct payments to the local government. While officials love to see any sort of economic development, they still have services to provide and a budget to balance, and will want to know what the municipality will be receiving directly. Calculate your building’s expected property taxes, both on an annual basis and 5-10 years out — since cannabis licenses are usually very difficult to re-locate, emphasize that you are in it for the long haul. Be sure to understand your states’ tax structure, and know whether there are any local taxes that the town will receive, or if towns that host cannabis licensees receive any portion of state tax revenue.
PUBLIC SAFETY
The top public safety issue in local officials’ minds when it comes to cannabis processing is almost surely to be butane fires and explosions. This is for good reason — while hydrocarbon extractions can be very safe and effective when done properly, when done improperly they can be incredibly dangerous. City councilors or fire chiefs may have read some of the many headlines about butane-related accidents over the past few years, and it’s up to you to address these concerns directly and honestly. Of course, before diving into these conversations, check to see if the municipality or county has already banned such extraction methods, as some state laws allow local control in this area.
If you’re not planning to perform hydrocarbon extractions at your facility, be sure to tell that to your local officials. They may not realize that there are many other types of cannabis extracts that do not present such safety risks, such as CO2 extracts (carbon dioxide is not flammable, and similar processes are used for decaffeinating coffee) or bubble hash (which uses only cold water). If you have zero interest in ever using hydrocarbons in your facility, putting this agreement into writing may make local officials even more comfortable.
If you do plan to perform hydrocarbon extractions, educating officials on the risks and safety measures is paramount. Most states have extensive regulations on how extraction labs must be set up, which you can email or print out for meetings to demonstrate what you’ll need to comply with. Since the vast majority of butane-related accidents have come from illegal labs with makeshift equipment, show officials the equipment you’ll be using, emphasizing the price and professional quality. The manufacturers may even have fact sheets or other information you can share to demonstrate the safety of their equipment. As you educate officials on your methods and equipment, be sure to keep open lines of communication with the fire chief and building inspector, who will have the most expertise and authority on this aspect of public safety.
Beyond the processing-specific concerns about fires and explosions, all cannabis businesses will have to deal with officials’ concerns about theft. These may be particularly acute for processors since your end products have a much higher value-to-weight ratio than raw cannabis plants. To address these concerns, explain the security requirements in state laws and regulations, and any areas where you are going above and beyond what is mandated. Things like external security cameras and floodlights can both protect your own business and your neighboring community, making a cannabis business a net gain to public safety.
COMMUNITY IMPACT
Once economic development and public safety have been considered, local officials will wonder about the broader community impact of your cannabis business in areas like odor or traffic. This is an easy topic for processors, as they arguably have the smallest impact of any type of cannabis operation.
Processors are generally much smaller than cultivation facilities, and since they’re not full of growing cannabis plants, they also have much less odor to address. Unlike a dispensary or retailer, processors are not open to the public, so town planners won’t need to worry about an influx of traffic. Once you explain how you’ll be operating, local officials should be able to rest easy knowing that to an outside observer, your business will be virtually indistinguishable from a commercial kitchen or light manufacturing facility. If there are still concerns about odor, inform them that modern odor mitigation technology can completely eliminate any odor from leaving your facility.
GOING FURTHER
Once you’ve explained what you’d like to do and how you think your facility would fit into the local community, the conversation isn’t over — it’s just beginning! If the local government needs more time to consider your proposal, then it’s good to keep in close touch and address any additional concerns they have as they arise. If the local officials are already comfortable with your business and are welcoming it into their community (or if your state law doesn’t give local officials the power to stop you from opening up), it’s still great to build that relationship and keep an open dialogue.
Elected officials usually need to know a little bit about everything, but don’t have the bandwidth or in-house expertise to go very deep on most subjects. That’s where you, someone working full-time in the cannabis industry, come in — you almost certainly know more about state laws and regulations than they do, which is a great opportunity for you to serve as a resource. If you hear about changes in the law or proposed bills that could impact their town or city, send over news articles or bill text to help keep them informed.
Once you’re open, it’s always great to offer tours of your facility. This will help officials gain first-hand knowledge of what you actually do, and in municipalities where legal cannabis is new, it can help dispel negative stereotypes and demonstrate how professional you and the rest of the regulated cannabis industry are.
Be sure to stay tuned for future installments in this series, where we will be addressing other cannabis license types. Our next blog will focus on retail.
Member Blog: How to Launch Online Ordering and Dispensary Procedures During COVID-19
The growing coronavirus outbreak in North America has affected businesses of all sizes and sectors, including cannabis dispensaries. Many states have categorized medical dispensaries and retail cannabis stores as essential businesses. But it’s extremely important that any cannabis retailer choosing to stay open during this time take extra precautions to keep their staff and customers safe while still staying compliant with local and emergency laws.
COVID-19 Plan
5 Steps to Get Started With Online Ordering and Delivery Service
Use technology to stay compliant and make your vision come to life
You will have to rely more on retail technology while human interaction and in-person sales are not possible. Online ordering, delivery, line queuing, and no-touch ID verification policies will all require reliable tech. Check with your current POS if they have a workaround to facilitate the new process and integration with an online ordering platform.
Re-design your store layout
Change your store layout to further limit exposure. Take all of the products out of display cases and instead use that space to store fulfilled online orders. Use ropes or another barricade to ensure a six-foot distance between customers and sales counters. Install sneeze guards in front of checkout stations. Use tape or signage to mark where customers should be standing (six feet apart).
Develop operating procedures
These changes will require an update to your operating procedures. You will need a few employees dedicated to packing online orders and another employee on the floor ensuring customers are far enough apart and surfaces are consistently sanitized. If employees are feeling sick, require them to stay home. Some dispensaries are even taking the temperature of employees before every shift.
Train & protect your staff
Be sure to limit the number of customers in the store at a time, so there is ample distance (3-6 feet) between people. Protect your employees and customers with the following equipment:
Touchscreen-friendly gloves for employees
Alcohol swabs for any surface customers touch at the POS
Hand sanitizer
Masks
Lysol or other CDC-approved antibacterial cleaning spray
Faai Steuer is VP of marketing at Cova Software, the fastest-growing cannabis retail POS in North America. An entrepreneur at heart, she has a passion for growing startups and building brands. With 20 years of marketing experience in CPG and retail tech, she lends her knowledge and best practices to help cannabis entrepreneurs in the U.S. and Canada open their first store and grow their business through vital thought leader content.
Cova is an award-winning, seed-to-sale compliant POS with an intuitive design and robust tech platform, making it the most reliable cannabis POS system on the market. Cova helps dispensaries simplify compliance, raise the customer experience bar, and increase revenue through automated compliance capability, express check-out app, and integrated delivery solutions. Learn more at www.covasoftware.com.
Webinar Recording: A Spring Federal Policy and Government Relations Update
In this webinar from the morning of Friday, March 27 at 10:00 AM MT, NCIA’s Director of Public Policy, Andrew Kline, presents an update focused on federal cannabis policy issues taken up by NCIA’s Policy Council, including vaping illnesses, highlights of the findings from the Illicit Market Summit, and comments to be submitted to the DEA and NIDA. We also explore the COVID-19 responses across the United States.
Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations, shares information about how to stay politically active on behalf of cannabis policy reform while still practicing physical distancing during the COVID-19 pandemic. We explore the impact that COVID-19 is having on small cannabis businesses, plus an update on the action and movement we’ve seen in Congress, including a recent letter sent regarding Small Business Administration loans for cannabis businesses.
Speakers
Michelle Rutter Friberg
Deputy Director of Government Relations, National Cannabis Industry Association
Michelle Rutter Friberg is deputy director of government relations for the National Cannabis Industry Association. Prior to working for NCIA, Michelle was a research analyst at a government affairs firm in Washington, D.C., where she analyzed and tracked legislation on numerous issues. Michelle graduated from James Madison University in 2012, receiving her Bachelor of Arts degree in Political Science with a minor in History. During her studies, she held a year-long internship with Virginia House of Delegates member Tony Wilt (R). There, she communicated with constituents, businesses, and government officials alike, facilitating meaningful conversations. Michelle was also a member of a pre-law fraternity where she planned events and hosted social functions that sought to encourage long-lasting professional and personal relationships with members. A native Virginian, Michelle currently resides in the Washington, D.C. neighborhood of Capitol Hill.
Andrew Kline
Director of Public Policy, National Cannabis Industry Association
Andrew Kline is NCIA’s Director of Public Policy. In this new role established in early 2019 at NCIA, Andrew leads NCIA’s substantive public policy efforts, striving to prepare and protect the state-legal cannabis industry. He will also lead NCIA’s Policy Council, a group of NCIA members focused on influencing federal and state public policy. Kline most recently served as President of the National Association of Cannabis Businesses (NACB), the first self-regulatory organization for the high-growth cannabis industry. At the NACB, Andrew led the creation of national standards for the state-legal cannabis industry, oversaw its standards governance board, and led day to day operations and strategic planning. Kline has a deep and celebrated background in public policy, law enforcement, and coalition creation/management. He is renowned for his ability to create solutions to complex domestic and global public policy issues that appeal to both private and public constituencies.
NCIA’s Human Resources Committee hopes that you and all your employees are healthy during this outbreak. Many states continue considering cannabis-related business as ‘essential,’ so the HR Committee met to discuss ways NCIA member companies could navigate the impact of the COVID-19 outbreak on our cannabis businesses to help ensure you and employees minimize your risk of spreading and contracting the virus in the workplace.
We are confident that our fellow member companies strive to create a safe and healthy work environment for their employees, but we have brainstormed a few extra precautions cannabis companies may want to consider during this outbreak.
One of the best resources we have seen thus far are the WHO guidelines put in place for workforces.
Some additional best practices we have seen from dispensaries, processing facilities, and cultivation sites are as follows:
Time Login/Logout
Consider using an app so employees can login/logout on their own phones versus signing in/out, using a time punch system, or everyone logging in/out on the same computer system.
Cash Handling
We know that cash handling & computers being used by multiple people is a concern for many employees. Consider purchasing gloves for employees to use. If gloves aren’t available due to medical personnel needing these supplies at this time, offer additional breaks so employees can wash their hands between each transaction with a customer.
Product Packaging Handling
If you’re in a state where customers are allowed to touch the product packaging or sample containers, consider also having gloves available for customers to use. You should also have some form of cleaning wipes available to wipe down packaging, sample containers, etc. after each customer has touched them, along with wiping down cabinet tops between each customer. Seeing as these supplies are sometimes not available at this time, consider putting up a notice stating that in order to keep customers safe during these times, only Store Employees will be handling product packaging.
Safe Distancing
For retail stores, you may want to even consider installing plastic/glass barriers (think similar to what we had back in the medical days or you see at banks) in order to keep employees/customers safe. For Producer/Processer cannabis companies, you should try to keep employees at the 6-foot minimum distance. If you’re not already operating in multiple shifts, you may want to consider doing this as well so you can continue regular production but space out workers so they feel safer in this environment.
Hand Washing
Add additional hand sanitizer stations and consider hiring additional staff and/or appointing one of your current staff members to wipe down all surfaces every 30 minutes.
Thermometers
Consider purchasing thermometers for each employee so they can check their temperature multiple times/day.
Curbside Pickup or Appointment-Based Purchasing
Consider adding to your website a mechanism for customers to pre-order online with curbside pickup, or to schedule an appointment to visit your store. This can help to keep the number of customers in your store at any given time relatively low, while maintaining consistent business throughout the day.
Encourage Delivery
While not all states have delivery available, those that do should try to encourage its use. This will help limit contact between your workers and customers.
We are sure our fellow members will have plenty of other valuable suggestions, so we encourage you to share your best ideas in the comments section of this blog post, on NCIA’s Facebook page, so we can all work together to keep our cannabis community safe during these times.
Member Blog: Attracting Investors Requires Compliance And Scalability
by Frank Nisenbaum, Vice President of ERP Sales, c2b teknologies
More new cannabis entrepreneurs are trying to carve out space in the industry, and as the market continues to expand, so are cannabis investors.
This comes as no surprise. Cannabis investors have more predictable ways to invest in cannabis companies since marijuana can now be found in everything from beverages to beauty creams.
But the needed operating capital coming from these investors isn’t being thrown at new upstarts riding on nothing more than the dream of success in the legal marijuana marketplace. Cannabis investors want to see the people and businesses into which they put capital have a strong commitment to their industry and a dedication to their processes. Of course, this entails strict adherence to local, state and federal regulations for compliance initiatives, but investors also want to see a solid foundation for expansion and scalability in place.
Scalability
Consider your projected growth over the next few years, what are you doing to meet it? Investors want to see more than forward-thinking ideas, they want to see the initiatives you’ve put in motion to meet your projections. Are you upgrading suppliers, creating new products, or even better, adding new locations?
Investors need to believe that organizational leadership has a sound plan for scalability in place. More importantly, as you expand into new markets and grow your product offerings, you have invested in the framework and infrastructure in order to grow their operation in line with your business plan.
Regulation and Compliance
Among the more burdensome compliance issues for cannabis operators is the need to track the entire lifecycle of cannabis products from seed to sale. You need to be able to account for every step in the lifecycle of your cannabis plants and be able to provide this information to regulatory agencies at a moment’s notice.
Adding to the complexity of tracking the plant, you’ll need tracking for each employee who works with the plant. These seemingly minor details can derail the best intentions, so demonstrating success surrounding mandated quality assurance testing at key points in the plants’ development will get the attention of would-be investors.
Multiple Jurisdictions for Added Complexity
Compliance is even harder to achieve due to the multiple bodies which have jurisdiction. Local, state, and federal agencies all jockey for partial control of regulatory measures placed upon your cannabusiness.
Some of the federal agencies involved in the regulation of legal cannabis plants include, but are not limited to:
United States Department of Justice
Environmental Protection Agency
Internal Revenue Service
Each state in the U.S. has its own regulatory body for cannabis operations. Examples include:
Department of Public Health
Department of Food and Agriculture
Department of Fish and Wildlife
Department of Pesticide Regulation
Alaska Marijuana Control Board
California Bureau of Cannabis Control
Colorado Department of Revenue Enforcement Division Marijuana Enforcement
Illinois Department of Financial and Professional Regulation, Cannabis Regulation
Maryland Medical Cannabis Commission
Massachusetts Cannabis Control Commission
Michigan Department of Licensing and Regulatory Affairs Bureau of Marijuana Regulation
Nevada Department of Taxation
Oregon Liquor Control Commission
Washington State Liquor and Cannabis Board
The full list of regulatory bodies is much longer. Compliance concerns are not exclusive to this industry, but as a cannabis operator, you face a tremendous number of regulatory bodies and each of these agencies has specific requirements to adhere to in order to stay compliant and stay in business.
As cannabis legalization becomes more widespread, each jurisdiction develops its own guidelines surrounding cannabis, from seed to sale. Unfortunately, this often creates confusion and leaves cannabis compliance open to interpretations. Without the systems in place to track and document multiple aspects of the cannabis industry, you’re at risk for considerable fines for non-compliance.
How to Present Your Cannabusiness
If you’re seeking capital from cannabis investors, understand that building a cannabusiness for compliance and scalability is nearly impossible without purpose-built technology. To that end, cannabis operations software is an invaluable platform for your cannabusiness when looking to attract investors.
Beyond your core business functions, investors consider the systems in place which support your cannabusiness. By planning ahead and incorporating a cannabis operations solution before you seek outside funding, you’re able to enjoy the fruits of efficiency, but you’re also able to prove it.
Cannabis operations software features tools for inventory tracking, asset management, and personnel scheduling and management, which means that the regulatory guidelines with which a cannabusiness must remain compliant are areas intrinsically handled by the platform. These systems excel at tracking inventory and allocating resources while maintaining clear audit trails, which is extremely important if a regulatory agency knocks on your door.
Cannabis operations software gives you and potential investors a unified view of your entire operation by bringing all operational data under the same umbrella, standardizing the data reporting and making it available for easy cross-referencing. By collecting all data into a single pipeline, a best-in-class solution gives everyone in the process the tools and insights necessary to make the right decision.
Vice President of ERP Sales, Frank Nisemboum,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.
Committee Blog: California Social Consumption Leads the Way
It was January 28, 2020: It’s a full house at the Berkeley City Council meeting, with comprehensive changes to the city’s marijuana regulations on tonight’s agenda. The biggest issue, with supporters of both sides attending, is the vote to consider legalizing cannabis consumption at specially designated licensed dispensaries.
The proposal to allow smoking, vaporizing, and consumption of edible goods is supported on one side by a phalanx of marijuana advocates and dispensary operators, and on the other side, it’s the city Health Department and Berkeley’s famously NIMBY neighbors. This conflict runs deep; cannabis users want dignified, legal facilities where they can gather and use marijuana, and several dispensary neighbors and the health department want this idea squashed, full stop.
Fact is, people have long gathered together to share cannabis, as shown by an extensive recorded history of use. This spans from ancient Sumerians, who built huts and vaporized cannabis on burning coals inside, to underground marijuana smoke-ins in the 70s and 80s, to now, where cities are licensing legal cannabis consumption facilities for adults.
California is helping lead the United States consumption lounge movement. For example, California’s Bureau of Cannabis Control (BCC) regulations (Section 5025) explicitly contemplate the possibility of consumption lounges, stating that “this section shall not be interpreted to prohibit cannabis consumption on the premises of a licensed retailer or licensed microbusiness authorized to engage in retail sales,” as long as they are locally licensed and approved.
The state law also created Temporary Cannabis Event Licenses, where onsite consumption is allowed at festivals like the High Times Cannabis Cup and the Emerald Cup. Yes, with city or county and state permission, it is possible to throw your cannabis dream event, but there are a limited number of locations in only a handful of places that allow these uses (including my hometown, Oakland). This makes it hard to get these licenses, and the costly and complicated regulations are hard to meet once you have one. Anyone hosting a Temporary Cannabis Event can expect to interact closely with the BCC regulators, who will surely attend to ensure compliance.
Cannabis consumption facilities are nothing new in California. They have long existed, ever since Dennis Peron opened his first dispensary in San Francisco in the early-1990s. His famous location on Market Street was five stories high, literally, as each floor contained tables, couches, and chairs where patrons could hang out and consume cannabis. When the Compassionate Use Act of 1996 passed, collective dispensaries started opening across the state, despite federal illegality and the occasional raid because of it (Dennis was raided by the feds and forced to close in 1998).
I opened my first cannabis consumption lounge at Berkeley Patients Group in 1999, which was long before it was legal to do so. This was under the cover of tolerance provided by Proposition 215; after all, not even dispensaries were actually made legal by this groundbreaking initiative. That didn’t happen until the state legislature passed the aptly named SB 420 in [year], after which most cities grandfathered in their existing cannabis dispensaries. (Not all, though. Some municipalities used this transition as an excuse to ban dispensaries, or to close existing ones, during long periods of regulatory contemplation.) Berkeley allowed onsite consumption until the early 2010s, when the local regulatory processes changed. Hence, the City Council vote tonight to decide the fate of onsite consumption here once again.
Now, I own Magnolia Wellness dispensary in Oakland, where local regulations have allowed cannabis consumption at specifically licensed dispensaries since 2017. Magnolia’s Dab Bar and Vapor Lounge was the first legal consumption lounge in the East Bay. We have café style tables, a gorgeous full, copper top bar, glass dab rigs with e-nails, Vapexhale and Volcano vaporizers, and a variety of tasting events where people can try samples. Unfortunately, Oakland’s dispensary law only allows vaping, edibles, and topicals, limiting smoking to additionally permitted outdoor patios, none of which currently exist. (Full disclosure: I also co-own Hi Fidelity dispensary in Berkeley, too.)
San Francisco, on the other hand, has more than a dozen shops where cannabis smoking, vaping, and edibles consumption are all allowed. SPARC, one of the first lounges in the city, has tasteful tables and chairs right in the main dispensary, where volcano vaporizers can be used onsite. Vapor Room, a few blocks away, is a smaller neighborhood joint, with a handful of seats for people to sit and enjoy smoking or vaping. According to owner Martin Olive, it was a costly HVAC system, at a near six-figure expense, that allowed his facility to host its cannabis smoking patrons. Moe Greens, the latest licensed lounge to open in the city, took four long years to get licensed, but is now a beautiful facility, with cushy booths for smoking and a counter service dab bar with top-of-the-line e-nails and dab rigs for patrons to use.
West Hollywood is the biggest news on the California consumption lounge scene, as the city recently licensed 16 facilities for on-site consumption. Half of these facilities will allow retail sales and consumption, while the others are allowed to sell only single-use items, designed to be consumed café style, while patrons are on-site. This plan has been controversial, though, because in issuing these licenses, the city took permits away from several of the long-existing dispensaries, re-issuing them to new operators. The ensuing lawsuits and legal battles will surely play out through 2020.
There is another big problem in West Hollywood: the state law does not match up with their rather forward-looking ideas for cannabis cafes. For example, cannabis cannot be blended into café food and served on the spot, as the city imagined when creating this law; Cannabis can only be sold pre-packaged and tested, per BCC regulations. Furthermore, state-licensed cannabis businesses are not allowed to sell anything but cannabis products (and a shortlist of branded items like mugs, lighters, and pipes). In other words, they can’t sell non-infused foods or beverages like coffee, soda, or tea (or, since we are talking West Hollywood, kombucha and smoothies).
Until state law changes, the plan is stuck in limbo, with facilities looking for creative workarounds to allow food and beverage service.
So, despite the West Hollywood ordinance passing in late 2018, only one facility has opened there, and even this has hit roadblocks. In fact, they recently re-branded after only a short time in business, from Lowell’s Café to the Cannabis Café, after a regulatory crackdown hit the Lowell’s brand hard. It remains to be seen when the other 15 cannabis lounges will open there.
Back in Berkeley, staff from the Health, Planning, Police and Economic development offices joined forces with the Berkeley Cannabis Commission to present the City Council with a comprehensive plan to update the city’s cannabis ordinance. Diverging opinions meant that the agenda contained competing proposals on several of the ten proposed ordinance changes, with the Cannabis Commission leading efforts to create progressive changes, and the Health Commission stuck on the old trope, “we need more research.”
Elizabeth Greene, City of Berkeley Senior Planner, explained to Council that these proposals have been in development since 2017, with the goal of expanding the rules to protect the entire cannabis supply chain, from seed to sale. This includes development of two new license types, cannabis consumption lounges and non-retail dispensary licenses.
“State law allows for consumption lounges as part of a retail license, as these are the only facilities open to the public,” Greene says. “Currently, consumption lounges are not permitted in the City of Berkeley.” Her presentation made it clear that city staff recommended cannabis lounges be permitted, despite the worries of the Health Commission, whose representative commented that “legalization is new,” despite that cannabis sales have been regulated by the city for around 20 years.
Long time senior advocate, and ICANN dispensary owner, Sue Taylor spoke eloquently in support of the proposal to allow lounges. “Seniors need a place to learn about cannabis, how to use it and dosing, and you could do that in a vape lounge. I can’t go into their homes, but I can provide this education at a lounge,” says Taylor. “It’s not like a bar; at a bar, you just get sicker. A vape lounge helps people.”
Ultimately, the City Council agreed. By 11:30 PM, Mayor Jesse Arreguín called the vote, with the Council unanimously approving the entire proposal. Supporters filled the room with cheers, and long-time advocates like myself reflected on the fact that, yes, hard work and determination do pay off. Together, we may just end prohibition, once and for all — and have some fun, too.
The Illicit Cannabis Market Puts Consumers At-Risk and Is an Existential Threat to the State-Legal Cannabis Industry
by Andrew Kline, NCIA Director of Public Policy
Photo By CannabisCamera.com
The illicit market is not working for anyone. The illicit market puts consumers at risk by offering untested, unregulated, and dangerous products, including “vape cartridges” filled with additives that are not intended for inhalation. These illicit vape products alone have caused 2,768 injuries and 64 deaths to date nationally. Pop-up dispensaries are selling illicit, unregulated, and untested products to unwitting consumers. Unscrupulous people are unlawfully selling cannabis products over the internet in violation of state and federal law, and online platforms are enabling the illicit market by advertising for illegal online and brick and mortar stores. Counterfeit and ready-to-fill packaging is being sold with fake lab results, batch numbers, and barcodes. Illegal growers are causing serious environmental harms. Even illicit market operators with the best intentions still put consumers at risk when they sell untested products produced in unregulated facilities.
And these illicit operators pose an existential threat to the regulated markets that voters have demanded. Operators are laying out significant funds for licenses and compliance to compete against an illegal, untested, unregulated, untaxed marketplace. Law enforcement is playing whack-a-mole. Consumers are often unaware of which operators are legal, particularly where illegal operators often have a veneer of legitimacy or have stolen the intellectual property of these regulated businesses to gain consumer trust. We need to make certain that reliable and safer products (tracked, tagged, and tested) are being sold in the regulated market. Trust in the safety of the supply chain is key here, with laboratory testing, traceability, and safeguards (eg: ability for recalls) as mandatory prerequisites.
On February 19, 2020, NCIA, along with NCIA’s Policy Council, former Boston Police Commissioner Ed Davis, and Commissioner Britte McBride, public safety appointee on the Massachusetts Cannabis Control Commission, partnered to facilitate an important discussion with law enforcement, advocates, and industry stakeholders seeking solutions to the illicit cannabis market. The summit brought together federal, state and local law enforcement; state regulators, cannabis entrepreneurs and multi-state operators, ancillary technology companies, and social equity experts. The purpose of the summit was to dialogue about the illicit cannabis market with the goal of developing recommendations on resources, policies, best practices, and public-private partnerships to share information.
Here are some key takeaways:
First, the cannabis industry needs to help law enforcement find alternatives to arrest and incarceration. Some states have been creative in their approach to combating the illicit market, by locking doors and shutting off electricity and water, levying fines, and prosecuting tax evasion. It is essential that we rely most heavily on alternatives to arrest and prosecution so that we don’t perpetuate the myriad problems associated with the “war on drugs.”
Second, the industry must better define the illicit market. The illicit market looks very different in Idaho than it does in Colorado. In Idaho, all sales are illegal and diversion from legal states into Idaho is a serious problem. In Colorado, state regulators are concerned about unsafe products being manufactured and sold outside of the state regulatory regime. So, we need to take a hard look at the products that are causing the most significant problems (injuries and deaths) and focus our attention on the most serious of those cases. Until we prioritize what we deem to be illicit market activity, it will be difficult to prioritize limited law enforcement resources.
Third, the industry needs to definitively determine the root cause of the illicit market. We know that three probable causes of illicit market activity are: (1) lack of legal access to cannabis and cannabis products and (2) price disparity between legal and illicit markets, largely due to high taxes of legal products, and (3) a lack of economic opportunities in marginalized communities causing people to turn to illicit sales. But, what are other causes and effects?
Fourth, the industry needs a forum for collaboration with law enforcement. The middle of a crisis is not the time to develop relationships.
Fifth, the industry needs a pathway for illicit market operators to enter the legal market. We can’t displace the illicit market unless we create a pathway for previous illicit market entrepreneurs to enter the legal market. That means that states must create realistic pathways to enter the regulated market for legacy illicit market actors. There are an increasing number of potential models here, from the states such as Massachusetts (which has led on attempting to prioritize social equity during license application processes) and Illinois (which made such pathways a key point in the legislation to create a legal market) to industry groups such as the Minority Cannabis Business Association (which has published recommendations for state regulators intent on incorporating social equity requirements into their licensee applications).
Sixth, law enforcement has competing demands and needs help prioritizing cases. What are the most egregious cases that warrant criminal arrest and prosecution? What are the cases that warrant automatic expungement? And what do we do with the cases that fall in between?
Finally, the industry needs to speak with one voice and start rowing in the same direction. The industry needs national messaging from states that have a regulated market to help dispel myths and prepare warnings for responsible use. We need to share information on packaging and labeling, testing, universal symbols, etc., nationally. And most significantly, the industry needs to start speaking with one voice and work to bring legacy businesses into the regulated market. NCIA’s Policy Council is committed to continuing efforts to create a safe place for everyone in the industry to begin that dialogue.
Andrew Kline is the Director of Public Policy for the National Cannabis Industry Association and leads NCIA’s Policy Council. He can be reached at Andrew@TheCannabisIndustry.org
Member Blog: The Days Of Breaking Bad Are Over… Sort Of
With the expanding decriminalization of marijuana and hemp and increasing market demand for cannabis concentrates, more people are assuming the role of pseudo-chemists or lab technicians without formal training. People no longer need to ‘break bad’ by extracting and processing cannabis in their garages, kitchens, or old RVs. Commercial laboratory spaces are becoming more common. Unfortunately, without formal laboratory training, appropriate laboratory safety habits are often not established. The ‘whatever-it-takes’ mentality plus some questionable lab techniques add up to be quite dangerous in a pursuit for the ‘good stuff.’
Solvents used for extraction, though often odorous, are clear and colorless and therefore invisible in vapor form. They are often handled in the lab like water. For those manufacturing cannabis concentrates for retail, the focus has been on possible regulations set by the FDA, but these new, small businesses are also under the jurisdiction of OSHA. While studying industrial hygiene standards written by OSHA, most safety practices seem like common sense, but only after the chemical hazards are recognized.
For more in-depth safety standards and fire codes for non-glassware or non-laboratory-scale (read: industrial-scale) extraction and processing equipment, ANSI/CAN/ UL/ULC 1389 or NFPA 1 Chapter 38 are great starting points.
Most of What We Breathe Is Invisible
As mentioned above, the solvents used to extract and process cannabis are either gases compressed into their liquid form or clear, colorless organic liquids. [Note: here ‘Organic’ means a substance that contains carbon, not the label you find at your grocery store]. These solvents include ethanol, propane, butane, pentane, hexane, isopropyl alcohol, methanol, acetonitrile, and other less common ones.
The danger of these solvents is that even when they are cold they vaporize easily enough for inhalation, some without harsh odors as a warning. Opening containers, glassware, or vessels without proper ventilation or PPE (personal protective equipment) exposes laboratory workers over a short time and many times a day. This exposure can occur during simple acts of pouring, transferring, heating, drying, mixing, or weighing on a balance. While many of the solvents used have a GRAS designation (generally regarded as safe) by the FDA, this label is used for food additives with the intention of ingestion, not inhalation. There are a few research studies on the toxicological effects of breathing in these VOCs (volatile organic compounds) in a short period of time. However, chronic studies of consistent exposure for years are rare. NIOSH, or the National Institute for Occupational Safety and Health, provides a decent summary of worker exposure studies for common industrial chemicals. Some of which can cause respiratory effects that evolve into allergies or even neurological damage. Unfortunately, most of the toxicological literature available can be decades old.
Yet laboratory technicians are not the only ones exposing themselves to a potential hazard. Working onlarge-scale extraction equipment, workers come into contact with large plums of high concentrated VOC when opening extraction tanks and vessels. This process happens many times a day when workers reach in to load and unload bags of cannabis biomass. Exposure also occurs through skin contact, as many of these solvents absorb into uncovered skin.
Gases under pressure are yet another non-chemical hazard. Compressed gas tank cylinders need to be transported and stored safely to keep them from falling over and crushing limbs. If a cylinder valve breaks off, they turn into a projectile missile, or they become damaged enough to rupture and release thousands of liters of suffocating gas within minutes or seconds.
Carbon dioxide solid in the form of ‘dry ice’ is often used in large amounts for cold traps in cannabis oil processing. Dry ice easily sublimes, where the solid form converts directly into a gas. Gaseous carbon dioxide is much heavier than general air and can easily displace oxygen in closed-off storage areas. Oxygen sensors, proper ventilation, and limited exposure help to avoid hazardous side-effects of oxygen deprivation.
The Tools to Keep Everyone Safe Are Out There
Any workplace that handles or stores chemicals should have the corresponding Safety Data Sheets (SDS) of the chemical. These are usually obtained from the manufacturer of the chemical, but there are also free databases online for easy access. All SDS’s should be available for easy access to workers who handle or are in an environment that uses chemicals.
OSHA also provides its own chemical database system that lists the physical properties of chemicals as well as their permissible exposure limits (PELs) and short-term exposure limits (STELs). These limits are used for compliance purposes, but in short, they provide a rough guide for how dangerous it is to breathe in some of these chemicals. Note that OSHA’s exposure limit guidelines may be outdated as many have been written 50 years ago when OSHA had been founded! For the latest guidelines visit NIOSH and ACGIH. These organizations/agencies keep up with current toxicological research and provide more up-to-date exposure limits that are sometimes significantly lower. Air sampling of your workers can always be done through an AIHA-accredited laboratory that will send out certified industrial hygienist to sample during a work shift.
Any industrial hygienist will tell you that the use of PPE is the last line of defense against chemical hazards and exposure. Engineering controls like proper room ventilation and local ventilation, including fume hoods, exhaust hoods, and elephant hoses, are some of the best ways to avoid exposure through inhalation. Fume hoods are almost always found in laboratory spaces; however, it’s easy to form bad habits when using them. For example, storing large objects and numerous chemical bottles inside the hood significantly blocks the proper airflow that needs to occur to make sure any vapor is properly ventilated. The sash (or glass door) should always be kept as low as possible and especially below the chin of the person working at the hood. Newer models of fume hoods have airflow monitoring devices and alarms systems to make sure the face velocity of the hood is between 80 and 120 fpm (feet/min).
Finally, PPE that fits comfortably, doesn’t interfere with the flow of work, and is rated properly for the hazards of the chemicals used, is a definite requirement when working with chemicals even when other controls are in place.
When effective local ventilation is not available for situations where a large plume of solvent vapor is expected (e.g., opening an extraction vessel to remove biomass bags), a full-face or half-face respirator is the best option to prevent exposure.
Respirators have specific cartridges that stop the inhalation of certain hazards. VOC cartridges are required to keep out the organic solvents most used. However, respirators will only protect as they meant to be if they are fit-tested, and properly cleaned and stored.
Last, eye protection via safety glasses is an obvious and thankfully well-practiced habit even in workplaces without chemicals. Unfortunately, the commonsense practice of making sure workers are wearing long pants, shirts with sleeves or lab coats, and closed-toe shoes (preferably non-absorbent) is more difficult to enforce if the location is in warmer climates.
All that said, for those who are dabbling in the new, exciting world of cannabis extraction, let’s hope they are following Walter White’s lead and suit up before they get to work.
With more than 15 years of experience working and teaching in chemistry laboratories, Meghan McCormick, Ph.D. is the Senior Chemist and a part of the Herban Legends team at Spektrum Cannabis Technologies, an innovative, fit-for-purpose engineering services company. Meghan serves as the resident expert in the chemical processes that occur during cannabis extraction and post-processing and has helped design and test the Spektrum industrial-scale cannabis processing modules. Meghan worked as a Senior Chemist for the OSHA Salt Lake Technical Center for 3 years. She received her Ph.D. in Inorganic Chemistry at Indiana University studying organometallic electrocatalysis and anti-cancer prodrug activation mechanisms.
Member Blog: Cannabis Software Solutions – The Case for Connectivity
In the cannabis industry, it is critical for cultivators to track crops throughout their production. Traceability benefits and protects cannabis companies, state governments, and the consumer. Without proper tracking systems in place, it would be impossible for states to tax businesses appropriately, it would be dangerous for consumers, and the burden of risk is placed almost entirely on the operator.
To combat this risk, states have mandated certain systems to track cannabis products called track-and-trace or seed-to-sale systems. There are a few leaders in the space – Metrc, MJ Freeway, and BioTrack. All three provide tracking software solutions for operators and contract their software to state governments.
These systems are designed for regulators, not cultivators. Growers instead have to purchase a second system to manage their operation. We’ve highlighted why it’s important for growers to implement a cultivation management platform (CMP) in the past, but it’s important to note how difficult it is to implement a CMP in the current market.
Growers are second class citizens in the cannabis world – and that’s a major failure of the industry right now. Growers are the backbone of this industry and we, as innovators, should be making it as easy as possible to track products through the supply chain. This is not just because it’s a good business decision or because it makes it easier for governments to tax products, but because it’s good for the industry. It’s good for the consumer. It’s the right thing to do.
However, the industry is disconnected. For Metrc required states, it takes weeks before you will hear from the company regarding connectivity and months before integration can happen. The regulatory systems all tout their API as a way for other software companies to integrate into their systems, but in reality, it’s not that simple.
Here’s what that means for growers. Growers are mandated to use regulatory systems to record weights and plant IDs (as well as other data) for the benefit of the regulator and the chosen software provider, but they cannot use those tools to their advantage. Instead, they have to choose to purchase a third-party system that may or may not be able to integrate into the regulatory system or they are forced to purchase the cultivation software from the same regulatory software provider, which again, may or may not fulfill their needs. If the grower chooses a system that they like but cannot integrate, it means they have to enter information twice. This is a costly burden and often leads to unnecessary data entry errors.
Most of the regulatory systems on the market today are ill-equipped to provide enterprise-ready software in the first place, but it’s not the fault of those software providers. This is a new industry. Most of the software companies on the market are undercapitalized and many are outsourcing development as a result. This leads to serious security issues and system outages, like we’ve seen in Washington and Pennsylvania.
A better way to handle the growth of this industry would be to regulate in a connected and open environment. Instead of mandating a particular software solution, mandate traceability and let the grower decide how to meet that requirement.
For example, under the Controlled Substance Act, the DEA requires certain reporting requirements and these are submitted to the DEA database ARCOS (Automated Reports and Consolidated Ordering System). However, a company could choose to use Microsoft NAV for its management solution and sync to ARCOS for submittal of reports.
In food, the USDA governs food safety requirements under FSMA (the Food Safety Modernization Act). FSMA mandates food producers create and maintain a food safety plan, however it does not require a specific format or content. There is guidance for how to create a plan, but FSMA also allows for flexibility in operations and there is trust that operators will create a plan that is right for their operation.
This idea of trust in the grower and a unified framework of requirements is missing in the cannabis industry. Some software providers have tried to close that gap, but relying on mandatory software and changes on a state-by-state basis will only hurt the industry. We need to enable growers to scale efficiently and legally. We should support growers and provide tools that make it easier for them to implement new regulatory requirements, not harder. Our industry should consider opening up the software market for regulatory reporting and at a minimum should encourage data integrations, not limit them.
Allison Kopf is the Founder and CEO of Artemis, the market-leading Cultivation Management Platform serving the fruit, vegetable, floriculture, cannabis, and hemp industries. Artemis won the highly coveted Disrupt Cup at TechCrunch Disrupt in San Francisco. Kopf was recently named one of Forbes 2019 30 Under 30 as well as one of New York Business Journal’s 2019 “Women of Influence.” Allison is an Investment Partner at XFactor Ventures and serves on the boards of Cornell University’s Controlled Environment Agriculture program and Santa Clara University’s College of Arts and Sciences. She is a Techstars Farm to Fork mentor and holds a BS in Physics from Santa Clara University.
Artemis provides a world-class Cultivation Management Platform that enables owners and managers of enterprise horticulture facilities to drive efficiency, profits, and growth while ensuring security and regulatory compliance. With Artemis, users can manage workflow and daily tasks, register crop batches, trace food safety issues, manage workers, and leverage data insights to increase workforce efficiency and crop productivity. Read our software buyer’s guide for more information.
Committee Blog: Cannabis Banking – Regulatory Outlook and Effective Compliance
During a recent webinar, we polled the audience on their current positions on offering financial services – traditional financial services – to direct marijuana-related businesses (MRBs). The results, as you might imagine, were mixed but we identified one common theme: The vast majority have taken action to address cannabis banking issues. This has been the theme we’ve been championing for years. The dichotomy between state and federal cannabis laws has placed our financial institutions in a precarious position: Bank the cannabis industry, be first to the market in doing so, create a non-traditional revenue stream and help to solve public safety and other logistical issues by solving the all-cash conundrum OR continue to watch from the periphery as others take the leap?
We see the number of financial institutions – banks and credit unions – that offer financial services to cannabis businesses expanding, but not to the level suggested by FinCEN SAR data. There remains a critical need for financial services within the cannabis industry.
Why the hesitancy in tackling this issue?
The current regulatory environment is a critical factor. As it stands, our industry is relying primarily upon the FinCEN guidelines to offer financial services to cannabis-related businesses. These guidelines, coupled with a surge of proposed legislation and a regulatory perspective on risk-based risk-taking, have allowed financial institutions across the country to effectively provide financial services to cannabis-related businesses. There is a key term we’ve been using: cannabis-related businesses. Within this term, we encompass direct and indirect marijuana-related businesses, hemp, and CBD entities. The majority of those polled feel more comfortable with hemp and CBD entities primarily due to the passage of the 2018 Farm Bill. Getting into the intricacies of how the Farm Bill and the USDA’s resulting interim final rule have added a layer of complexity to banking hemp and CBD businesses is more than we can cover in this blog post. Let’s focus instead on those providing financial services to direct MRBs, those that are state-legal, licensed cultivators, extractors, and dispensaries.
It IS possible to actively bank direct MRBs, to offer stable banking services that bring the cash off the street and provide a means for these businesses to operate more effectively and efficiently, and surely in a less costly manner than an all-cash business. The regulators are not criticizing financial institutions for providing financial services to MRBs; they review these services as they would any higher-risk, complex activity. When an institution takes on too much too fast or does not have sufficient controls to know whether it actually has a higher risk or complex business concentration within its customer base, the regulators will be critical… as they should be.
So, what are they looking for?
This goes back to the theme we mentioned: Financial institutions actively addressing cannabis banking issues.
Every financial institution, whether it intends to bank direct or indirect MRBs, hemp or CBD should have a Cannabis Banking Program that assesses the inherent risks of doing so, speaks to the controls necessary to effectively manage those risks, and determine whether they are well-positioned, or have a risk-appetite for, providing financial services to the cannabis industry. Conversely, if a financial institution that has no appetite for, or does not reflect sufficient regulatory health to bank cannabis, it must establish effective controls to ensure that position can be maintained.
But, this post is about empowerment. It is about speaking to the regulatory environment in which we find ourselves. It is about providing the perspective that banking marijuana, hemp and CBD CAN be done effectively, safely and soundly. Yes, there is a significant level of infrastructure needed to do so. Yes, it does come with the need for ongoing, strong risk management and control enforcement. Yes, it can be a bit scary. By establishing a Cannabis Banking Program, comprised of a comprehensive risk assessment that drives an equally comprehensive policy, a financial institution can provide financial services across the spectrum of marijuana, hemp and CBD, and undergo regulatory scrutiny with confidence. Moreover, such a program has become a regulatory expectation to support a financial institution’s cannabis position. This is also not a program where a financial institution will set it and forget it. The risk assessment and policy must remain dynamic as legislation evolves, as regulatory perspective changes, and as a financial institution’s position or outlook may shift.
This is an industry that has already proven prolific. This is a time that will be ingrained within our nation’s history. Let’s be remembered as those who championed the issues, established the country’s infrastructure, and set the standard for those who follow.
As a former Federal bank regulator and seasoned consultant, Angela’s knowledge of regulatory compliance, risk management and investment advisory services has established her reputation as a leading resource within the financial consulting industry, spanning consumer protection and anti-money laundering statutes, fraud and cannabis banking issues.
Angela is the Managing Partner and Co-Founder of Sterling Compliance, LLC, a consumer compliance consulting firm based out of Pittsburgh, Pennsylvania. Sterling specializes in consumer protection and anti-money laundering compliance within the community banking industry and enjoys a significant online presence with a client base spanning the coasts.
In December 2019, Angela joined Integrated Compliance Solutions, LLC (ICS) upon the ICS acquisition of Sterling Compliance as an independent operating subsidiary. Angela oversees the firm’s Compliance Strategies division, of which cannabis banking is a significant component. ICS is a financial technology, banking compliance and innovative payments solution provider helping financial institutions with complex solutions. In joining the ICS team, Angela has continued the firm’s mission of bringing its complete SEED-TO-BANK™ solution to financial institutions and cannabis-related businesses throughout the United States, and has expanded the firm’s industry engagement as a well-respected authority on the regulatory and compliance issues surrounding cannabis banking.
Committee Blog: Opportunities & Challenges with Next Gen Packaging In the Legal Cannabis Market
It’s a new year, a new decade and quite frankly—a new era of packaging in the cannabis industry. We are officially face-to-face with next gen packaging in our ever-growing market. But what is next gen packaging, anyway? By definition, next-generation packaging is “basically a packaging technology, which possesses different advanced features, such as traceability, offers various benefits such as product shelf life extension and provides product quality information.”
Essentially, it’s taking our cannabis packaging to the next level.
The Growing Opportunities
With new products, formats, and technologies available, the opportunities for next gen cannabis packaging are limitless. In fact, there are so many options for next gen technologies that our NCIA Packaging and Labeling Committee has organized a subcommittee that is dedicated to the topic. We’ve also created subcommittees for Sustainability, Honesty in Labeling and Intellectual Property and Protection. A new era for packaging indeed!
Today’s cannabis cosumers are supporting the legal market for its quality and transparency, and today’s cannabis retailers need accessible platforms to educate them. These dynamics create an environment where next gen packaging (and merchandising) can really shine. With these new tools, brands can immediately engage, inform, and incite action.
Dreams Vs. Reality
While our hopes are super high for next gen cannabis packaging, the reality can be a bit of a buzzkill. In a state-by-state market, the variables for packaging create an inherently significant expense. And with regulations frequently shifting, it makes investing in premium packaging challenging, to say the least. There’s also the complication of managing data and actions behind a next gen platform. Worth the effort? We sure think so. And the good news is that next gen packaging is designed to be measurable so there’s data to evaluate its impact.
Promising Examples
The applications of next gen packaging for cannabis are seemingly limitless. Everything from a simple QR code, to complicated anti-counterfeiting technology, are possible. Augmented and virtual reality, scratch and sniff add ons, and improved breathability all present powerful opportunities to quickly and effectively affect a purchase decision.
KURZ is really pushing the boundaries of cannabis packaging with value-added security and technology solutions that are not only effective but purposefully decorative. Think holograms on packaging that can be used for anti-counterfeiting and other special finishes that add pop but are also sustainably produced. Now we’re talking next gen!
BUNDLAR is getting ahead of the curve with what they call “AR made Easy.” By making aspects of AR technology publicly available as well as offering customization, brands can more easily experiment with this exciting new platform.
The strategic approach to structural design that Greenlane is taking and the inspiring steps SANA Packaging has made with hemp-based materials are other compelling examples of the momentum in next gen packaging. Perhaps the most promising example of all is that as an industry, we’re just getting started.
New Decade, New Attitude
Our subcommittee predicts more exploration in cannabis with packaging that covers the exciting world of next gen possibilities in this new 2020 era and beyond. Which brands will step up? Will retailers ask for it? Will consumers pay for the experience? In an industry that refuses to stand still, these questions will inevitably be answered. The Packaging and Labeling Committee will be watching and sharing more examples and insights in additional articles.
Are you using next gen packaging? Drop a comment and share your experience!
Committee Blog: Interstate Cannabis Commerce Will Benefit Public Safety, Consumer Choice, and Patient Access (Part 2)
By Sean Donahoe, Founder and CEO, Sungrown Developments Inc. Member of NCIA’s State Regulations Committee
In Northern California’s legendary cannabis growing region of Mendocino, the elected county sheriff was recently a competitor at a homebrew festival, jovially pouring samples of his “Pretty Sour Powerful Sider” (jokingly referring to the “Public Safety Power Shutoffs” recently implemented by the electricity utility PG&E to prevent wildfires.) While this relaxed scene of neighbors bonding in the wake of shared inconveniences was not exceptional in itself, here, Sheriff Allman was posing for selfies with licensed (but possibly a few unlicensed) cannabis cultivators sharing the liquid bounties of harvest for the benefit of a local nonprofit.
For nearly a decade, the elected officials and staff of Mendocino county have worked together to normalize the local cannabis farmers by providing a pathway for medical cannabis cultivation permits, long before the state established a licensing system. This public policy process brought once-outlaw cannabis growers into conformance with every regulation of modern life: from building code standards to streambed alteration regulations to the quantification of gross receipts for tax collection. Bringing regulators onto these farms has curtailed previous practices that may have threatened consumer safety: pesticide and other chemicals are now tracked and regulated, while every gram can now be tracked back to its very plot of origin (in case of a safety recall or other concerns post-harvest.) This has been unquestionably difficult for and disruptive to many heritage and small farmers, but it has also allowed in these regions for simple scenes of social bonding and neighbors trusting neighbors again, as participants in the illicit sector were normalized into first their local county’s community then into a system of state license and next (hopefully soon) into a web of regulated interstate commerce. The process of bringing every farm into the regulated supply chain is far from complete, of course, and there are still illicit operators producing for consumers in urban areas in the state and beyond.
Rather than dwell on the incomplete success of California’s ongoing efforts to bring order to the world’s largest cannabis marketplace, it is essential to focus on the quality of life benefits from every cannabis operation successfully brought over from the traditional market to the regulated sector. Each licensed operation makes for one more safe workplace, one more source for lab-tested products for consumers and patients, and one more farm abiding by environmental regulations while providing stable employment and economic sustainability in rural communities. Under the previous medical cannabis paradigm, while there was certainly an abundance of responsible operators, there was virtually zero guidance from the state on matters of workplace safety, manufacturing standards, or environmental compliance. We are now several years into a robust legislative and administrative rulemaking process that has established a (mostly) clear set of rules of the road for commercial cannabis activities. It has unquestionably been a bumpy road for many of the legacy farmers to comply with new regulatory standards, but we are nonetheless able to say that there are now thousands of well-regulated cannabis farms in California (and southern Oregon) eager to sell their clean and craft quality products in a hopeful system of interstate commerce.
Has every cannabis farm in California transitioned? Of course not, but neither have the illicit cannabis economies been entirely supplanted by adult-use cannabis retailers in Colorado and Washington. Sensible and sustainable cannabis policy reform is a process, not a simple flipping of a switch from “illegal” to “legal,” and Americans should be realistic about the progressive and iterative nature of this process. This process, like most evolutionary processes, has already experienced several inflection points, transformative moments that noticeably shifted public opinion or opened up new frontiers in policy reform. While the earlier era of medical cannabis state laws certainly created a base of public opinion and laws, it was questionably the passage of adult-use ballot measures in Colorado and Washington which brought onto the global stage and accelerated the awareness that adult consumers could buy cannabis in clean, responsible retail locations rather than furtive or even dangerous transactions in the illicit marketplace
Throughout this policy process, we have established that licensed retail options can be scaled without negatively affecting public safety and are highly efficient competitive enterprises, offering consumers ample product selection and low prices. In both Colorado and Washington states (but also in later states) we have seen imbalances for some time as market forces, regulatory factors and new cultivation capacity coming online have all helped to create price fluctuations, product shortages, and other supply disruptions. These disruptions were not unique to these early states and will likely continue in every market as new in-state regulated options come online in fits and starts (but when interstate commerce becomes possible we should expect significant price fluctuations unlike any seen to date.) During these fiscally trying periods, we have often seen cannabis operators attempt to cut corners on compliance to make ends meet, which can lead to compromised consumer safety and public safety. The goals of consumer availability and cost competitiveness should be foremost in the minds of policymakers crafting cannabis policy reform nationwide, most notably in the anticipated markets of the Northeast. As these next anticipated adult-use states are designing the framework of their retail and distribution systems, strong consideration should be taken on the potential benefits of quickly and effectively scaling their programs by incorporating interstate commerce as soon as (politically) possible.
The Interstate Commerce Conversation
As the serious policy conversations about compliant interstate cannabis commerce begin, it is helpful to study how in our proverbial laboratories of democracy we can see that decreasing retail friction and shifting consumers from the illicit marketplace benefits crime reduction efforts and improves overall public safety. We should also note that retail cannabis sales have continued to grow in Colorado and Washington, even after the initial novelty and the surge of tourism waned, while legal sales have supplanted illicit sales. These early-adopting states have created models that are addressing consumer demand as national interest in cannabis for wellness and adult-use purposes are soaring and the cultural normalizing continues to occur on a global scale. Interest is high, consumer demand is real, and evidence shows that our drug reform policies should be crafted to bring every cannabis consumer transaction into the regulated supply chain in order to fulfill the demand while benefiting from increases in public safety.Interstate commerce could provide not only safer products but also a greater variety of quality and highly competitive offerings. For medical patients and wellness-oriented consumers, interstate commerce may be the only viable means of access for certain formulated cannabis products or cultivars, especially in smaller state markets.
In addition to the above benefits, regulated interstate cannabis commerce system could provide a more robust and differentiated production and distribution network combined with the ability to rapidly scale retail sales and address insufficient cultivation capacity in new adult-use markets.Cannabis consumers are price sensitive and illicit market retail options continue to entice consumers in states with functional adult-use programs such as California (or Canada), where there is an insufficient amount of licensed retail options to address total consumer demand. With the beginning of adult-use sales in Illinois and larger adult-use states yet to come, it is frankly a bit difficult to envision how total consumer demand will be able to be fulfilled in any near term by relying on licensed cannabis cultivated in-state alone.
The Safe Vaping Discussion
While moving to allow interstate commerce will best position licensed operators to compete with the prices available to consumers in the illicit sector, moving towards a borderless system of production and distribution will also increase safety and access for patients and consumers. Most prominent is the recent nationwide discussion on vaping and vaping-related issues, where tainted products and resultant injuries have been found in the unregulated, illicit sector (or in a very few instances from licensed but arguably under-regulated sources.)Notably, NCIA’s Policy Council established a Safe Vaping Task Force to work on these issues and has released a more comprehensive document advocating for the expansion of a regulatory approach for the safe manufacturing and distribution of cannabis products, whether vape cartridges or otherwise.
The issue of vaping extends to broader issues of product safety including educational campaigns, quality assurance, and testing programs, supply chain integrity, track and trace, and other reporting systems, and (when all else fails) a capable and sophisticated product safety recall system and these are all necessary components of a well-regulated marketplace. These consumer safety programs have already been carefully designed and stress-tested in Colorado and California and the insights from these systems and those in other states should be incorporated into the crafting of interstate cannabis policy (which will require significant harmonization of Certificates of Analysis and testing standards, packaging and labeling standards, etc., again all of which will benefit patients and consumers by offering greater predictability and reliability of their preferred products.)
Multi-State Coordination
In various forums, we have begun to see state regulators liaise with each other and we hope to see more coordination in the future and potentially an earnestness in harmonizing standards where statutorily possible. This multi-state coordination on product safety standards would be accelerated as part of the regulatory coordination efforts that are likely necessary for interstate commerce and, again, consumers and patients will benefit from safer cannabis and cannabis products, and we see NCIA as the critical player in this coming national conversation. In conclusion, moving to a system of regulated interstate cannabis commerce will have tangible benefits for the general public, for consumers and patients and I encourage forward-thinking members of the industry to participate and help manifest a system of interstate cannabis commerce with NCIA, its Allied Associations and other industry groups.
After studying Russian affairs and working as a political consultant, Sean Donahoe co-founded the California Cannabis Industry Association. He served as its Deputy Director through 2014 when he transitioned to consulting for investors and operators, communicating with public stakeholders, serving on local government committees, and advising industry trade groups. He holds an MSc in Government from the London School of Economics and is CEO of Sungrown Developments Inc., an advisory firm and holding company in Oakland, California.
Member Blog: Common Interior Design Mistakes that Dispensaries Make
As the legalization of cannabis spreads rapidly throughout the United States and across the globe, new medical and adult-use dispensaries are opening just about every day. The progression of architecture and design within dispensaries has expanded just as quickly as the legalization of their products.
The saying, “never judge a book by its cover,” has been ingrained into our brains since our adolescence. The truth is, consumers are first drawn to a product or location simply by the look of it. That is why your space must stand out from your competitors. From choosing the right location to conceptualizing layouts, here are a few major mistakes to avoid when designing a dispensary.
Layout
The foundation of any dispensary design should be rooted in the customer experience. A poor layout can interfere with traffic flow, lead to security issues, and cause longer wait times, which upsets patients. The goal is to create an effective layout that provides efficiency for patients while encouraging them to spend more time in the store, discussing products and treatments.
To achieve this goal, designers must have a deep understanding of how a “typical” customer will move within space and in what order. Mastering that concept allows designers to make the best use of the available space.
Basic Interior Design Features
A dispensary does not have to be a cold, sterile environment; in fact, it shouldn’t be! New patients may already be intimidated; bright and welcoming furnishings and color palettes will contribute significantly to their experience. Additionally, an inviting design will help attract and retain patients.
Interior design can quickly become mismatched and overdone. To avoid your design and layout, looking discombobulated, stick to a style, and keep in mind that less is more. Adhering to an overall aesthetic will ensure your elements flow together and complement one another.
Another major factor contributing to the layout and function of a dispensary is the merchandise display. For starters, all of the displays should be made of the same materials. Whether it be wood or glass, keep it consistent.
Now, think about the customer experience. Products layered in vertical displays tend to make browsing the selection easier than a flat surface.
Finally, make sure you build out the appropriate amount of displays. Too much space and the dispensary will look like it’s lacking while not enough space will leave it looking cluttered.
Furniture Selection
To you, the words cheap and inexpensive may be synonymous, but to an interior designer, something defined as “cheap” implies that it is poorly made and, therefore, of low quality. With that said, avoid purchasing cheap furnishings. Opening a retail cannabis location is a costly feat. So, it’s understandable that you would want to cut costs where you can. Know that cheap furniture and furnishings can tarnish a customer’s experience as well as your dispensary’s reputation. Most importantly, buying cheap seating and tables from budget vendors that are not for commercial use can lead to unexpected claims.
Dispensaries follow the same rules as retail stores
As a store-front business, foot traffic will be consistent. Failing to prepare for the long-term wear and tear of your floors, couches, and tables, etc., can be costly.
Practicality is essential here. Select flooring and surfaces that require minimal maintenance and won’t show visible signs of deterioration. The furniture should be durable enough to last and comfortable enough to function well for all ages and abilities.
Lastly, remember that the design of a retail store does not change from year-to-year, if ever. Create a timeless design.
Location
Location is one of the most important elements that factor into the success of any retail business. Prime locations support long-term success.
Unfortunately, prospective dispensary owners can not pick any old retail space they want. Due to rigid state laws and local regulations, they are limited in terms of available real estate. Familiarizing yourself with an area’s zoning laws is critical for establishing your business in the best possible location.
ATMs
Given the current status of the banking laws within the cannabis industry, the majority of purchases still need to be made with cash. Do not overlook an ATM when conceptualizing the layout! If there is nowhere for a patient to withdraw the cash necessary for a purchase, owners are missing out on sales.
If your budget allows, offer cashless ATM services to enable quick and safe transactions, which not only makes purchasing more convenient for customers but also adds to the security of your dispensary by limiting the accumulation of cash.
Perpetuating Old Stereotypes
The modern-day cannabis consumer represents a cross-section of the diverse population. Creating an environment that plays into the negative stereotypes will turn off a good portion of consumers simply because they will not want to be associated with the old stigmas surrounding marijuana. Paying homage to Jeff Spicoli will not only offend a majority of potential customers, but it will also draw unwanted attention from the surrounding community and law enforcement.
Christina is a certified Interior Designer with 20+ years of experience in the industry. Chris received a Bachelor of Science in Interior Design from Philadelphia University and honed her skills as an interior designer with several large architecture firms in Philadelphia. Specifically, while with Ballinger and EwingCole, Chris gained considerable experience in a variety of market sectors including healthcare, research and development, government, education and sports and entertainment, overseeing dozens of multi-million dollar projects. Christina first established herself in the cannabis industry when she was recruited to join a team of experts assembled by Philadelphia-based attorneys and consultants Moriconi Flowers, Ltd. to assist clients in obtaining permits to grow, process, and sell marijuana. Moriconi Flowers intended to coordinate a group of diverse professionals to act as strategic partners to support marijuana permit application projects and identified Christina and Design 710 as ideal to provide building/zoning code analysis, budget and schedule development, and interior design services to their clients. Christina quickly became an integral part of the team.
Design 710’s successes have included designing the project for the winning application and first dispensary to open in Philadelphia, designing the project for a winning grower/processor applicant in the Delaware Valley, and designing the winning project for an additional marijuana dispensary permit holder in the Philadelphia area.
Design 710 was created to help assist both new and experienced businesses to navigate the ever-changing cannabis industry. Christina’s intuition and experience has made her the ideal interior designer for countless projects, including 3 dispensaries she opened with Restore Integrative Wellness Center in the greater Philadelphia area over the last 2 years. Christina’s experience working within the recreational and medical cannabis industry makes her an excellent strategic partner, and her unique vision is complemented by years of experience navigating the ins and outs of opening a dispensary. Having provided design assistance and consultation to projects in Pennsylvania, New Jersey, Ohio, Connecticut, Massachusetts, and Missouri, Christina has a wealth of experience navigating multiple markets.
Member Blog: Cross-Pollination Poised to Prompt Litigation in Light of New USDA Hemp Rules
On October 29, 2019, the USDA released regulations establishing a domestic hemp production program, paving the way for hemp cultivation on an industrial scale in 2020. While the potential benefits of a robust hemp industry in California are exciting, large scale industrial hemp cultivation increases the risk of cross-pollination for hemp and cannabis growers, which may significantly impact the value of both crops.
Cannabis sativa, the plant used in both hemp and cannabis production, is a dioecious species, meaning that male and female flowers are borne on separate plants. Cannabinoids, including THC and CBD, are more concentrated in the female flower than in the male flower. Therefore, cannabis or hemp growers who desire a crop with a high yield and potency of either THC or CBD will typically use feminized seeds or clones and will weed out male plants if they appear. Growers of industrial hemp produced for seed or for fiber, however, are not concerned with producing potent cannabinoids and therefore will generally grow both male and female plants.
Cross-pollination between female and male plants can cause problems, such as seed production, lower crop yields, and altered THC or CBD content of the flowers that are produced. This can devastate the value of crops grown for their THC or CBD content. Moreover, if hemp exceeds the 0.3% THC concentration threshold allowed under the federal regulations, it must be destroyed.
Unfortunately, cannabis pollination can occur over large distances depending on the concentration of plants and weather conditions. Industry experts recommend a minimum distance of ten miles between outdoor growing operations, but research shows it is possible for cannabis pollen to travel much further. Therefore, cross-pollination is possible even if a neighboring farm is miles away. This dynamic poses a huge problem to the young industry.
At this point, there are few regulations in California designed to prevent cross-pollination. Several counties enacted temporary moratoriums on the production of hemp, primarily based on the USDA’s inaction. In those counties, cross-pollination has not been a problem since cultivation was not allowed in the first place. Now that the USDA has issued regulations governing the hemp industry generally, counties will likely lift these temporary moratoriums. But since the USDA regulations are silent as to the distance between hemp and cannabis operations, cross-pollination will almost certainly occur and will likely result in litigation in the near future. Indeed, cross-pollination has already caused litigation in other states. For example, lawsuits related to cross-pollination have already commenced in Oregon. In Jack Hempcine LLC v. Leo Mulkey Inc., et. al., a hemp grower alleges that cross-pollination by male plants on the property of several nearby growing operations raised the THC levels of the Plaintiff’s female plants, rendering his entire crop unmarketable. The grower who brought that action alleges damages exceeding $8,000,000 in lost crop value.
There are several legal theories available to growers seeking to recover damages caused by cross-pollination of their crop by a nearby hemp or cannabis operation, including negligence, trespass, nuisance, strict liability, and interference with prospective economic advantage. If your crop is or was negatively affected by cross-pollination or another grower alleged that you have damaged their crops via cross-pollination, you should contact counsel as soon as possible.
Ryan McGuire is an attorney at HK Cannabis Law, a practice group of Huguenin Kahn LLP, a full-service law firm representing clients throughout California and beyond. Ryan has years of experience litigating a broad range of legal actions, including personal injury, employment, contractual disputes, and construction defect claims. Ryan also has deep ties to California’s agricultural community, and has successfully represented growers, packers, and distributors. Ryan’s knowledge and experience are valuable assets for clients involved all aspects of cannabis production from seed to sale. Established to provide legal representation and counsel in the emerging field of cannabis law, HK Cannabis Law stands ready to serve clients at every stage of the cannabis business cycle, from business entity formation, real estate acquisition, land use, contracts, business transactions, regulatory compliance, licensing and permitting, enforcement defense and, should it ever be necessary, legal representation in both civil and criminal trials and appeals.
Committee Blog: How NCIA’s Banking & Financial Services Committee Can Help You In 2020
As we begin the new year, the NCIA Banking and Financial Service Committee is joining the trend of starting something new for 2020. We are launching a blog series, the very words that you’re reading now, to help the cannabis industry when it comes to banking and payments. Here, you’ll find new content every month. Our goal is to give you actionable information based on current markets so that your business can grow and thrive throughout the year.
In Missouri, the state has issued 192 retail licenses, and 80 licenses for cultivation. To serve the industry, there are numerous banks and credit unions who are actively working with cannabis businesses to offer transparent banking options.
Utah will be issuing 14 retail licenses and 8 cultivation licenses, with businesses expected to start operating in March of this year. There is a financial institution in the state that is ready to bank the cannabis industry, helping your business with compliant financial services.
Finally, the committee has built relationships with additional financial institutions in California, giving even more options for cannabis businesses that need banking solutions. Whether your business is based in Missouri, Utah, California, or any other state with a legal cannabis market, NCIA’s Banking & Financial Services Committee can help provide information that may help you obtain banking services. Please get in touch with usif you need help, and we can make connections that could help.
Considering the changes to legislation in states across the country, as well as the impressive growth of the cannabis industry in recent years, we’d like to take this opportunity to welcome both newcomers and old-timers in this industry. Our community is vibrant and collaborative, with a focus on helping each other grow.
Unfortunately, there are always operators who try to work around the rules instead of following them. As a result, it’s important that we remind all our members about the dangers of breaking the laws or rules regarding cannabis banking and payments. We want to make sure that everyone knows the dangers that can be associated with the few transaction methods that are available to the industry.
Debit and credit card payments for cannabis are not allowed by the branded card networks. What does this mean? VISA and MasterCard do not want anyone paying, or receiving payment, for cannabis on their rails. While not technically illegal, circumventing their rules can lead to some dire consequences, including getting blacklisted and unable to get a merchant account in the future, even when cannabis becomes federally legal.
Instead of trying to work outside the system, focus on compliance and sustainability. How can you ensure that your business thrives for years to come? Build a solution that is legal now and will continue to operate legally as the federal laws expand. Work with banking and payment partners who understand your business and help it grow. Ensure that you only build partnerships with reliable, trustworthy institutions that improve your brand’s viability and performance.
As always, remember that NCIA’s Banking & Finance Committee is here to help you. Our goals are to educate and support operators in this industry across the country. If you’re worried that your banking or financial services solutions might not be fully trustworthy or compliant, don’t stay silent. Make full use of this committee by utilizing all our resources and connections to help your business thrive. Because when your business does well, the association continues to grow and improve, too.
In his role as Hypur’s Chief Revenue Officer, Tyler leverages his extensive experience in building brands, managing key relationships and strategic partnerships. Tyler has been at the forefront of Hypur’s expansion efforts for over five years and touches Financial Institutions, Government Officials, Regulatory Bodies and the State Legal Cannabis industry.
As a result, he possesses an intricate knowledge of the Banking and Regulatory climate, key industry influencers, industry dynamics, and market history. He has also become a key contact for media outlets, analytics companies, industry consultants and investment firms searching for reliable, accurate sources of industry information.
Tyler’s contacts and relationships in the US State Legal cannabis industry are unparalleled.
As a result of his influential value, he was selected to be Chairman of the National Cannabis Industry Association Banking and Financial Services Committee. He is also a member of the Forbes Business Development Council, frequently publishing articles about the banking and payment environment in the cannabis industry. Tyler founded and managed a large beverage company prior to joining the Hypur team and was a professional athlete in the New York Mets Organization.
2019 was an incredible year of growth for the cannabis industry; mergers and acquisitions, multi-state expansion, new state licensing, and an explosion of new jobs created. Operationally, more businesses began adopting best practices from the retail and hospitality industries and implemented technology systems to connect all facets of business for stronger insights. There have been focused efforts on hiring, engagement, and training to improve employee retention. Plus, the momentum for widespread acceptance of cannabis legalization is truly unstoppable.
These favorable advancements haven’t come without a variety of challenges, including continued banking access stalls, compliance hurdles, and environmental tragedies. While most legal markets in the nation are struggling to keep up with the demand for qualified talent, select California enterprises laid off an average of 30% of their workforce due to numerous obstacles. Most notably, the vaping crisis shed light on the need forconsistent regulation and testing. Additionally, lack of access to capital has significantly slowed down business growth nationwide.
According to a survey Wurk sent to leading enterprise U.S. cannabis businesses, the largest human resource challenge in 2019 was managing rapid growth and scaling the workforce to meet demand. Managers felt pressure to ensure hiring plans were strategic, yet could meet the constant change of the industry, and many learned that employee turnover was directly related to a lack of training and effective performance management practices.
2019 tested the resiliency, patience, and commitment of many in the industry. As 2020 begins, consider this: this is a passionate community that has the experience, determination and gumption to persevere no matter the roadblocks. As pioneers in cannabis HR, leaders are responsible for providing the right support and resources to the people of the industry, so momentum continues.
In 2020, recognize these 9 trends in cannabis Human Capital Management:
Employee Training & Performance Management
While more than half of the US has some form of cannabis legislation in place, the industry still lacks a standardized education and training program for employees in each vertical. Compliance and risk management programs have been developed by vendors like Cannabis Trainers, and states such as Massachusetts are mandating that operators take part in these sessions. A portion of marijuana businesses have created internal training programs and will invite producers in-house to offer product education to budtenders.
Although there’s been progress in this category, the industry is still a long way away from providing consistent, reliable education to employees. In the coming year, HR leaders will have self-developed or outsourced courses on compliance, at a minimum. More and more operations will expand their employee development to include product and plant specifics, responsible selling best practices, and even positive psychology coaching.
Reducing employee turnover will remain a focus for cannabis HR leaders in 2020. Operators will take a fresh look at how performance management is handled and whether it aligns with company culture. One approach to replace the annual review will be “continuous performance management,” where frequent one-on-ones are scheduled to improve communication, address issues fast, and ensure employees are engaged in the organization. HRIS platforms can support these conversations with people data so managers can combine the human interaction with trending evidence in order to spot at-risk employees before they jump ship.
Employee Experience
People are a business’s largest asset, which means not only can they be the most substantial expense, they are also the biggest revenue generator. The Employee Experience (what people encounter, observe or feel over the course of their employee journey) will begin to be a part of cannabis HR strategy into the new year. By gathering insights about this unique workforce through surveys, interviews, and conversational documentation, cannabis businesses will start to define an Employee Experience that parallels the company’s mission, vision, and values.
Forbes recently included “tending” people as an HR trend to be aware of in 2020. The idea is to cultivate employees and support their growth, rather than manage them. This intentional relationship-building practice evokes a sense of community and wellbeing. Harvard Business Review notes that tending goes a long way in mitigating the “workers as machines” phenomenon. If crucial talent feels they are just a cog in the Multi-State Operator machine or an unseen hourly inventory manager, the likelihood of them voluntarily departing the business will rise.
Standardization vs Customization
Recognition must be given to leadership in 2019 for leaning on other industries for processes to effectively manage a mostly hourly workforce. While cannabis businesses are still in start-up mode, there are labor tasks and procedures that mirror those in the fast food, hospitality, and agricultural segments that can help shape standards. There’s no need to reinvent the wheel, but it’s obvious that the intricacies involved with the seed-to-sale process require customization.
In 2020, HR will balance enforcing best practices and the need for agile, tailored decision-making. When it comes to talent acquisition, for example, a hiring manager may draft a job description that includes vital soft skills, like reliability, communication skills, organization, adaptability, and leadership. In new cannabis markets, following a cookie-cutter model won’t generate the talent pool needed to build a business.
Being innovative with tried and true methods will allow leadership to solve bottlenecks today, not in the future.
Data-Driven Decision Making
According to Deloitte’s 2018 Human Capital Trends report, 85% of companies see people analytics as a high priority, but only 42% believe they are either ‘very ready’ or ‘ready’ to meet expectations. Over the years, cannabis executives have taken action to implement a technology foundation that supports compliance, streamlines processes, and reduces cost. Yet, there is still a lot of runway left to cover.
The focus will shift from technology as a ‘nice to have’ to technology as a major transformational driver in the years to come. Organizations will recognize the benefit of all-in-one solutions that enable better business decisions based on data. Human Resources will remain on budget by comparing actual spend per department, location, and cost center to predicted payroll spend. Managers will rely on people analytics to identify what elements impact turnover and employee engagement. Even in the most fast-paced, ever-changing industry, HR professionals will have the ability to predict future trends for talent, finance, and workforce planning.
Managing Rapid Growth
Massive expansion has created immense pressure for all positions in the cannabis vertical, notably for HR professionals. With most companies growing through M&A activity, not organically, the structure of business is evolving faster than most can realistically manage. This surge will only continue in 2020, demanding the expertise of the HR department to effectively discern new opportunities and build the workforce of the future.
According to the PwC CEO survey, 77% of CEOs believe the biggest threat to their business is the lack of availability of key skills. With CEOs so concerned about talent, cannabis HR managers will shift focus to increasing productivity of their existing workforce as opposed to hiring additional staff. Data will help inform HR professionals on who the top performers are and what conditions are supporting their success.
Outsourced HR Solutions
Employee relationship management should be made a priority for every business, but in-house cannabis human resources may not be an option for all. Small businesses may wait until they reach 40 or even 75 employees before bringing on a full-time HR manager. Constantly evolving labor laws and the risks involved with cannabis payroll will drive some business owners to outsource HR services to cannabis-specific partners.
From employment taxes to employee benefits to the Fair Labor Standards Act (FLSA), there are many aspects of workforce management that owners may not have the resources or experience to maintain. In an industry already strapped for financial support, one mistake in adhering to the work and pay rules for a specific municipality can amount to a hefty fine. The risk involved with managing cannabis people is high and this liability will drive licensees to depend on cannabis-friendly HR and Payroll partners.
Diversity and Inclusion
Key states had strict requirements surrounding diversity initiatives in the cannabis application process in 2019 and this focus will only grow in the decade to come. HR departments will develop stronger D&I plans with innovative ways to recruit, to communicate the importance of unique perspectives and to support peers across the organization.
Sadly, the industry saw a decline in the number of women execs at the end of the decade. Vangst found that of the 38.5% of employees that self-identified as females in the industry, only 17.6% of these women held a “Director” or “Executive” role. This compares to 82.4% for self-identified males.
As momentum gains, the industry will continue to attract like-minded, experienced professionals from mainstream, big box corporations. This past year, KushCo Holdings appointed former Nestle and Cetera Financial Group HR Executive, Rhiana Barr, as their Chief People Officer and Harborside brought on a female HR leader from big pharma. This trend will progress as the industry continues to prove legitimacy through international acceptance and financial opportunity.
Corporate Social Responsibility
Giving back to the community has been a challenging push for cannabis businesses as many non-profit organizations and volunteer programs are still hesitant to partner with plant-touching operations. Thankfully, this trend is taking a turn in a positive direction. Take for example, Cresco Labs, who launched the SEED initiative in 2019 to “ensure that all members of our society have the skills, knowledge and opportunity to work in and own businesses in this industry.” Companies all over the nation are contributing to those most affected by the War on Drugs by donating to non-profits like Last Prisoner Project or collaborating on expungement events.
Human Resources will attract a wider talent pool and increase employee satisfaction in 2020 by providing thoughtful opportunities for employees to be involved in CSR efforts.
Wellness and Benefits Offerings
For years, marijuana businesses have had to worry about basic employee resources, like ensuring they have access to banking and can receive a direct deposit. Although this will remain a hurdle for many, more doors have begun to open for managers to offer benefits, and even 401(k). Insurance and 401(k) brokers that are transparently serving the industry are becoming more and more prevalent into the new year. While Section 280E hinders employers from offering a 401(k) match, some production-focused entities may be able to deduct contributions to their employee benefits plans, where dispensary entities may not be able to—even when they’re owned by the same parent company.
Partnering with cannabis-friendly brokers and financial advisors will only benefit HR professionals as these offerings are still difficult to obtain and execute.
They say a year in cannabis is like 7 dog years… The industry has made it this far, not without flaw and frustration, but certainly with grit and determination. Organizations have the strength to power through 2020 with a solid foundation, the right toolset, and the best people around.
Heather is an experienced marketing professional with a demonstrated history of work in cannabis technology and digital strategy. Skilled in customer relationship management, online marketing, immersive experience design and communications, Heather brings a unique combination of creative ideation and project management. As Director of Marketing for Wurk, the first workforce management company designed specifically for the cannabis industry, Heather develops key messaging to inform the market about effective human resource management and to support the advancement of the industry. With previous experience at MJ Freeway, the leading provider of seed-to-sale software solutions for marijuana businesses, Heather brings a unique understanding of cannabis chain of custody and the various challenges operators face in this highly regulated space. Heather earned a bachelor’s degree in communication design and marketing from Metropolitan State University.
Designed specifically for the cannabis industry, Wurk allows employers to protect and streamline their operations, while providing an environment where people are a priority every step of the way. The intuitive, all-in-one solution automates the most complicated and risk-prone processes associated with hiring, scheduling, and paying employees. Learn more at enjoywurk.com.
Committee Blog: Working With Your Local Government as a Cannabis Cultivator
The regulated cannabis industry is inextricably linked to politics, and all politics is local — so when trying to open and operate a cannabis business, you’re almost sure to need to work with local government in some way.
To help our members understand how to start these relationships right, the NCIA State Regulations Committee hosted a webinar on how to approach local government earlier this year. That focused on identifying your relevant local authorities, how to introduce yourself, and how to properly navigate those relationships.
Once you’ve figured out who to talk to and have gotten in touch with them, they’ll often have questions about the cannabis industry, and there is plenty of good information you can proactively share as well. To help NCIA members inform their local governments about the wide range of issues surrounding our industry, we’ll be diving even deeper with a series of blog posts.
We’ll be starting this series where the whole cannabis supply chain begins: cultivation. Future posts will touch on processing, retail, and more. Even though states categorize their licenses differently, with some issuing stand-alone cultivation licenses and others combining cultivation with processing (or sometimes issuing vertically integrated licenses, with retail too), we’ll be focusing in on the various operations individually.
ECONOMIC IMPACT
When elected officials hear about a new business wanting to open in their town or city, their first question is usually, “how many jobs will it bring?” Mayors, city and town councils, departments of economic development, and other government entities are often laser-focused on building up the local economy, so explaining how your business will help them towards that goal is integral to moving your project forward.
Lucky for them, cannabis cultivation is a very labor-intensive endeavor, and you’ll likely be hiring dozens of people to staff your facility. If you’re an experienced operator who knows exactly how many people you need to hire and in what roles, let your local government know! They’ll be interested to see the range of responsibilities and necessary experience, from entry-level trimmers to mid-career managers to botanists with a Ph.D. If you’re still figuring out your exact staffing plan, providing a range of possibilities will help them understand the scale of your project. Be sure to avoid pie-in-the-sky estimates that you’ll never be able to reach — in the long run, it’s always better to under-promise and over-deliver than to make it seem like you were pulling a bait-and-switch. Also do not forget to include all the contract jobs created by constructing or retrofitting your facility.
Beyond the sheer number of hires you’ll be making, it’s important to talk about the compensation and benefits that you’ll be providing to your employees. If you’re starting everyone above the state’s minimum wage — or better yet, starting everyone at a living wage (generally thought to be at least $15/hour) — highlight that! If you’re providing health insurance or other benefits to your hourly employees, let them know! Elected officials like to see companies doing better than the bare minimum, and love to see companies that do even more.
Your physical facility will also have an economic impact on the community that’s worth talking about. If you’re buying your building, you’ll be paying property taxes, and you can let your elected officials know just how much you’ll be contributing to the tax base. Mayors and councilors always love to see unused space being occupied, so if you’re making use of a vacant or neglected building, be sure to let them know. This goes double if you’ll be making improvements to the building that increase its value (and triple if you’re using a local construction company to make those improvements).
Finally, consider whether you will be providing any additional revenue to the local government. While some state cannabis laws do allow for local taxes, these typically apply to retail rather than cultivation. Massachusetts and some other states also make heavy use of “community host agreements,” or CHAs, where a business commits a percentage of its revenues to the local government for a limited period of time. If either of these applies to you, be sure to provide elected officials with the relevant parts of state law, and the specifics you’re willing to offer. If you plan to financially support any charities, provide details — and if you’d like some guidance on what local charities are doing the most good, just ask, since most officials would be happy to tell you some of their favorites.
PUBLIC SAFETY
Elected officials also care about public safety, but usually follow the lead of their police chief and fire chief, for whom safety is their one and only priority. It’s good to proactively highlight the ways your facility will improve public safety — if you’re installing outdoor security cameras or floodlights, those can protect your neighbors as well as yourself, and there have been multiple cases where cameras on a cannabis business have helped solve an unrelated crime.
It’s important to remember that police and fire chiefs are spread thin and need to know a little about a wide variety of topics. Unless there are already cannabis businesses in their town, they probably haven’t read the state security requirements to open a facility, so providing an overview of the state law can help demonstrate how tightly regulated you will be. Knowing that the state already has rules for waste disposal, product storage, and controlled access areas can alleviate many of their initial concerns.
Once you’ve explained the security features of your building and run through the state requirements for cannabis businesses, you should address any lingering fears or questions that they may have. Two of the most common concerns are the safety of employees while transporting product or cash, and the risk of your building being targeted by burglars looking to steal product.
Regarding employee safety, explain how you will be shipping product to processors or dispensaries. Are you delivering it, are they picking it up, or are you using a third-party transporter? If you are transporting product yourself, explain both the state requirements and your own operating procedures, from GPS tracking to using two employees for each delivery.
You should also go into detail about your banking relationships. Many people outside the industry assume that it’s 100% cash, but if you’re part of the large majority of cannabis businesses with bank accounts, let your local officials know, especially the police chief. They will be much more comfortable if they know your customers will be wiring payments directly to your bank, rather than dropping off duffle bags full of cash at your facility.
Regarding burglary, be sure to re-emphasize your security measures, from cameras and fencing to access control and alarms. Explaining the cannabis life cycle may also be helpful — since plants are not useable products for most of their life, they’re poor targets for theft. This means that cultivation facilities are not prime targets for burglars, but in the rare cases that they are targeted, you can point to examples where cameras have led to burglars’ arrests.
COMMUNITY IMPACT
While economics and public safety are almost always the top two concerns of local governments, they may also be worried about other impacts on the community and how your business will affect residents’ quality of life. Common questions include whether your facility will emit any odor, and if it will increase traffic in the area.
Cannabis is famous for its strong odor, so it’s understandable that people would ask about it. Whether your state requires it or not, it’s advisable to use charcoal scrubbers or other odor mitigation technology to prevent your plants’ odor from escaping the building. Knowing that you’re taking steps to address this concern will help elected officials feel comfortable welcoming you into their community, especially if it’s in a densely populated area.
Traffic concerns may arise, especially if there are recent news stories about mile-long lines at dispensary grand openings. You can address this easily by explaining how cannabis cultivation facilities are not accessible to the public, and the main people coming to your building will be employees and inspectors, not customers.
When built and operated properly, cannabis cultivation facilities should be virtually indistinguishable from any other commercial warehouse. Unless you have very explicit signage (which we do not recommend), most people driving or walking by will not even know that you’re a cannabis business.
GOING FURTHER
Even after you have addressed all of your local government’s concerns, there will probably be even more questions — and that’s okay! This is a great opportunity to keep the dialogue open. Be sure to stay up to date on state laws and regulations so that you can serve as a resource for local officials. Because they’re spread so thin, they will appreciate having someone like you as a go-to when they have questions about cannabis politics or the industry.
If you’re able to offer tours of your facility, that’s a great way to build relationships with your local officials while educating them about your business and the cannabis industry as a whole. They may also appreciate invitations to events hosted by state cannabis regulators, or local industry conferences where they can get broader exposure to the cannabis world.
And of course, it’s important to be a good member of your community. Whether it’s participating in local projects, supporting local organizations, or organizing your own trash clean-ups or other events, staying active and visible will help the community know that they can count on you being a good neighbor.
Be sure to stay tuned for future installments in this series, where we will be addressing other cannabis license types. Our next blog will focus on processors.
Felony Provisions, Harvest Schedules, and ‘Hot Hemp’ – NCIA Responds to USDA Hemp Rules
by Vince Chandler, NCIA’s Social Media Manager
On October 31, 2019, the USDA released its Final Interim Rule governing the domestic production of hemp within the United States. Going into effect immediately upon its issue, the interim rule regulates industrial hemp after the 2018 Farm Bill removed its Schedule I listing under the Controlled Substances Act. While the IFR is in effect, there is a public comment period happening right now, allowing for early input as the federal agency begins to “test drive” the program. Sunsetting after two years, the interim rules will inform permanent oversight and regulatory infrastructure after a full crop cycle has occurred.
National Cannabis Industry Association Director of Public Policy Andrew Kline formed a coalition of more than 100 leading hemp and CBD entrepreneurs, scientists, medical doctors, and FDA lawyers in May to provide comments and testimony to the FDA on their regulations and rulemaking for CBD. The committee produced 60 pages of formal comments to the FDA, as well as providing expert testimony. After the submission of the coalition’s comments, the NCIA Hemp Committee absorbed the effort to voice the cannabis industry’s position on federal regulation of low-THC cannabis.
On Wednesday, NCIA hosted a webinar with our Hemp Committee Chair Cindy Sovine and committee member Alex Buscher to discuss the cannabis industry’s official response to the USDA hemp rules. Concerns about definitions, the feasibility of harvest windows, and DEA oversight of testing laboratories all pose as potential hurdles in the program’s viability, and NCIA is committed to ensuring our members have all the resources they need to submit feedback to the USDA before the deadline.
It is important to note that, while the 2018 Farm Bill descheduled hemp with less than 0.3% THC, the federal agency has left it up to individual states to submit plans for regulations and oversight. Until a state has submitted their regulatory plan, and had it approved, the sale of hemp is not legal in that state. While states draft and submit their plans, NCIA is leading the quest for information on how federal rules will apply.
The administrative procedure for the USDA requires that they consider any comments put forth by the public, but do not have to adopt any of them. All indications are that they are open to influence and input from those, like National Cannabis Industry Association, with institutional knowledge on the matter.
Highlighted in the webinar as an action item deserving immediate attention and commentary is the USDA’s planned rule for “hot hemp.” The agricultural governing agency appears to have taken the position that they lack regulatory jurisdiction over cannabis plants that test above the 0.3% THC threshold, deferring instead to the Drug Enforcement Administration.
NCIA’s Hemp Committee recommends that, instead of handing oversight to the DEA, USDA should adopt particular procedures that will allow for the remediation of those hemp plants. This re-processing should render non-compliant plants compliant, thus allowing for their use rather than requiring the immediate mandatory disposal, per DEA regulations.
Remediation options could include:
Removal of THC through processing
Conversion of THC
Diversion to fiber market
Interstate commerce, harvest scheduling, and DEA testing laboratory registration need to be addressed, along with specifying definitions for ambiguous terminology. These issues can be changed through public comment at the USDA rules level.
Requiring legislative procedure to change is the felony provision rules in the USDA Final Interim Rule. Currently, the Farm Bill’s statutory felony provision reads, “any person convicted of a felony relating to a controlled substance under State or Federal law, before, on, or after the date of enactment on this subtitle shall be ineligible…”
The USDA could have interpreted this provision broadly, blanketing the ban to apply to anyone working in any capacity in the industry. Instead, the USDA has limited this provision in their licensure by stating that it will apply only to “key participants.” While NCIA wishes to see felony provisions removed as barriers of entry from working in the legitimate cannabis industry, our committee recognizes this liberal interpretation of the provision as a best-case scenario, until the Farm Bill is up for renewal and specific language can be amended or abandoned.
Public commentary is open until December 30, 2019, and all NCIA Members are encouraged to submit their thoughts. For suggested language or guidance shaping your comment, we’ve made available our slide show from the webinar with samples of copy and more information on individual recommended steps. If you are interested in shaping NCIA policy recommendations for hemp, CBD, or many other cannabis sectors, inquire about joining our Policy Council.
Member Blog: The Ultimate List of Must-Have Cannabis POS Hardware
by Heidi Orpilla, Digital Content Specialist at Star Micronics
The cannabis industry is booming – and it’s expected to continue doing so. According to Grand View Research, the global legal marijuana market is expected to reach $66.3 billion by the end of 2025, and each year brings new legalization across the world.
Whether you’re in the business of opening a cannabis business yourself or are looking to provide cannabis point of sale (POS) solutions to your customers, it’s important to understand the critical role cannabis POS hardware has and how to determine which products are right for your business.
Must-Have Cannabis POS Hardware
Receipt Printers
Receipt printers are extremely important in the cannabis market. When it comes to cannabis, proof of legal purchase is key – and there’s no better way to provide it than with a receipt printer. In some places, like Canada, it is illegal to possess cannabis deemed illicit, and without proof of purchase, all cannabis is assumed to be illicit. Carrying that illicit cannabis could result in a $5,000 fine or a five-year prison sentence! In the US, laws vary greatly by state and must also be carefully obeyed.
Along with providing proof of purchase, it’s important to note that depending on your region, receipts must also contain other information, like store name and address, product category/name, and the appropriate tax code/identifier.
Label Printers
Next on the list is another kind of printer: the label printer. An important part of seed-to-sale tracking, printed labels have an important role in the entire cannabis production and retail process. Seed-to-sale tracking is a key requirement in cannabis regulatory models, and refers to the process of tracking plants and their byproducts from planting all the way through to the plant’s sale.
Custom Cannabis Labels
As mentioned above, labels are incredibly important for the cannabis industry. It’s critical to ensure your cannabis labels come pre-printed with official, state-required universal symbols. These pre-printed cannabis labels are available in various sizes for all recreational markets.
Scales
Yet another critical piece of cannabis POS hardware is the scale – but not just any scale will do. First, you must ensure the scale you are considering is legal to use in your state and NTEP-certified. Being certified means that the scales are ensured to charge the correct amount for the product being weighed. Another great feature to look for is a scale that is integrated directly into the POS. Why? Reduced risk of human error that is associated with standalone scales that cannot integrate with the POS.
To make the process of adding a scale to an existing system a simple process, look for scales which are compatible with Windows, iOS, and Android. It’s almost important to seek scales that include a waterproof and dust-proof cover, as well as Bluetooth, USB, and serial interfaces.
Cash Drawers
Chances are you’re aware that the cannabis industry is currently predominately powered by cash. While marijuana is legal in many parts of the country, it remains illegal under federal law, which means dispensaries’ access to credit card processing options is slim. Thus, a reliable, high volume cash drawer is key! Be sure to look for a cash drawer made of durable steel that’s available in colors to match the rest of your POS.
Scanners
Scanners are an important part of the entire seed-to-sale process, from back-end warehouse operations to scanning products at the point of purchase. Important features to look for are connectivity options and a design/color that matches the existing POS, if applicable.
Tablet POS Stand
As we discussed above, dispensary aesthetics are extremely important, not only from a branding and customer experience perspective but also to legitimize the business to outsiders and newcomers. A great place to tie in style is at the POS, and an easy way to do that is by incorporating a sleek, space-saving POS stand into your arrangement. Choosing a stand that features clean cable management is an added bonus.
Self-Service Kiosks
Dispensaries are sometimes limited to how many people they can allow inside at one time because budtenders need to be able to pay special attention to customers, and make sure they are recommending the right products. Some dispensaries are using kiosks to allow waiting customers to pick out what they want on screen, take the slip to the budtender, and simply just collect and pay for their items.
Value-Added Marketing Services
Just like other businesses, cannabis dispensaries need to advertise, but what sets them apart is that they must adhere to strict advertising laws. For example, in multiple states including California and Colorado, over 70% of cannabis advertisement audiences must be over the age of 21.
An easy way to ensure marketing efforts are being communicated only to the intended audience is by printing those promotions on your receipts. By leveraging receipt marketing tools – some of which can be provided by certain receipt printer manufacturers as a value-added service – dispensaries can create custom promotions from templates which increase customer engagement and retention and can be used to promote sales, new products, loyalty programs, and more.
The POS as a Dispensary’s Backbone
In the cannabis industry, accuracy, a professional aesthetic, and responsible marketing are of utmost importance. When properly implemented, the POS can become a dispensary’s backbone to success. By choosing the correct printers, scales, labels, cash drawers, and value-added marketing services, cannabis industry professionals can focus more on growing and selling and spend less time worrying.
Heidi writes for and manages the blog and social media at Star Micronics, a point of sale manufacturer that specializes in POS printing – and more – for the cannabis industry and beyond. Star Micronics offers a full portfolio of cannabis point of sale hardware including receipt printers, cash drawers, NTEP-certified Class II scales, label printers, mobile printers, tablet POS stands, and more. A true one-stop shop, Star provides all the hardware solutions a dispensary could need, from front of house dispensary sales to labeling and weighing product during curation. Additionally, Star has integrations with approximately 85% of all cannabis POS software on the market today.
Webinar Recording: NCIA’s Official Response To USDA’s Hemp Rules
Watch this recording if you missed the live webinar on December 10 about NCIA’s official response to the USDA’s hemp rules.
On October 31, 2019, the USDA released its Final Interim Rule governing the domestic production of hemp within the United States. The USDA is currently accepting public comments to its hemp rules through December 30, 2019. There are many rules that need to be changed or clarified to make the program viable, including sampling, required DEA registration for labs, a fifteen-day harvest window, and a definition of “commingling” among other potential issues. Please join Cindy Sovine and Alex Buscher to discuss the NCIA’s public comments and steps you can take to help shape the final USDA hemp rules.
Closing out 2019, jobs in the cannabis industry have been at the forefront of a national conversation. With more states coming on board with medical and adult-use legislation, the industry is continuing to grow. Industry leaders are looking to attract and retain talent from within and outside of the industry by using competitive compensation strategies.
Several companies launched salary surveys in 2019, including us – FutureSense, LLC. We started on this journey to offer our compensation consulting clients accurate survey data. Surveys happen to be one of our areas of expertise. We partnered with the National Cannabis Industry Association (NCIA) to launch the first-ever comprehensive, compliant, and actionable compensation survey to be released in January 2020.
As we dove deeper into the industry, we found that there were several other surveys in action. We also learned that our survey holds a few essential components that other surveys were missing.
These components include:
Compliance – Creating a compliant survey is not easy. Other surveys provide no acknowledgment of DOJ and DOL regulations around reporting pay data. Most other data sets do not indicate as to how many incumbents represent each data point, nor how heavily weighted any one company was in the data. Our survey follows all DOJ and DOL regulations.
Broad & deep data – At first, other surveys represented these values as minimums, averages, or maximums. Further research showed extreme data points that were not in line with normalized data. Based on our 30+ years of survey experience, these are clear signs of thin data. Our data has always been presented in percentiles, showing breadth and depth.
Usable & actionable data – Companies need much more than a handful of “hot jobs” to build out their compensation programs. HRT and compensation professionals need detail and ranges. Our survey provides extensive ranges and detail for professionals and companies to understand the market and put these findings into action.
When reviewing final survey data, we generally expect there to be data for a minimum of 25th, 50th, and 75th percentiles, each calculated using standard statistic formulas. We also expect there to be a normalized difference between each level of no more than one or two standard deviations from the norm. In much of the other industry data, there are only minimums, maximums, and averages reported. Even more concerning is the wide range of pay for some jobs. In certain cases, we have seen data with no ranges (clearly data for only one or two individuals). In other cases, we have calculated rough deviations of six or even ten standard deviations from the norm.
As an example: one of the industry’s premier recruiting firms did a great job outlining the current trends in the industry and providing info on hot jobs and benefits. The narrative is great, but the pay data used to support their findings is limited to less than 30 positions and does not indicate whether it is compliant with all rules. It’s simply not data that businesses should use to set their pay levels. As an independent third-party survey provider, we’re aiming to provide compensation and benchmarking information that can be used to determine pay, without any bias.
Our report currently covers compliant data for more than 85 positions in 11 job families. As participation in our survey continues to grow, we will continue to expand the number of reportable job titles and family benchmarks. Our goal for 2020 is 200+ jobs with compliant and reportable data. We will also begin to present data by demographic breakouts, like location/region, company size, and revenue. The elements will make the data increasingly useful to any compensation/HR professional or executive looking for pricing for key positions and the foundations for the structure of a viable pay program for their company.
We are big believers in collaboration, not competition, and welcome the opportunity to explore designing a single set of data with other industry providers currently creating their own survey. The goal must be to represent the industry at-large. Good data is critical. Our growing industry cannot afford to promote the use of bad data any longer.
The report summary will be released to NCIA members in January of 2020. For more information or to sign up to participate please visit: www.CannaCompensation.com
Dan Walter, FGE, CECP, CEP, is a Managing Consultant at FutureSense, a holistic human capital consulting firm. He has worked in the field of compensation since 1994 and was previously the Founder and CEO of Performensation. His expertise includes equity compensation, incentive pay, executive compensation, and talent management issues. Dan is an industry thought leader for all forms of equity, including stock options, restricted shares and units, stock purchase plans, and performance-based programs. In addition to his focus on plan design, he has been the architect of software solutions and administrative and technological best practices used by many companies. Dan has coauthored several books on compensation and is a popular blogger on the topic. He is also a popular speaker and does dozens of presentations every year. Dan is also on the NCIA’s Human Resource Committee.
Matt Finkelstein, is a Consultant at FutureSense. Matt has worked in the compensation field with FutureSense for six years and has also spent thirteen years as an organic farmer & gardener. Prior to joining FutureSense, he was managing small family farms & developing educational gardens around California, with an emphasis on regenerative practices and design. As a farmer, Cannabis has always been integrated into his own operations and he has also spent a lot of time on cannabis-specific farms. Matt brings his breadth of knowledge from both fields and serves as the primary project coordinator for FutureSense’s cannabis compensation endeavors. Matt is also on the NCIA’s Cultivation Committee.
About FutureSense, LLC FutureSense provides integrated solutions to build and sustain human capacity and optimize organizational performance. FutureSense specializes in people, pay, organization, and strategy, offering unique and comprehensive services to create solutions that make a difference. For more information, visit http://www.futuresense.com.
Member Blog: The Economics Of Trespass Grows And The Legal Industry
by Jackee Riccio, Regional Field Director at the CROP Project
California’s cannabis economy has not generated the cash flow that regulators were anticipating. Current legal sales have topped $3 billion, but unregulated cannabis continues to dominate the market. This may not be surprising, as critics argue that the current licensing process — being lengthy, expensive, and with unpredictable outcomes — does not encourage cultivators to join the legal industry. What may be surprising is how much of that unregulated market is dominated by trespass grow operations on California’s public land. Forest Service Law enforcement & Investigations, and other government agencies, estimate that cannabis cultivated on public lands account for nearly 60% of the illicit market in California. And 98% of trespass grows in California are operated by international drug-trafficking organizations that leave a heavy environmental footprint, and a costly clean-up process for taxpayers. DTOs have wide distribution networks on the East Coast and throughout mid-west states. Many of those states do not yet have adult-use cannabis, creating no legal, safe avenue for cannabis users to purchase from.
So, would legalization federally help the trespass grow issue? Yes, and no. It would in the long term, but in the near term, consumers would likely still purchase what was readily available and inexpensive. Furthermore, without increased Forest Service presence on National Forests where the vast majority of trespass grows occur, they’d still have remote, unvisited landscapes to operate in. Trespass grows operating up-stream of a legal grow may still jeopardize the ability of that product to get to the legal market. In the words of Lindsay Robinson, Executive Director of the California Cannabis Industry Association, “Black market marijuana is potentially dangerous because traces of the toxic chemicals used at grow sites are often found in the plants,” she said. “If you have an illicit grow upstream from you, and you’re legal, that could end up tainting your product and prevent it from entering the market,” Robinson said.
There are thousands of trespass grows throughout nearly all of California’s National Forests. While recreation in National Forests has increased over the past decade, budget cuts have reduced Forest Service presence on the forests and the ability to properly patrol them. For example, the Shasta-Trinity National Forest is 2.2 million acres, and yet only 6 Forest Service Law Enforcement officers patrol its entirety. Reclamation of the sites is only one aspect of removing them from our public lands. To avoid playing trespass grow whack-a-mole, it’s critical that there is regular Forest Service presence to deter the activation of new sites, while reclamation teams clean-up the backlog of existing sites. This is one of the primary goals of the Cannabis Removal on Public Lands (CROP) Project, a nonprofit project of the Community Governance Partnership and the California Wilderness Coalition.
Before CROP, there was no bi-partisan effort or political will to remove trespass grows from the landscape. Two years of meetings, listening to communities and scientists, has led to CROP spearheading a state and national effort to secure state and federal resources to reclaim trespass grows on National Forests, increase Forest Service law enforcement and overall presence in National Forests, educate the public on the dangers of ingesting unregulated cannabis, and increasing criminal penalties for bringing neurotoxic pesticides onto public lands.
Jackee Riccio currently serves as the Regional Field Director for the CROP Project. Her fervor for the natural world has fueled her career as a wildlife biologist and archaeologist, backcountry horse packer, and finally as the co-founder and Executive Director of Cannabis for Conservation, a new 501(c)(3) nonprofit. She graduated from Humboldt State University with a B.S. in Wildlife Management and Conservation, and a B.A. in Archaeology. She has worked for the U.S. Fish & Wildlife Service and private organizations conducting wildlife research on endangered species including gray whales, desert tortoises, and Pacific fishers.
CROP is directed by an Advisory Board of interests that includes environmental organizations, state and federal agencies, local officials, tribes, scientists, and the legal cannabis industry. CROP is fighting on behalf of California’s wildlife, users of public lands, and downstream communities long plagued by trespass grows. To learn more about CROP, or how to contribute, please visit www.cropproject.org.
Member Blog: Cannabis Dispensary Inventory Management Done Right – Best Practices
Discover how state-of-the-art technology can help your dispensary thrive.
Many first-time dispensary owners do not come from a retail background. The cannabis industry is full of entrepreneurs running into long-established retail processes for the first time.
Although the cannabis industry is new, many of the processes upon which it relies are not. Sales, marketing, and administration operate on the same foundations no matter what you are selling, from apples to zucchinis.
Inventory management is one of those ever-present aspects of retail. Every business that sells physical goods has to keep track of its stock, perform inventory audits, and synchronize inventory movement across multiple systems in order to operate.
Cannabis dispensary owners have additional demands to meet. They must implement solid strategies for meeting compliance needs, including comprehensive seed-to-sale tracking. Managing all of these demands while running a successful business can be overwhelming.
Automated Processes Improve Inventory Management
Optimization is the key to responding to the many demands of operating a retail store in a highly regulated industry. In the retail environment, there are never enough assets and resources to get every job done – certain processes need to be automated in order to free up time for higher impact work.
Inventory management is one of those critical-but-time-consuming activities that is ideally suited to process development and automation. Since cannabis dispensaries already have to report on every purchase and transaction that takes place in the dispensary environment, the data is already there.
Yet without a tailor-made technological solution, cannabis dispensaries find themselves spending valuable employee-hours manually entering inventory data into their systems. This necessarily takes time away from other, equally important processes.
Enhance Inventory Management in the Dispensary
Dispensary owners who invest in process development and automation quickly find that the retail service industry already offers many solutions to the kinds of problems they face. Streamlined cannabis dispensaries use these technologies to solve a broad range of problems:
Inventory Categorization. A well-organized inventory is key to success in any retail environment. Dispensary owners that know which products sell best can place those products in the spotlight, further enhancing profits by focusing on their most successful lines.
Automated Data Entry. Manual data entry takes time and produces little value. If there is one readymade way to improve retail efficiency across the board, eliminating manual data entry and freeing up employees to focus on more valuable work is the first step to take.
Inventory KPIs. Key performance indicators (KPIs) help business owners identify opportunities to make better purchasing decisions, improve cash flow, and ultimately boost profitability. Dispensary owners that track data like inventory turnover are better-suited to make sound business decisions. More on these below.
Automated Tracking.Tracking inventory movement through the retail environment is another time-consuming process that, although necessary, produces little value. Implementing automated solutions helps to streamline the process and lets dispensary owners put more energy into value-driving initiatives.
Accurate Reordering.Dispensary owners that know when products are running low can reorder in time to prevent costly and embarrassing stockouts. This is key to maintaining a professional image in a regulated industry like cannabis.
Streamlined Stocktake.Stocktaking plays a critical role in financial management. In order to know how much money the dispensary is really making, owners need to calculate how much liquidity is frozen in stock.
Active Inventory Synchronization.Dispensaries that wish to synchronize their stock with a website database or an app like Leafly or Weedmaps needs to have a solid inventory system in place. Developing active inventory synchronization is key to selling products through multiple channels.
Which Key Performance Indicators Should You Track?
There are many different types of key performance indicators that relate to inventory management. Some of them are more important than others, but navigating the world of cannabis retail requires gathering enough data to calculate any of them when needed:
Weeks-on-Hand. This KPI correlates to the efficiency with which the dispensary moves stock. If the figure is too high, it means that inventory is not selling at the same rate that new goods are coming in. This results in lower profitability due to storage fees and liquidity problems.
Inventory Turnover Rate.This is a ratio that shows how many times the dispensary sold and replaced specific goods during a particular time period. This also tells dispensary owners how fast inventory is selling.
Time-to-Receive.This metric shows how efficient dispensaries stock retrieval processes are. It measures the average time it takes for employees to validate incoming stock, add it to the inventory record, and shelve it in the appropriate place.
Shrinkage.In a highly regulated industry like cannabis, shrinkage is dangerous. Dispensary owners need to be vigilant in recording any discrepancies between recorded inventory and actual physical inventory. Employers who catch discrepancies early can account for shrinkage before regulators come into the picture.
Cost of Carrying Inventory. Holding products in stock costs money. This KPI helps dispensary owners calculate how much capital they spend holding and storing inventory on an annual basis. It allows owners to identify dead and slow-moving stock.
Days to Sell Inventory.This KPI measures how long it takes to sell products in stock. When the number is high, it indicates inefficient inventory movement. When it is too low, stockouts become a risk. Every industry has its own average days-to-sell figure, cannabis included.
Maximizing dispensary efficiency requires gathering this data and acting on the insights it offers. This is only possible with specialized dispensary point-of-sale (POS) systems that adhere to the industry’s rigorous compliance standards on a state-by-state basis.
Invest in a Purpose-Built Point-of-Sale Solution
It takes more than drive and ambition to implement efficient inventory management in the dispensary environment. Dispensary owners need to deploy technological solutions that address the unique nature of the regulated cannabis industry.
This means investing in a POS system that auto-populates inventory database fields, consolidating sales data into a compliance-ready format. Dispensaries that collect high-quality sales data are able to manage growth while empowering their employees to continuously improve.
BenCurren is the Founder of Green Bits, the nation’s leading retail management and compliance platform for the legal cannabis industry. Founded in 2014, Green Bits helps legal cannabis retailers run compliant, operationally efficient and growing stores. The platform serves more than 1,000 cannabis retailers across 13 states and processes more than $3 billion in sales annually through its point-of-sale platform. In 2008, Ben co-founded Outright, an accounting program used by businesses for freelancers and consultants, that web-hosting company GoDaddy acquired in 2012. Ben is a frequent commentator in national outlets about tech, trends, business issues, and state and federal policy and regulation in the legal cannabis industry.
Green Bits provides smart management solutions that help cannabis retailers maximize performance and make better business decisions. Our robust retail platform – with automated state-by-state compliance, inventory control, and personalized insights – enables owners, managers, and budtenders to run, protect, and grow their businesses with ease. The company serves more than 1,100 cannabis retailers across 13 states and processes more than $3.5B in cannabis sales annually. Visit Green Bits for industry resources.
NCIA Committees: Quarterly Update And A Look Ahead
NCIA committees are an opportunity for members to get directly involved in specific industry issues and sectors. These volunteer-driven efforts engage members’ expertise and passion to drill down in areas of expertise and passion to effect change, provide professional development opportunities, and develop best practices and guidelines that will shape the future of our industry.
We recently checked in with these various committees to learn more about what they’re up to and what projects they’re working on this term. Get updated on their activities below.
Scientific Advisory Committee (SAC)
SAC is comprised of practicing scientists, physicians, and other scientific field professionals. SAC’s vision is to disseminate educational materials to NCIA members on scientific topics in the cannabis industry and to advise other NCIA committees as they work to develop standards and guidelines, ensuring that any formal recommendations produced are scientifically sound, sustainable, and legitimate.
SAC is currently working on five projects, all of which are in the outline or first draft phase:
1) Blog on the science behind why ‘sativa’ and ‘indica’ are no longer the best way to classify cultivars.
2) White paper on how cannabis may help the opioid crisis with a review of scientific studies that show how cannabis can be an alternative for pain management.
3) Blog calling doctors to action in the cannabis industry and why it is important for doctors to get involved.
4) Blog on the vaping crisis from a physician’s point of view. 5) General audience and technical white papers on the Endocannabinoid System.
Marketing & Advertising Committee (MAC)
The MAC coalesces the talents of 20 of the industry’s top-tier marketing and communications professionals around three focus areas: Education, Advertising Access and 2020 political goals. We use our personal, professional and business skills and networks to help build a responsible, legal cannabis industry. The committee is producing best practices, webinars, workshops and social media campaigns to aggregate and generate support from NCIA members, the public, media, government and business leaders.
In our first quarter, our Education Sub-Committee began creating a Speakers Bureau to provide qualified experts for conference organizers and media who will address topics of interest and concern in the industry.
Our Advertising Access Sub-Committee is completing best practices for advertising, making presentations to media groups and expanding Advertising/Labeling Do’s and Don’ts from five states to all legalized states.
Our 2020 Sub-Committee is driving awareness around policy change through panel presentations, preparing a campaign supporting pro-cannabis candidates and is encouraging professionals from the cannabis industry to run for office.
Cannabis Cultivation Committee (CCC)
We are working on producing our first podcast episode, which will feature top-notch farmers who are doing great work employing sustainable practices in indoor facilities.
There will be more podcast episodes to come on other hot cultivation topics.
State Regulations Committee (SRC)
The State Regulations Committee has been hard at work on a number of exciting pieces of work-product that should be available soon. For example, we hosted a webinar on December 3, 2019, in which the expert members of the Committee break down what operators need to know about Michigan’s adult-use market’s rules before it launches in 2020.
The State Regulations Committee has work-product in the pipeline on a number of topics of great importance to members. That includes a recurring guidance series on social consumption in markets across the nation, posts analyzing challenges in local/municipal regulation, a focus on the crucial questions of promoting social equity, and much more.
Cannabis Manufacturing Committee (CMC)
The Cannabis Manufacturing Committee is focusing on reviewing existing business practices and state regulations of concentrates, topicals, vaporizers and, edibles ensuring the manufacturing sector is helping shape its destiny. In this approach, we have published our first blog using lessons learned from the e-cig sector. We are also engaging with NCIA’s Safe Vaping Task Force.
CMC has created three sub-committees; GMP (Good Manufacturing Practices), Testing (from the operator’s view), and Nomenclature (providing clarity to industry language). GMP has its first draft complete and will be ready for publication in November. Nomenclature has a concrete draft to review for publishing its first part of a multi-piece series.
Packaging & Labeling Committee (PLC)
The PLC has 4 subcommittees: Honesty & Labeling, Sustainability, Security, Next Generation Packaging. Each subcommittee has set a goal of producing 3 or more blogs and 1 webinar. We have a very motivated and strong group this year. Our biggest vision for the year is to use our data, blogs, white papers, webinars, and PLC members’ knowledge to create a document reflecting the industry views on what federal policy should be around packaging and labeling.
The Retail Committee is working on a compilation of SOPs for retail compliance to turn into a white paper and webinar series, combining efforts from various retailers in several states/markets in order to be most useful to the national audience.
Facilities Design Committee (FDC)
As a new committee, we have established a mission statement: To provide access to resources for the NCIA community and regulators that will inform the design and use of GMP-driven, sustainable and operationally efficient facilities to position our industry to compete in the global marketplace.
We have established two sub-committees: Standards and Sustainability. The Standards Sub-Committee is linked through membership to ASTM’s D37 committee on cannabis.
Banking & Financial Services Committee (BFSC)
Our vision is to provide reliable, actionable and current information to NCIA’s members via committee member videos and a monthly newsletter. The committee will also be coordinating “NCIA Panels” at Bank and Credit Union conferences throughout the country to spread awareness to the issue and bring these institutions closer to the industry.
Lastly, the committee will be contributing language to the Policy Council for revision of the current version of the SAFE Act.
We will keep the NCIA updated as the Bank and Credit Union panels are confirmed. The committee will continue to pair any operator with the best banking option based on a myriad of factors, free of charge.
Member Blog: Youth Safety is Imperative to the Future Success of the Cannabis Industry
by Joan Irivine, Co-founder and CEO of ResponsiTech
The House Judiciary Committee recently passed the historic Marijuana Opportunity, Reinvestment and Expungement (MORE) Act in a 24-10 vote. After weeks of declining cannabis stock prices and layoffs due in part to counterfeit vaping issues, this vote provided a much needed, bipartisan boost to the industry. However, we need to remember that this is only the beginning of this process and there is still much to be done for our industry to be successful.
For example, this week, the legislators expressed both support and concerns about de-scheduling cannabis, but there was one consistent theme expressed by several of the committee members – youth safety. Representatives Doug Collins (R-GA), Tom McClintock (R-CA), Lou Correa (D-CA), Karen McBeth (R-RI), Debbie Mucarsel-Powell (D-FL), Sheila Jackson Lee (TX-D) and many more expressed valid concerns about youth safety.
As we all know, there have been many challenges for the industry and it seems that we are always reacting to change rather than being proactive about it. However, we now have the opportunity to lead our community when it comes to improving youth safety–especially online youth safety.
Online tools such as parental control filters are already offered by web browsers, Internet Service Providers (ISPs), firewall proxy servers, search engines, and even computer operating systems. Meanwhile, special plug-ins, toolbars and filtering software are widely available. These options are also commonly used to moderate kids’ Internet use in schools, libraries and other public places. However, even conscientious parents equipped with these tools can’t do it alone. Cannabis companies have a responsibility to label their sites that are unambiguously recognizable by parental control systems to reduce access by minors.
One of the issues in making website labeling mandatory is the fact that each state has different regulations. In addition, domestic laws do not apply internationally. As a result, websites operated by foreign companies cannot be required to comply with another country’s, state, or provincial labeling requirements. However, if international cannabis businesses and bloggers adopt a voluntary standard parental filtering label, proactive industry self-regulation can accomplish what governments can’t.
With parents implementing parental filters, and the industry installing standard parental controls, we can work together to reduce children’s access.
Moving forward, what does ResponsiTech recommend for companies in the cannabis industry? To start:
Continue to use self-affirming age gates for initial entry as a secondary safeguard.
And of course, use an age verification service for any purchase; including both online and delivery services.
Let a qualified marketing compliance expert conduct an audit of all of your brand’s Internet and social media profiles.
Like it or not, media, parents, and legislators consider vaping THC and nicotine as the same issue, even though minors obtain THC products from the illegal and counterfeit markets. Licensed e-cigarette retailers use various forms of age gates and verification to prevent youth access. We suggest that the cannabis industry incorporate policies that we established for another industry and Juul has included in its new marketing policies:
Do not feature images or situations intended for a youth audience.
Campaigns depict appropriately aged individuals.
Do not use cartoons, caricatures, or other designs aimed at attracting minors.
Ensure responsible placement of our product designed to limit exposure to an underage demographic.
Support and comply with all federal and state regulations to prevent sales to minors – this includes stringent third-party age verification for online sales.
Use social media responsibly to ensure content is targeted to adults while limiting engagement by youth.
Our industry needs to establish its own standard online youth policies before our legislators do. Let’s take the lead and make it happen.
I have written several recent articles about Online Youth Safety which provide more details:
Joan Irvine, ResponsiTech Co-Founder & CEO, brings over two decades of policy development, government relations, and advocacy for online child protection in ‘high-risk’ industries to the cannabis industry. She successfully spearheaded an international award-winning parental filtering label and worked with First Amendment, Internet Security, and Privacy attorneys and international law enforcement to establish online child protection. Learn more about us on our site, LinkedIn and Facebook.
Member Blog: Cannabis Business Security – Going Above and Beyond
In 2018, Sacramento CBS reported crooks stole $80,000 worth of cash and cannabis products from TotalLeaf Inc. after circumventing the facility’s alarm system and video surveillance technology.
Christopher Cohen, owner of the Sacramento-based cannabis manufacturing and distribution company, told the news outlet his security plan passed muster with state and local authorities, but noted the company upgraded its security after being robbed. The edibles-to-oils manufacturer has added steel doors, additional security cameras, alarm systems, fences and bolted-down safes. The firm also hired a private security company to watch over the property 24 hours a day, seven days a week.
Commercial cannabis businesses, like TotalLeaf, are prime targets for burglary, robbery and internal theft. This is not surprising in a cash-based industry with a flourishing black market. Commercial cannabis business operators must maintain stringent and customized security strategies that go beyond state and local minimums to fully protect their businesses from crime.
In states where cannabis is legal, the first step toward acquiring a commercial cannabis license is meeting state standards. However, a growing number of local communities are expanding on these bare minimums and applying a wide-ranging set of additional security requirements for commercial cannabis businesses. Emerging local regulations incorporate specific design elements, lighting standards, manpower requirements, and heightened camera and alarm standards.
Regulations vary by municipality. Regarding design elements, local entities typically require the use of door-redundant screening areas, internal/secure loading areas, and reinforced product storage rooms. A minimum exterior lighting standard of 1.5-foot candles of LED, white luminance, and prohibitions against up-lighting and light trespass are also common. Some localities even demand one or more armed, or unarmed, security guards on the premises, during business hours and sometimes around the clock.
Gaps remain though local regulations are more stringent, says Matt Carroll, President of Carroll Consulting and Director of Compliance for Seed to Sale Security. Carroll, who develops security plans for cannabis operations, finds, “There is little value in meeting state (and local) standards just to check a box for compliance. Operators seeking to enjoy peace of mind and asset protection will approach security planning from two different perspectives: technical compliance and actual security. Existing regulations do nothing substantive to deter burglary, robbery, or to protect the safety of those working within or visiting a commercial cannabis business.”
But what does going beyond security requirements actually look like? This article investigates how cannabis operations can better harden their security by voluntarily meeting additional requirements for security cameras, access control and alarms.
More Security Camera Coverage
State-level cannabis regulatory bodies typically demand a basic level of surveillance coverage for access points and limited access areas, which are spaces where operations process, store or transfer cannabis goods. Most local authorities expand this requirement to include security camera coverage on all sides of the building, adjacent thoroughfares, and more thoroughly throughout the interior.
States also set a minimum resolution for security cameras. For instance, California requires a minimum resolution of 1280×720 pixels (e.g. 1 megapixel). Herein lies the problem: Any minimum megapixel standard predisposes operators to meet the minimum standard and little else. But, doing so may not achieve the goal of “certain identification” as expressed in the regulations.
Security camera megapixel ratings mean virtually nothing. For certain identification to take place, companies must also factor in the distance of the targeted viewing area from the camera placement, and the camera angle, lens quality and compression rates.
For positive identification in idyllic lighting conditions, security cameras must meet a minimum standard of 60 pixels. For night mode, positive identification demands up to 90 pixels per foot. This is what matters: pixels per foot (PPF) at the target, not the camera resolution. IPVM, an independent research group, has developed a great video to drive these points home.
Regulatory agencies hoping to get footage of value from crimes in cannabis settings would be wise to adopt a PPF standard over an overly simplistic megapixel standard.
Better Access Control
With access control, state regulations typically require walls, doors and commercial-grade locks. They also expect operators to maintain a log of visitors and those accessing video surveillance systems. More stringent access control regulations are few and far between.
Though reasonably priced biometric and electronic key systems are readily available, hand-written logs meet most state and local regulations. However, manual logging is unreliable. Using a manual system, coupled with PPF-ignorant video standards, puts access control on the honor system.
Responsible operators fill the gaps regulations ignore. These business owners reinforce storefronts and roll-ups with K4 or better rated bollards to deter vehicular intrusion. They install solid-core doors at all exterior access points and at internal doors leading to limited access areas. They equip doors with pry-resistant latch covers and automatic closing devices. They reinforce shared walls to prevent tunneling and they fortify product/currency storage rooms.
They also use electronic access controllers that limit staff to areas of relevant roles and to the days and hours when employees work. They reduce opportunities for human complacency to override their access control strategies from initial design, to technology, to supporting and enforcing policies.
Improved Alarm Systems
Short of mandating that operators install an alarm system that is operational after hours, most states establish no standards for monitored intrusion alarms at commercial cannabis businesses. This is another area where applicants can fill in the gaps.
Some jurisdictions mandate a specific Underwriter’s Laboratory (UL) standard for intrusion detection and robbery alarms.
Beyond meeting UL standards, it’s also important to extend the focus of an intrusion alarm system beyond exterior access points. Offenders can come in the form of stowaways concealing themselves inside until closing. They may be employees accessing areas they shouldn’t or third parties who find less expected ways to access the premises, such as tunneling through walls or ceilings and misappropriating ventilation shafts.
A properly designed alarm strategy protects against these situations by establishing various partitions, allowing for “home” and “away” modes, and setting aside areas for management-only access. Even while occupied by workers, certain areas of the premises, such as product or currency storage areas, should remain under alarm monitoring.
Finally, a thorough alarm system abides by UL Standard 681, incorporating contact points at every door; sufficient motion detectors to detect movement in any direction, in any area of any room; glass break sensors; ventilation protection; and panic alarms at vulnerable positions, such as the entrance, loading areas, product/currency storage areas and the management office.
What more can you do?
Responsible cannabis operations also seek to elevate the safety and security of the entire industry.
This includes lobbying at the state level for severe criminal penalties against those engaged in the black-market trade. Public acceptance of cannabis often leads prosecutions to fall flat as jurors shrug about black-market activities. Black-market operators also view the limited penalties as a cost of doing business. But, as long as the government handles black-market cannabis retailing with kid gloves, criminals will target legitimate operators for their stockpiles of Grade-A product.
It also includes lobbying at the local level for more stringent security standards. Offenders who reap the rewards time after time an area will continue to target that area. But if cannabis business owners’ partner with local authorities to tighten up safety and security standards, their businesses become an environment where the juice is not worth the squeeze for offenders, ultimately driving their crimes to regions with less formidable targets.
Finally, it includes teaming with proven security experts who work in the cannabis space; following their best practices, developed based on real-world experiences; and teaching others in the industry to do the same.
Patrick Chown, is the Founder and President of Seed To Sale Security, a national cannabis security company offering security consulting, security plans, and security system installation to customer’s in 30 states. With cannabis-specific technology and a proficiency with regulatory compliance state by state, Seed To Sale Security makes sure your cannabis business stays safe, secure, and compliant.
Video Member Spotlight: AgriScience Laboratories
In this month’s video member spotlight, step into the cannabis and hemp testing labs of AgriScience Laboratories, based in Denver, Colorado. AgriScience Labs was created as a merger of two laboratories: CMT Laboratories and Terra Health Care Labs. CMT had been operating since 2011 and was known as a leader in science and customer service during that time. Terra Health Care Laboratories (THCL) was the first certified testing lab in the United States, and they were known for state of the art equipment, methods, and facilities. Learn more about the company’s testing methods and values from Frank Traylor, Founder & CEO, and Laboratory Director Claire Ohman.
Committee Blog: Vaping-Related Illness – Applying Lessons Learned From The E-cig Market
by Ramon Alarcon, Wellness Insight Technologies, Inc. NCIA’s Cannabis Manufacturing Committee
THE ISSUE
In recent weeks, a growing number of respiratory illness cases associated with nicotine or cannabis vaporizer cartridges have been reported, leading to increasing concern among cannabis cartridge consumers, regulators, and medical experts. The vast majority of these reports are linked to cartridges that were produced and obtained in the illicit and unregulated market, or that were adulterated by consumers. The small number of cases that have so far been associated with legal cannabis products have not shown definitive links to those specific products.
Furthermore, similar cases of respiratory illness have not been reported in Europe, where the regulations governing vapor products are different. Even if, as we suspect, it is confirmed that the source of the current problem is limited to illicit-market products, there are valuable lessons to be learned to ensure the future safety of licensed vapor products and preserve our ability to promote vapor products as a viable and beneficial method of consuming cannabis.
Although cannabis vaporizers and nicotine e-cigs are not the same, there are important commonalities that we can learn from given that the nicotine e-cig market has been around for over a decade. First, it is essential to acknowledge the differences. Although some people view all vaping through the same lens, vaping cannabis and nicotine are as different as drinking alcohol and coffee. The formulations are vastly different in their chemical compositions, and usage patterns of cannabis consumption are far less intensive than those of nicotine e-cigs, which tend to be used many times throughout the day. Notwithstanding those differences, the principles of operation are the same; a heating element is generally used to aerosolize a stored liquid without combustion.
THE RISK
Moreover, in both cannabis and nicotine cartridges, the target active ingredient is typically combined in formulation with other organic compounds. These include glycerol (VG) and propylene glycol (PG) that are more commonly used in nicotine-containing cartridges and dictate the viscosity of the liquid. And flavorants, typically terpenes in the case of cannabis, are included in the formulation to provide particular taste and aroma characteristics.
Nicotine e-cigs have had numerous public health concern moments, some real and some manufactured, but one particular issue is especially illustrative to cannabis manufacturers. In the early days of e-cigs, some smaller e-cig manufacturers added diacetyl to their formulations in order to create flavored e-liquids with buttery notes. Those manufacturers assumed diacetyl to be safe because it is classified as GRAS (Generally Recognized As Safe) by the FDA (we eat it on our popcorn for goodness sake). Nevertheless, that GRAS classification was provided for ingestion, not inhalation. In fact, diacetyl had already been discovered to cause bronchiolitis obliterans, also known as “popcorn lung,” in popcorn factory workers in the early 2000s. And although no one was reported to have been hospitalized or died, the discovery of diacetyl in nicotine vapor products cast a cloud over the entire e-cig industry, even for those companies who employed scientists, practiced good product stewardship and developed internal lists of ingredients that led them to only include ingredients that had low inhalation toxicity risk profiles. This example illustrates that it is in our interest to ensure that all cannabis vapor product manufacturers understand that compounds that are characterized as GRAS are not necessarily safe for inhalation purposes and that an additional level of risk analysis must be performed.
THE SOLUTION
We must ensure vapor product safety because the potential of cannabis vapor products to deliver the necessary medicine to patients without the harmful byproducts of combustion must not be undermined by industry missteps or the loss of public trust. Again, using nicotine e-cigs as an example, we know that vaporization can eliminate the byproducts of the combustion of plant materials. In one study, approximately 1,000 times less harmful chemicals like carbon monoxide, formaldehyde, and acetaldehyde were measured in e-cig vapor when compared to combusted cigarette smoke¹. Designed with the proper materials, protocols, and formulations, nicotine vapor products can have a very low-risk profile relative to combusted cigarettes. In fact, one nicotine vapor product has been evaluated as low risk enough to have been approved by the MHRA (UK equivalent of the FDA), thus adding to the evidence that, generally speaking, vaporization can be considered safer than combustion. Of course, confirmatory studies need to be done with cannabis but combined with the ability of vapor products to deliver fast-acting, precise doses of formulations that can be tailored to an individual’s needs, the importance of vaporized cannabis as a low-risk method of consumption is real.
With this in mind, we, as an industry, must develop standards and best practices. Doing so will build consumer trust while also providing guardrails that still allow for innovation. Other industries have done precisely this, including the fragrance and food additive industries. Moreover, if we do not develop our standards and only react to state regulations, which can tend to lag, we run a higher risk of similar problems in the future. A few simple principles can be applied to this problem.
Test what goes into your body. In the case of vapor products, that is the vapor. In other words, we should test the aerosol, not just the liquid that goes into the cartridge. Labs in the e-cig industry already do this type of testing, and the methods can easily be adapted to cannabis products.
We should develop a list of analytes that have low inhalation toxicity risk profiles.
Stick close to what nature gave us. People have been smoking cannabis for thousands of years, and we have not seen similar health problems. As a matter of fact, we can say that the risk profile for cannabinoids and terpenes in the amounts typically consumed via smoking cannabis is low². However, we do know that some compounds that naturally occur in cannabis can pose a safety risk at high enough concentrations. So until we have more data on inhalation toxicity for all terpenes and minor cannabinoids, we should practice caution when creating novel formulations. In other words, try to remain close to the amounts found natively in the plant in order to preserve the same risk profile.
Whether or not required by state regulations, be transparent, and list all ingredients. This will not only help consumers better understand what ingredients are safe — it will help capture their long term trust.
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1 – Rana Tayyarah, Gerald A. Long, Comparison of select analytes in aerosol from e-cigarettes with smoke from conventional cigarettes and with ambient air, Regulatory Toxicology and Pharmacology (July 31, 2014)
2 – Pletcher, et al., Association Between Marijuana Exposure and Pulmonary Function over 20 Years, 307 JAMA 173 (Jan. 2012).
Former FDA Commissioner Calls For Descheduling And Federal Regulation
by Andrew Kline, NCIA’s Director of Public Policy
With uncertainty about the proximate cause of the vaping crisis continuing to roil state regulators, and state governors trying to determine the right short-term solution to protect the public health, the former Commissioner of the FDA has a longer-term plan. Former Commissioner Scott Gottlieb is rightly calling for descheduling and federal regulation in an op-ed in the Wall Street Journal. NCIA made the same argument in our Policy Council’s recent white paperon regulating cannabis post-legalization and in our public responses to the vaping crisis.
While no one yet knows for certain what has been causing these injuries and deaths, it is readily apparent that unregulated and untested products are extremely dangerous and continue to infiltrate the market. Just last week, a mother and her two sons were arrested for allegedly illegally filling over 30,000 vape cartridges in Wisconsin from their home. That burgeoning illicit and untested market poses real risks to American consumers. And the best way to eliminate the illicit market is to create opportunities for consumers to purchase products from legal dispensaries and market awareness of the benefits of purchasing from those regulated markets.
For example, if consumers know that legal dispensaries are selling regulated products that have been tested to improve consumer safety, then they will be more inclined to stop purchasing from the illicit market. People already know that when they step foot into a grocery store, the foods they eat and the drugs and dietary supplements they take are part of a supply chain designed to improve safety. That is because they have placed trust in the USDA and FDA. And no better way to build consumer confidence, than to make sure that trusted federal agencies are in charge of promoting public health in the cannabis industry.
We can’t continue to leave the cannabis industry in a state of uncertainty. It’s time to deschedule, regulate at the federal level, and require mandatory lab testing. We must displace the illegal, unregulated and untested illicit market. There is no plan B.
Andrew Kline is Director of Public Policy for NCIA and Chair of NCIA’s Safe Vaping Task Force
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Faai Steuer is VP of marketing at Cova Software, the fastest-growing cannabis retail POS in North America. An entrepreneur at heart, she has a passion for growing startups and building brands. With 20 years of marketing experience in CPG and retail tech, she lends her knowledge and best practices to help cannabis entrepreneurs in the U.S. and Canada open their first store and grow their business through vital thought leader content. 
With more than 15 years of experience working and teaching in chemistry laboratories, Meghan McCormick, Ph.D. is the Senior Chemist and a part of the Herban Legends team at 
Allison Kopf
As a former Federal bank regulator and seasoned consultant, Angela’s knowledge of regulatory compliance, risk management and investment advisory services has established her reputation as a leading resource within the financial consulting industry, spanning consumer protection and anti-money laundering statutes, fraud and cannabis banking issues. 
After studying Russian affairs and working as a political consultant, Sean Donahoe co-founded the California Cannabis Industry Association. He served as its Deputy Director through 2014 when he transitioned to consulting for investors and operators, communicating with public stakeholders, serving on local government committees, and advising industry trade groups. He holds an MSc in Government from the London School of Economics and is CEO of Sungrown Developments Inc., an advisory firm and holding company in Oakland, California.
In his role as 
Patrick Chown
