Just when you thought you had a grasp on the tangled web of regulations governing California’s legal cannabis market, the packaging rules are changing again on January 1, 2020.
That’s right around the corner… so if you are a manufacturer, grower or producer, you need to pay attention or face consequences that could include product seizure, loss of revenues, and delays in getting compliant packaging on the shelves.
In a nutshell, current regulations in California allow that either the product must be in a child-resistant container, or it must be placed in a CR exit package.
New regulations, taking effect on January 1, mandate that all products must be in a certified child-resistant container. Moreover, edible products must be in a child-resistant re-sealable package.
While this will allow dispensaries to start offering interesting, branded shopping bags, it means that product packaging must be compliant and in place by the first of the year.
Accordingly, if your packaging currently does not meet the upcoming regulations, you are rapidly running out of time to replace it with new, compliant solutions.
Unfortunately, the fact is, it takes time to get new packaging designed, printed, shipped, fulfilled, and placed on shelves… Lots of time.
Let’s take a look at a typical timetable:
Creative
Getting your new packaging designed, revised, and approved. 2-4 weeks.
Sampling and Refinements
Once the design is complete, you’ll receive samples, which takes an average of 2 weeks.
Then, your team will analyze the packaging, and if necessary, the designers will make any refinements. 1 week.
Mass Production
Printing the packaging can take up to 8 weeks, depending on the supplier, season, and complexity of packaging.
Transit
A lot of printing these days is done overseas, where costs are lower. However, shipping times are much longer and can take 6-8 weeks to arrive. This includes loading and unloading, customs clearing, and ground transport.
Fulfillment
Getting your products into your new packaging takes time. Allow 1-2 weeks for this task, depending on the quantity and complexity.
Transit to Distributors and Stores
Finally, you’ll need to get your product to distributors and stores. Count on at least 1 week for each.
Summary:
If you add up the various steps – each critical to the process – you will see that your project can realistically take 20-26 weeks. That’s up to 6 months!
There are ways to trim this timetable, but inevitably, they start adding expense to the project. Accordingly, the best practice is to start the process at least 6 months before you need your packaging on the store shelves.
Granted, this schedule is for producing a premium packaging system. There are lower-cost solutions available, but these inevitably make your product look cheaper. This is especially important if you want to build an upscale brand and position your product as a luxury item.
The best advice is to contact a packaging professional as early in the process as possible and discuss your options, costs, and timetables.
Don’t start thinking about packaging a few weeks before a regulation change… get ahead of the game and start the process early to enjoy the most options, best results, and lowest costs.
CEO Kary Radestock
Kary Radestock, CEO, launched Hippo Premium Packaging in March 2016 offering an array of services to the cannabis market, including: Marketing Strategy, Brand Development, Social Media, Public Relations, Graphic and Web Design, and of course, Printing and Packaging. Radestock brings over 20 years of award-winning print and packaging expertise, and leads a team of the nation’s top brand builders, marketers and print production experts. Hippo works with businesses looking for a brand refresh or an entire brand development, and specializes in helping canna-business get their products to market in the most beautiful and affordable way possible. Radestock’s Creative Collective of talent and experts, allows her to offer world-class solutions to support the unique needs of the Cannabis Industry.
Member Blog: Cannabis Seed To Sale Transparency Provides Solution To Vaping Illnesses
by Jessica Billingsley, CEO of Akerna NCIA Board Member
The day I sat beside the MRI while my daughter’s mystery neurologic symptoms were investigated, I began my crusade for product transparency. I didn’t know then that transparency in products would become life’s work. On that day, I only knew my daughter risked potential long term physical and mental disability due to unknown causes. I then spent months, which turned into years, hunting for a solution to her neurologic events, which started with an unexplained fever that would sometimes develop into lesions in her brain causing varying symptoms depending on the location of the lesions. Often the symptom manifested as trouble walking; however, one heartbreaking time, she slurred her words and couldn’t remember many basic components of speech.
She was diagnosed with recurrent ADEM, an autoimmune demyelinating illness that doctors didn’t understand and were at a loss to cure. The western medicine approach didn’t have an answer, and I wasn’t really surprised. Western medicine’s approach of diagnose and drug (or diagnose, surgery, and drug) rarely takes into account what we put in and on our bodies. And my gut told me I needed to take a closer look at foods and products to find the source of her illness. This is a lot easier than it sounds. We actually know very little about what’s in our products. There’s an assumption that harmful ingredients or additives have to be disclosed in products, but they don’t. My journey into product transparency — looking at ingredients, additives, and the chemicals used to make our products — led me to find a solution for my daughter that has resulted in her being 7 years in remission and counting.
My passion for saving my daughter and my tenacity in peeling back the layers in our consumer product goods supply chain left me with a sobering conclusion: Consumer transparency and public safety is not at the forefront of our current consumer goods regulations. We don’t have any requirements to give consumers transparency regarding what’s fully in the products we eat or absorb. That perspective is what inspired me to launch the first seed-to-sale tracking technology in 2010. I believed then that cannabis patients needed to know how their medicine was grown and the public needed assurances that we can identify the regulated, tested medicine from the illicit alternatives.
The number of vaping-related illnesses keeps climbing. The crisis has claimed at least six deaths and there are over 450 cases in 36 states and the U.S. Virgin Islands. And best, early thinking is additives – cutting agents, potentially Vitamin E – may be the culprit. I am reminded clearly of my daughter’s early years and my hunt for product transparency. We’ve done a lot of good with seed-to-sale tracking in cannabis. The regulated cannabis industry has the most transparent and accountable supply chain of any consumer packaged good.
For nearly ten years, my team has refined a technology that pinpoints most every aspect of every gram of cannabis tracked in our system — the plot of land it was grown on, soil nutrients, water and light intake, additional ingredients for edibles, when it shipped out and in what batch, and finally where and when the product was sold and to what patient. The exactness and granularity of this data enables prompt reactions in times of crisis that narrows down areas/people of impact, points investigators to probable causes, and importantly allows consumers and patients to make informed decisions.
As much as we do track in regulated cannabis, we need to track more. Most governmental compliance frameworks don’t require additives to be tracked and thus communicated to consumers and patients. We need to make this mandatory in our regulations.*
Consumers and the industry should rally around three things. First, the majority of the cartridges in this crisis were purchased on the illicit market with completely unknown ingredient sources, which gives more reason to legalize cannabis in every state for adult use. Second, legal markets should continue to implement seed to sale tracking compliance as table stakes. And third, we need to make additives information a requirement for cannabis oil manufactured products.
I knew the industry needed a means of monitoring products through its lifecycle and generating transparency and accountability to support the 3P’s — patient, product, and public safety. I know the data in our system has the power to do great good — for science and medicine, for food and agriculture, for communities and tax revenues, for governments’ ability to respond to issues and effectively direct investigations and enforcements. I contend that while the industry is part of the health crisis story today — we are part of the response tomorrow. I am as committed today as CEO of Akerna as I was when I started MJ Freeway; we can give consumers the full product transparency they deserve to make the best choices for their health. It’s what I want for my daughter, and it’s the solution I commit to deliver every day.
Jessica Billingsley is a technology pioneer, solutions creator and industry leader, providing proven compliance software solutions to the cannabis market. She is the Chief Executive Officer of Akerna—the first cannabis compliance technology company to be traded on Nasdaq—making her the first CEO from this market space to bring a company to a major U.S. exchange. Jessica is also the CEO of Akerna’s flagship subsidiary—MJ Freeway. She established MJ Freeway in 2010 and it is the leading seed-to-sale regulatory compliance technology provider and developer of the cannabis industry’s first enterprise resource planning (ERP) platform. Akerna also offers Leaf Data Systems as a government resource for public sector compliance. Combined entities tracked more than $16 billion in world-wide, client cannabis sales to date. She is the first woman ever from the cannabis industry to receive the prestigious Fortune’s “Most Promising Women Entrepreneur Award” and is also recognized as one of Inc.’s “Female Founders 100.” Jessica received a degree in Communications and Computer Science from the University of Georgia and lives with her daughter in Denver.
Akerna’s MJ Platform includes “additives” as ingredients clients can use to communicate to patients any additives in a finished gram of oil. We believe additive ingredients should now be a required data field captured and communicated to patients, and we’re committed to training our existing client base on how to do so.
Watch The Webinar: Cannabis Extractions – Thoughts And Considerations
Learn more about cannabis extraction best practices, techniques, and methods in this webinar recording. Hear from speakers Dan Gustafik, President at Hybrid Tech, and Gene Galyuk, Chief Development Officer at Capna Systems.
Member Blog: What The Cannabis Market Can Learn From The Energy Sector About Overcoming Market Complexity
by Mike Elliott, Business Development Executive at DCM
In an industry where change is a constant, cannabis companies face big challenges when it comes to brand-building, communications, and bringing products to market. The sector’s complexity is only increasing, which is compounded by its continual evolution, along with tight, varied, fluctuating regulations, and in some cases, less-than-informed consumers.
While the path forward may seem uncharted, in fact, similar market challenges exist in other verticals. With the right strategies and tools, these hurdles—including rigid regulatory conditions—can be overcome. If you’re looking for a roadmap for success, look no further than the U.S. energy sector – specifically, utilities.
The recent shift toward deregulated electric and gas markets has created an environment strikingly similar to that of cannabis. Both sectors grapple with strict, unpredictable regulatory governance. Both must comply with state-by-state variances and prohibitive marketing. And both face the challenge of communicating with customers who are often unfamiliar with the sector’s legislation and production processes.
By gaining an understanding of these obstacles, cannabis operators can improve their own market and regulatory navigation. Following are a few key lessons learned from energy.
For both energy suppliers and cannabis providers, regulation and compliance are determined at the state level. State-by-state laws vary widely and become increasingly complex when factoring in additional local and municipal regulations—not to mention continual review and change. This complexity has a direct impact on communications and brand management. Rules on communication and packaging—including, for cannabis, dosage—can diverge greatly and shift quickly. And there are few signs of this framework getting simpler.
Energy suppliers have addressed this complexity through variable, highly responsive communication platforms that can—very quickly and at scale—accommodate unique market requirements.
For cannabis companies, similar success depends on razor-sharp management, including automation of intensive, often spreadsheet-based processes that are manually maintained and prone to error. Robust, technology-driven platforms can now deliver a wide array of materials efficiently and accurately across different markets, all while ensuring airtight compliance with each market’s specific regulations.
New opportunities call for a fast, location-specific response
Both energy and cannabis businesses must be agile and flexible when responding to new market opportunities. In adapting to fluctuating, state-by-state rules surrounding contract terms and conditions, energy providers have learned the hard way how inefficiency and error can delay market entry and reduce sales potential.
Faced with similar circumstances, cannabis producers need the support of automated, location-specific marketing – technology that efficiently allows for customized, regional messaging across multiple markets and channels while ensuring locked-down branding and regulatory compliance.
Perception is everything when it comes to reaching consumers
With deregulation, utility companies realized that many consumers were uninformed regarding the legislative changes and were unaware of product availability and their own ability to shop around. Educating consumers was key – and communicating to them a value proposition that would distinguish each provider’s offering from that of the competition.
While cannabis is not entirely unfamiliar to many consumers, the dialogue around legalization and products remains similarly dogged by a lack of information and general misunderstanding. Cannabis companies must now shift those perceptions and educate potential customers on product safety and use. Producers must look at developing innovative communications supported by tools like automation, multi-channel communications management, and 1:1 marketing. These can help target, personalize, and monitor communications to better connect with consumers.
With little room to communicate, companies need to get creative
Utility companies are highly restricted in not only how they can make changes to billing and service charges, but also how they can market to consumers. The scenario is the same for cannabis companies, though regulations are even more complex and restrictive, with federal prohibition blocking most traditional means of advertising, including social and digital channels.
Cannabis companies can combat these restrictions with genuinely creative thinking backed by a thorough understanding of the rules. That means combining market knowledge with creative expertise in a way that skillfully complies with regulations without breaking them. At the same time, creativity and customization cannot hinder efficiency. The right tools must be in place to make sure everything works together – for example, a platform that lets users customize branded collateral for different segments and channels, allowing for both efficiency and creativity – consistency and customization.
The bottom line: the stakes are too high for non-compliance
Fines for non-compliance in the energy sector can reach into the millions. Likewise, stiff penalties are levied for non-compliance in the cannabis industry. The financial implications can be devastating for cannabis producers – even more so if it comes to relabeling or pulling product from store shelves. To compound the risk, publicized mishaps can deliver a serious blow to consumer confidence for brands trying to win consumer trust. With that in mind, navigating the highly regulated cannabis landscape takes careful planning, constant oversight, and the ability to stay ahead of evolving regulatory requirements.While the opportunity is promising, it requires tools, technologies, and strategies that streamline processes, mitigate risk, and increase speed-to-market. Charting your course depends on careful planning, trusted advice, and experienced partners – along with the ability to learn from those who have been there and done that.
Mike Elliott is a Business Development Executive specializing in cannabis at DCM
From brand strategy and consumer insights to dynamic labeling and POS solutions, DCM helps build, protect, and bring to market North America’s largest cannabis brands. Learn more at http://www.datacm.com.
Partner Blog: Legal Education – The Cannabis Regulatory Rounds Presented by INCBA
The International Cannabis Bar Association (INCBA) is excited to present the fourth iteration of our in-person educational partnership with the National Cannabis Industry Association’s Cannabis Business Summit and Expo.
This year, INCBA is thrilled to showcase a full day set of educational sessions on July 22, 2019 in San Jose, California that sets the bar for legal education in the cannabis industry and offers 6.5+ credits of Continuing Legal Education (CLE) in select jurisdictions. Already renowned for presenting the highest-quality legal education in the legal cannabis, INCBA has continued to refine and enhance our in-person educational offerings, and we have something special in store for our attorneys at NCIA’s #CannaBizSummit this year.
Instead of focusing on substantive topic areas (like IP, finance, or real estate), we have decided to offer a special set of sessions focused on regulatory issues that face each business type that operates in this unique industry. Loosely based on license type, our educational sessions will focus on specific stops on the vertical stream of commerce, beginning with specific issues related to cultivators, moving through multi-state manufacturing and distribution, and then addressing to E-commerce. We will take a close look at the current bottleneck in many jurisdictions – testing laboratories – and at labor and workforce considerations that affect businesses across all the above license types. In short, we are giving you what you need to know to serve your clients in the cannabis industry no matter where their focus lies.
And, just to make sure you get those valuable nuggets of information, we have made sure that every panel features a regulator that can speak directly to the concerns that you must address when advising your client. INCBA has become known for featuring the top practitioners in the country on each of our panels, and now you get to watch them discuss their approach to regulation with the people in charge of enforcement.
In addition, INCBA is excited to present the most substantively and jurisdictionally diverse set of panels that we have ever featured. No more than two attorneys from any given state sit on a panel, which means that we will be covering topics that are relevant across state lines. And, because California’s regulatory system has come online this year, it serves as the perfect foil to compare and contrast differences in jurisdictions, failures and successes of regulatory structures, and the major pain points your clients face – no matter from what state they hail.
To make sure we end the day on the right note, and to ensure that you have the opportunity to create the lasting connections that will serve you throughout your practicing career, INCBA will be hosting one of our signature after-parties at the beautiful Mosaic Restaurant and Lounge at the Sheraton Hotel in downtown San Jose. After a long day of education, come to Mosaic to network with some of the best cannabis attorneys around. The party includes light bites and drinks, as well as Bocce ball and Giant Jenga. Find the panelists you enjoyed the most, see old friends, and make new ones to lay the foundation for a lifelong successful practice in this special industry.
As the first (and only) specialty bar association that exclusively serves the business needs of the cannabis industry globally, INCBA is the hub where cannabis industry lawyers come together to connect with each other, share information, and learn the tools necessary to further their clients’ interests in the legal cannabis industry. As Steve Shain of Hoban Law Group recently proclaimed – “It’s not whether you can afford to be here, it’s whether you can afford to not be here.”
WEBINAR: Streamlining Your Packaging Process and Innovating for the Future
Be sure to join us at NCIA’s 6th Annual Cannabis Business Summit & Expo in San Jose, California, on July 22-24, 2019 at the Wednesday afternoon panel session titled “Cannabis Packaging: Evaluating, Streamlining, & Innovating.” Presented by members of NCIA’s Packaging & Labeling Committee, this panel session will dive into key aspects of cannabis packaging that impact today’s businesses.
Video: Member Spotlight – Anresco Laboratories
In this month’s video spotlight, learn about how Anresco Laboratories went from an analytical lab serving the baking industry to getting involved in cannabis testing in 2015. At Anresco, they now conduct metals testing, microbiology, chromatography, HPLC, and are heavily involved with cannabis advocacy efforts!
Member Blog: How To Build A Successful Hemp CBD Company
The legalization of industrial hemp in December, 2018, has opened the door to a host of new products and processes that have the potential to enhance health and technological innovation while being environmentally sustainable and most importantly, highly profitable.
Entrepreneurs who want to stake their claim in the hemp space face some of the same challenges as others starting a new business, but other challenges are unique. Like anyone starting a business, you must understand your market. Right now hemp’s “low hanging fruit,” cannabidiol (CBD), is gaining popularity. Established brands such as Bluebird Botanicals, Endoca, and CV Sciences – which recorded $48.2 million in revenue for 2018, an increase of 133 percent over the previous year – are taking off.
Growth like this explains why predictions for overall expansion in the CBD market are meteoric, with cannabis industry analysts The Brightfield Group predicting it could hit $22 billion by 2022. But in order to get on that ride you will need to understand CBD consumers, prepare to meet their needs, and plan to expand their awareness of ways your product or service can help them. You will also need capital.
Stand out to investors
Once you have a good idea of the market and demand, you will be ready to start thinking about funding your company. It used to be that a passionate founder with a good pitch deck could attract investors after one meeting, but times have changed. Investors want cold, hard data to back up your claims, and they will want better analysis than your gut feeling, and a larger sample size than your friends and family.
Your pitch needs to not only support your market analysis with data, but differentiate your brand from others competing for the same investor dollars. The business model and differentiation need to encompass:
Revenue source
Where will you sell your product? Options include wholesale, white label, and retail through either online, brick-and-mortar store or a third-party vendor, or a combination of those.
Product category
Will you market your product as a cosmetic, pet supplement, nutraceutical, specialty beverage, functional food or something else? You will need specific information about the market for that product category and what roles CBD can occupy in them.
Product quality
What extraction methods are you using? Is your product purity third-party verified?
Are you using the highest grade of CBD isolate or distillate in your product line?
Product sourcing
Where does your hemp and raw materials come from?
How hands-on are you with your suppliers?
How stringently do you track your product from farm to consumer?
Vertical integration is increasingly seen as the optimal approach to CBD supply chain management. Producers such as Shi Farms in Colorado specialize in vertical integration.
Cannabinoid science:
Are your product and marketing firmly grounded in the best available science supporting the uses of CBD and other cannabinoids?
Product story
Do you have a compelling narrative that explains your personal investment in making the product available to consumers?
Does your marketing comply with FDA standards?
Some things you should not DIY
The issue of FDA compliance deserves special attention and professional support for CBD businesses. It is one of a few areas where hiring a consultant can make the difference between success and failure.
Your outward-facing communications will have to walk a line between including all the required elements without making any claims that violate FDA regulations. Cosmetic and nutraceutical labeling must list all ingredients, while nutraceuticals also need to provide a dietary supplement facts panel. Structure and function claims can be particularly tricky. CBD is not classified as a drug and therefore verbs such as treat, diagnose, prevent and cure are absolutely off limits. The language has to convey that some consumers use CBD in certain ways without employing medical terms or guaranteeing any particular outcomes. You can do your own research on compliance but it is always wiser to hire a consultant who specializes in this area.
As you get past the initial planning and push to get your business started, you will find there’s no substitute for long-term planning. Collecting ongoing data on the purity and potency of your product, the costs of raw materials and effectiveness of your marketing will enable you to make mid-course corrections in your projections so that your business and revenue grow.
Long-term planning based on robust data will ultimately make a huge difference for your business. I predict a failure rate of about 70 percent for CBD companies over the next five years. Whether they are underfunded, lack an effective management structure or are out of compliance with FDA standards, many new businesses won’t be able to compete with major players like Kraft, P&G and Unilever as they enter and begin to dominate in the CBD space. But some of those starting a CBD business now will not only learn how to stay afloat, they will prosper to the point that those major players will come knocking at their doors with generous offers to buy. Build in a pathway for your desired exit strategy and have all of your operating agreements and documents at the ready. If this looks like a possibility, or you want it to become one, you will need top notch, cannabis-savvy representation like McAllister-Garfield in your corner.
Learning and networking
If you want to make a deeper dive into starting or building a CBD or hemp concern, The Hemp Biz Conference is here for you. During symposia around the country you can learn about industry trends in an interactive forum, and get access to experts in discussion and workshop sessions designed for everyone from beginners to established professionals. Scheduled tracks – agriculture, processing, manufacturing, extraction, textiles, biofuels and plastics – allow you to focus your time where it matters most to you and your business. The Hemp Biz symposia attract the hottest hemp companies, investors and entrepreneurs in the industry so you will leave with connections that will help you grow for years to come.
Christie Lunsford, CEO, leads The Hemp Biz Conference’s charge into creating a sustainable hemp industry by bringing together the best experts, entrepreneurs, farmers and scientists in the cannabis space in the Hemp Symposium Series.
Before launching The Hemp Biz Conference in 2018, Christie founded Endocannabinioidology, a consulting firm providing cannabis science, FDA compliance support, technology and education management to businesses and individuals in the cannabis and hemp communities, where she successfully wrote or advised on winning cannabis license applications in several states. She has also overseen operations for a producer of horticultural LED technology, helped formulate and launch the first retail channel of CBD nutraceutical products derived from industrial hemp in the U.S, and was named Cannabis Woman of the Year at the 2015 Cannabis Business Awards. In addition to producing The Hemp Biz Conference’s Hemp Symposium Series she is a regular contributor on the business of hemp for Green Entrepreneur.
CBD (cannabidiol) is everywhere right now. Front page articles proclaim its virtues and ubiquity. New retailers announce their intentions to sell CBD products almost every day. But a lot of the media coverage of CBD is inaccurate or misleading. Below are five common misconceptions about the legal status of CBD.
CBD is legal in all 50 states
Unscrupulous promoters like to claim that the 2018 farm bill has fully legalized hemp as well as any and all derivatives of hemp. That’s not true. The 2018 farm bill exempted hemp and its derivatives from the definition of marijuana under the federal Controlled Substances Act (CSA), but it does not require states to do the same. Furthermore, under the 2018 farm bill, states are permitted to prohibit hemp production and several states continue to do so. While some states explicitly authorize and regulate the production and sale of CBD, or otherwise provide legal protection for authorized individuals to engage in commercial hemp activities, other states maintain outdated drug laws that do not distinguish between marijuana, hemp and/or hemp-derived CBD, resulting in hemp being classified as a controlled substance under state law. In these states, sale of CBD, notwithstanding origin, is either restricted to state medical or adult-use marijuana program licensees or remains unlawful under state criminal laws. Additionally, a number of states prohibit the sale of certain consumable CBD products, such as CBD-infused foods or dietary supplements. So, before you start selling CBD or invest into a CBD company, do your research on the states where you will be producing and selling product; you could be violating state criminal laws.
The FDA doesn’t regulate CBD products
Although the 2018 farm bill removed hemp and the cannabinoids derived from hemp from the purview of the CSA, the 2018 farm bill expressly preserves the U.S. Food and Drug Administration’s (FDA) authority to regulate food, dietary supplements, cosmetics, and drugs, including those that contain hemp ingredients. The FDA’s position is that THC and/or CBD cannot lawfully be added to food or marketed as dietary supplements. To date the FDA has sent warning letters to several CBD companies expressing this position and requesting corrective action. Therefore, although the FDA is accepting public comment and is holding a hearing to evaluate alternative approaches for regulating CBD products, the agency currently has jurisdiction over food, supplements, cosmetics and drugs containing CBD and continues to disseminate warning letters to CBD manufacturers for violating federal laws and regulations.
CBD is non-psychoactive
CBD is often marketed as the non-psychoactive cousin of THC. This is misleading. Research has indicated CBD has antipsychotic, anxiolytic (anxiety-reducing), and antidepressant effects – clearly demonstrating that it is a mood-altering substance (i.e., psychoactive or affecting the mind or behavior). It would be more accurate to say that CBD lacks the intoxicating effects of THC. From a legal perspective this matters because making deceptive claims in advertising is illegal and can result in serious consequences. Section 5(a) of the Federal Trade Commission Act prohibits “unfair or deceptive acts or practices in or affecting commerce.” We have seen the FTC jointly send warning letters with the FDA to a number of CBD companies and ongoing litigation surrounding the marketing of CBD products demonstrates there is meaningful risk that false or misleading label claims can create a cause of action for fraudulent inducement.
CBD has no side effects
There is increasing evidence that CBD has side effects and may interact with other medications, such as the anticoagulant warfarin, especially at high doses. The FDA has identified several safety concerns associated with the consumption of certain CBD drug products, including potential for liver injury, somnolence, lethargy hypersensitivity, decreased appetite, diarrhea and sleep disorders. FDA further noted that the potentially serious risk of liver injury can be managed through medical supervision, but questioned how effectively this particular risk can be managed in the absence of medical supervision and FDA-approved labeling. While more research is necessary to better understand the impacts of long-term CBD use at various levels, blanket claims that CBD has no side effects may provide false and misleading information to consumers.
CBD can be freely included in pet products
Although CBD products are widely marketed for pets, there are currently no hemp (or CBD) ingredients that have received express FDA approval for use in animal products. The FDA cooperates with the Association of American Feed Control Officials (AAFCO) for the implementation of uniform policies regarding the regulation of animal feed products, and although the FDA does not recognize animal supplements as its own regulatory category (it either classifies such products as food or drugs), the FDA’s policy has generally been to exercise enforcement discretion, allowing animal supplements where stakeholder groups such as the National Animal Supplement Council (NASC) permit them. At present, neither AAFCO nor NASC permits the use of CBD in animal products. While NASC’s position on the use of hemp ingredients in “dosage-form products” as of January 30, 2019, is that hemp is allowed in dosage form products (i.e. supplements) provided it doesn’t contain CBD concentrates, isolates, or synthetics, and the THC content is 0.3% or less, AAFCO has not approved any hemp ingredients for use in animal feed. As with human products, risk of enforcement and regulatory scrutiny is increased where products make any disease claims, where products are marketed as containing “CBD,” and where products are advertised widely in interstate channels. In addition, a product may be considered misbranded if its labeling is false or misleading in any way or fails to include required information.
Due to the highly nuanced nature of cannabis regulation, the infancy of the domestic legal industry, and the constantly changing regulatory landscape at both the state and federal level, businesses must be sure to stay informed, educated, and vigilant.
2 – Grayson, L., Vines, B., Nichol, K., Szaflarski, J. P., & UAB CBD Program (2017). An interaction between warfarin and cannabidiol, a case report. Epilepsy & behavior case reports, 9, 10–11. doi:10.1016/j.ebcr.2017.10.001
3 – Scientific Data and Information About Products Containing Cannabis or Cannabis-Derived Compounds; Public Hearing; Request for Comments 84 Fed. Reg. 90, 12969 (April 3, 2019) (to be codified at 21 C.F.R. pt.15).
4 – Id.
5 – Hemp and CBD in Pet Supplements Weaves Same Tangled Web as in Products for Humans (Jan. 31, 2019), NUTRA ingredients-usa.com
Charlie Alovisetti, Vicente Sederberg LLC
Charles Alovisetti is a partner and chair of the corporate practice group at Vicente Sederberg LLP based in Denver. He assists licensed and ancillary cannabis businesses with corporate legal matters, and he has experience working with clients on a broad range of transactions.
Courtney Barnes and Corey Cox are associate attorneys in Vicente Sederberg LLP’s Denver office. They both aremembers of the firm’s hemp and cannabinoid practice group, where they focus on policy, regulatory compliance, and risk management in the hemp space.
Member Blog: Weighing the Options for Cannabis Facility Construction
As more investors consider the cannabis industry as a growth market, the need for cannabis cultivation facilities, processing centers and dispensaries is projected to rise to keep pace with demand.
A report from New Frontier Data projects that by 2020 the legal cannabis market will create more than a quarter-of-a-million jobs. These are more than the jobs expected to be created from manufacturing, utilities or even the U.S. government, according to the Bureau of Labor Statistics.
Forbes magazine estimates that medical marijuana sales are projected to grow to $13.3 billion by 2020. With this growth will be the need for quicker, cost effective construction with investors likely to consider the remodeling option.
There is value in remodeling the interior design of existing abandoned or non-productive buildings into state-of-the-art cannabis facilities that can be brought to life quickly and on-budget so that the facility becomes a new source of jobs and tax revenue for the area. This is a popular option for investors looking to tap into the burgeoning cannabis market.
Cannabis businesses have to keep track of many moving pieces in the name of compliance, growth and sustainability. Industry experts are seeing value in integrating processing and cultivation at the same site, which can open the door for better quality control. A well-designed cannabis process goes far beyond just extraction; it overlaps heavily with cultivation on the front-end and product development on the back-end.
Security is a growing issue for cannabis dispensaries, cultivation and processing facilities. According to Security Sales & Integration magazine: “Once the products reach the warehouse or dispensary shelves cannabis companies rely on advanced security systems including visual and audio surveillance to protect their valuables and even their license. In order to prevent diversion of product, most state cannabis regulations require growers, storage facilities, processors and dispensaries to have advanced video security systems.”
Cannabis facility building contractors are charged with integrating top level security measures into their renovation. This is not only relevant to cultivation facilities, but also processing facilities and dispensaries. This builds confidence with clients and investors.
When building a cannabis cultivation facility, it is critical to understand that local codes are constantly changing as local building and fire departments try to keep pace with the rapid rate of changes in the industry. Rather than try to wade through these regulations, it is important to consult with a contractor who is experienced in the industry and is current with the latest changes.
Here are a few examples of buildings remodeled into high end cannabis facilities:
CFC renovated a 5,200 square-foot dispensary in Morris, Illinois that evokes old world charm, including a bar that originally was constructed in the Anheuser-Busch pavilion at the 1893 Chicago World’s Fair. The dispensary was originally the Rockwell Inn.
According to Mitch Kahn, CEO and founder of Grassroots, a national leader in medicinal cannabis, “It really is just a neat building with character that we wanted to keep, from the tin ceiling to the bar that’s over 100 years old, and retrofit it to our purposes. We saw the promise of remodeling an old building and turning it into a modern facility.”
A remodeled 40,000 square-foot cultivation facility in Illinois that was formerly a roller skate manufacturing facility. The facility was positioned in an Enterprise Zone that saved the dispensary owner more than $300,000.
Investors looking to build cultivation, processing and dispensary facilities, particularly in controlling construction costs, should:
Know there is an art and a science to converting raw materials of cannabis and finished products so any construction must meet all state regulations and local fire and safety codes.
Find a partner that can manage security infrastructure and planning as well as permitting and compliance support. It is critical to balance safety and customer-engagement.
Hire general contractors that will work on a fixed sum in lieu of a percentage of construction. This is especially important when it comes to a partner who will closely watch trade contractors to ensure they provide the best possible solutions, taking into account time and money.
Work with a partner that will watch their back from a relationship standpoint, not just the transaction.
Albert Marks is Client Relations Manager for Cannabis Facility Construction based in Northbrook, Illinois. Albert currently works with clients in three states, including Illinois, Wisconsin, and Massachusetts. Marks draws on his extensive knowledge of social media and digital marketing. He oversees the company’s blog, LinkedIn, Facebook, Instagram, and Twitter profiles. Marks is trained in using the SalesNexus CRM software, which he has used to make connections while working with clients, industry partners and trade partners in the residential, commercial, retail, restaurant, exterior and cannabis verticals.
WEBINAR: Cannabis Testing & How to Read Test Results
Learn from expert panelists: Alena Rodriguez, Managing Director, Rm3 Labs; Garrett Cropsey, Project Manager, Canna Advisors; and Tiffany Coleman, Director of Quality, Copperstate Farms.
Without delving too much into the testing methodologies used, we discuss reporting limits and some reasons for variability in test results. We also discuss the basic terminology used in test reports, provide examples of test results, and show you how to read them.
This webinar is great for general audiences that want to learn more about why we test in cannabis, how to interpret test results, and how you can use results as a consumer or cannabis business.
The Scientific Advisory Committee (SAC) is comprised of practicing chemists and other scientific field professionals to advise other NCIA committees as they work to develop standards and guidelines for the various sectors of our industry, ensuring that any formal recommendations produced by other NCIA committees are scientifically sound, sustainable, and legitimate.
For a deeper dive into cannabis testing policy, download this report prepared by NCIA’s Policy Council, where we explore recommendations for cannabis testing policies including requirements for proficiency, contaminants, potency and active ingredients, as well as records retention and laboratory accreditation.
Committee Blog: Streamlining Your Cannabis Packaging Process – Four Steps For Success
The beginning of a new year brings an opportunity to take stock of your cannabis business and ensure you’re doing everything possible to succeed. And because packaging is such a critical piece to brand wins and losses in this market, now is an ideal time to evaluate your process. It’s absolutely possible for your cannabis packaging to stand out while staying operationally efficient, it just takes careful planning. Get started with these four steps to streamlining your cannabis packaging process.
Step 1: Look for Flexibility
Rules and regulations for the cannabis and hemp industries are continually evolving. Streamlined cannabis packaging and labeling should accommodate data that changes regularly—as well as any required content that may be revised in the future. Always leave space on your package for legibly printed variable data (state-mandated warnings, potency, testing results, etc.). Utilizing secondary labels are often an unfortunate necessity of cannabis packaging. However, if these additional labels are composed creatively, they can actually serve a functional purpose and enhance the package design. A great example of this is a well-designed label that offers messaging while making the package tamper-evident. If possible, consider using an on-demand printing system on pre-printed label stock to minimize material cost and waste.
Step 2: Confirm Compliance
Now that you’ve dialed in your packaging options and are confident you can be agile with information, it’s time to ensure your product is compliant with state regulations. Brands with non-compliant packages can have their products pulled from store shelves or even face fines from state regulators. Re-printing labels or packaging can be very costly in print, labor and time.
Confirm that your package or label includes correct warnings, universal symbols, and produced with the correct material thickness and opaqueness if necessary. Edible products may need to include allergen information and other FDA requirements. Many states require tamper-evident or child-resistant packaging. Verify that your packaging container is compliant by requesting child-resistant certification from your supplier, or check to see if it is already on your state’s pre-approved packaging list.
It is highly recommended that brands don’t rely on their own interpretation of the laws. Consulting legal counsel is well worth the investment of confirming your packaging meets all the necessary requirements.
Step 3: Efficient & Effective from Sale to Shelf
Key to streamlining the packaging process is making sure your packaging is efficient and effective from the time you sell it, to the moment it’s merchandised on shelf. This relates to both the process of packaging your product and protecting your profits. Being efficient and effective with packaging will have a significant impact on your bottom line.
We suggest brands design their packaging to fit the size of the item. Oversized packaging costs more and can be misleading to the customer. In addition to selecting an appropriately sized package, brands need to accurately determine the labor cost associated with packaging options. Adding a sealed pouch for a pre roll takes labor hours. Consider the amount of time it takes to package a single product in comparison to the wholesale unit price. It’s easy to overdo packaging for a small profit margin. Make sure to test prototypes or samples with your production team or partners before you order a large quantity of packaging or labels. It’s essential to understand what the package will be subjected to once it leaves your facility. If at all possible, consult with existing distribution associates or wholesale customers for their input before investing in packaging. For example, your retail clients may prefer to display their products utilizing slat wall, which means that peg holes would be a valuable consideration to your package design.
Another consistent issue is knowing how dispensaries store your product in the back of house. If you have big mylar packaging for a small item, organizing those in bins, drawers or big safes becomes a mess down the line. Wholesale cannabis producers can also benefit from a primary panel label paired with a child-resistant container or mylar bag to streamline their distribution or sales process.
Step Four: Timing is Everything!
Advice we consistently offer brands? Understand your production timeline before you place any packaging order.Think about the implications of ordering stock or custom containers, and your shipping options. While custom containers and labels ensure differentiation in retail stores, they may take longer to produce than ordering off the shelf solutions. Processing art, approving proofs, production and shipping will all impact how fast your product can get to market. Packaging shortages in the cannabis industry are widespread so if you do decide to use stock containers such as glass jars or child-resistant tubes, make sure to place an order far in advance or well before you run out of packaging. Having a plan B can also be helpful. Ordering custom packaging may take longer, so stock items (like a label on a pouch or pop-top) can be used in the interim and may also be used for samples.
One Last Tip
It’s always smart to network with other brands that have similar packaging challenges to you. If they are willing to share them, lessons learned in the market are invaluable to brands making packaging decisions. Doing your fair share of market research by seeing what’s working in retail can also guide you in the right direction.
Have any tips yourself? We’d love to hear them in the comments!
Member Blog: Four Reasons ERP Helps Growing Cannabis Companies
Owners, presidents, and CEOs understand that you have to spend money to make money but it’s often difficult to justify investing in Enterprise Resource Planning (ERP) software when you could spend that money on new equipment or other tangible assets. Implementing the right ERP software can dramatically improve every aspect of your business from employee retention to customer satisfaction with consider cost savings and increased profits. Further, ERP software can significantly increase the value of your business for owners and investors. ERP helps executive leaders to understand what’s happening throughout the business with alerts, dashboards, and tools to make strategic decisions when necessary.
With dispensary ERP, companies serving the legal marijuana supply chain finally have the tools they need to drive innovation and gain insights for expanding their operations. ERP software automates many cannabis accounting functions related to technology, services, and human resources, all while allowing cannabis businesses to organize and manage real-time data from various solutions into a single view.
It’s easy to see why businesses operating in the cannabis industry would have intricate inventory management needs, but there’s another business side to cannabis which many might not consider. The cannabis industry has complex accounting requirements that go hand-in-hand with their inventory and other business processes.
With cloud accounting software built specifically for cannabis companies, organizations within the cannabis supply chain finally have the advanced technologies to support their unique operational and accounting needs. Today’s growing cannabusinesses need to adapt in a rapidly changing environment and when they’re successful, it gets noticed. This often results in company leadership seeking investor funding or entertaining mergers and acquisitions talks. When companies operating in this space attempt to position themselves for growth, they need field-tested cloud accounting software to prove it.
In this rapidly changing industry, here are a few ways an effective, flexible, and secure cannabis ERP solution will allow you to adapt, positioning your cannabusiness for growth:
Know Your Customers – Data and Predictive Analytics
Dispensary ERP solutions allow you to compile and understand data about your cannabusiness and the marijuana industry as a whole. With a better understanding of supply and demand pattern, dispensaries can make informed strategic decisions about products and operations.
By capturing relevant data about your cannabis operation, you answer many efficiency and profitability questions. What are customers most interested in? Which products are they buying and in what quantities. How much are they spending? Are there patterns in accompanying purchases or complementing products? These insights and more help your cannabusiness to create customer personas allowing you to better service your clientele.
280E Tax Woes – Accounting
A fully integrated, purpose-built cannabis accounting software package which offers financial reporting, meets GAAP and auditing board compliance standards also needs to be robust enough to handle other complexities within the industry. Does your off-the-shelf solution ensure compliance with section 280E of the IRS guidelines which prohibits a cannabis operation from deducting certain business expenses? If you’re not sure, the answer is probably not.
With modern cannabis solutions available, your operation can fully organize financials by department across multiple locations as well. Dispensary ERP gives you all the financial reporting tools you need for journal postings, purchase orders, invoices and cash management by recording all transactional data in detail, by location.
Staying In Compliance
Regulation and managing regulatory compliance continues to be top priority for growing cannabis companies. As legislation changes, cannabis operators need varying levels of up-to-date reporting capabilities surrounding seed-to-sale traceability, product recall capability, and proper labeling among many other considerations.
Built to exceed compliance standards, your dispensary ERP delivers individual and aggregated reports, unalterable custody tracking with time stamps to provide the real-time data needed for compliance initiatives – as well as for auditors, CPAs and others who will need access to the books.
If you have multiple locations, you will need to monitor, track and record data from each of your locations, jurisdictions, or intra-industry verticals (growers, processors and dispensaries). With one centralized database and integrated reporting, individual factions of your business are no longer operating as silos and staff have access the real-time access to accurate data for regulators.
Growing Your Business – Scalability
Consider growth plans as you look for technology solutions. If your plans include multiple locations or jurisdictions, you will need cannabis-specific software to manage the complexities that arise as a result. If you decide to diversify your product line by vertically integrating other seed-to-sale products, you will need industry-specific solutions to address the inventory, accounting and compliance ramifications not offered by out-of-the-box technology.
Growing cannabusinesses need to work efficiently with suppliers and growers, accurately forecasting demand and staying abreast of current regulations. As a result, your growing company needs solutions which are flexible and customizable with built-in cannabis-specific features.
Like any other business, growing a successful cannabis business requires technology tools to readily handle its industry’s trends and business process complexities. A flexible, powerful and scalable dispensary ERP will help you address those challenges while you continue to expand your operations.
Vice President of ERP Sales, Frank Nisemboum,is a trusted advisor at e2b 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 ERP and/or CRM solution make him an asset to all of his clients.
At e2b teknologies, our passion for solving problems drives us to deliver innovative solutions for everyone we work with. Visit e2btek.com for more information.
Member Blog: Cannabis Edibles – Preparing for Government Regulations & Inspections
by Martha Ostergar, Content Marketing Manager of RizePoint
Advice from RizePoint, a leader in the quality assurance and regulatory compliance space for over 20 years.
As more states legalize medicinal and recreational marijuana, more companies are getting into the business of cannabis infused food products (CIFPs), more commonly known as edibles. These food products can take many different forms such as baked goods, sweets, oils, capsules, and tablets. As an alternative to smoking or vaping, cannabis-infused products are already on track to become a 5.3 billion-dollar industry over the next five years.
But if cannabusinesses want to get into the edibles production industry, their products need to comply with new cannabis-related city, state, and federal regulations, as well as established regulations for food and pharmaceutical products. The cannabis edibles industry is still in its infancy, and many states are still deciding how to best regulate these new products for public health and safety. This means navigating regulations can be tricky, but there are a few things to keep in mind to stay above board in this developing market.
Evolving Cannabis Edibles Regulations
Cannabis is considered a Schedule 1 controlled substance according to the U.S. Drug Enforcement Administration (DEA), and an “adulterated food product” under the U.S. Food and Drug Administration (FDA). However, the cannabis edibles industry as a whole lacks systematic federal oversight. At this stage, this means that states must decide on how to best regulate these products once voters and legislators have agreed to legalize recreational or medicinal marijuana in each respective state.
This lack of federal oversight can lead to a great deal of confusion in the industry. Nearly 100,000 packages of CIFPs have been recalled over the last few years due to inaccurate labeling, the use of banned pesticides, and other regulatory hiccups. In fact, a recent study of edible label accuracy revealed that 83% of CIFP labels differed from the actual contents of the product by over 10%, and only 17% were labeled correctly.
Key Regulatory Concerns
If cannabusiness owners want to avoid similar quality and compliance issues, they need to make sure they are following their state’s laws and regulations regarding CIFPs. That being said, some states have yet to decide how they will regulate this industry, which can leave businesses on unsure footing or without a viable quality management plan. However, the cannabis industry isn’t totally in the dark — they can look to other industries and resources to create quality-related processes that will help them protect their products, their customers, and their bottom line.
For example, cannabusinesses can look to the National Environmental Health Association (NEHA) for guidance. The NEHA has established a list of regulatory guidelines that states and other regulatory bodies can use as a reference point when drafting legislation.
Here are some examples of regulatory guidelines from NEHA’s list:
All ingredients used in CIFPs should be from FDA-approved sources, including suppliers that maintain good agricultural, manufacturing, and processing practices.
All CIFPs should be safe for public consumption and should not exceed the Code of Federal Regulations tolerance levels for controlled substances such as THC.
CIFPs should be handled in a manner similar to the methods used by the pharmaceutical industry, including accurate product labeling, product homogeneity, and accurate information regarding dose concentration per serving and as a total.
CIFPs should comply with the food laws laid out by the regulatory body, including portions, labeling, processing, and packaging.
CIFPs should not be made to appeal to children or those under the age of 21, such as using words like “candy” on product labels and in product advertising.
Additionally, looking to established federal and state regulations in the food and pharmaceutical industries can help businesses proactively understand and set important quality standards until cannabis regulations become more consistent and clear.
CIFP Quality Assurance Management
With these regulatory concerns in mind, cannabis companies can start adjusting their business operations. Proactively creating a quality management plan with high standards and consumer safety in mind is the most important step businesses can take to prepare for official regulations.
The next step is to focus on the supplier quality management process. Whether suppliers or vendors are supplying cannabis ingredients or raw agricultural ingredients, suppliers also need to meet outside regulations as well as internal brand standards that reflect a company’s specific business goals. An edibles business will need to make a plan that includes auditing suppliers at least once a year, collecting relevant and current certifications, and tracking supplier performance.
After that, quality assurance falls to the production process. As mentioned above, government regulations are only part of the quality management process. Each company will have different internal standards they wish to meet that reflect their goals as a brand, including how to produce each product consistently for a better customer experience. This process involves collecting data from yearly or quarterly audits and daily checks as well as taking corrective action when those audit questions or daily checks fail. Best practice includes reviewing and analyzing quality data to proactively understand and improve any failings in the process.
Tools for Cannabis Quality Management
That brief overview may sound like a lot, and frankly, it is. The good news is there are already tools and resources available to help the cannabis industry create and manage quality and compliance processes.
Technology is key. It’s tempting for new CIFP companies to manage everything with pen and paper and spreadsheets as a cost-saving measure. But if you look at the food industry (among many others), it becomes quickly apparent that tech and software are needed to keep up with ever-changing regulations and to properly scale a growing business. Quality management software (QMS) helps businesses gather data efficiently to create a single source of truth. But the right QMS can also help you easily analyze that data so you can spot trends, gain actionable insights, and proactively fix issues before they become bigger problems.
These types of software have helped many other industries with regulatory compliance as well as quality consistency and brand standards. However, not every QMS is created equal, so it’s important to take your time in finding a digital solution that is right for your compliance and quality needs as well as your budget.
Consultants can help. Several cannabis consultancies already exist to help new and seasoned business owners set up and maintain internal programs for regulatory compliance and quality management. Most consultancies will be able to assess and advise cannabusinesses in cultivation, manufacturing, or dispensary management, and some have resources to do all three.
Consultants are not there to set goals for you, but the right consultant can help you achieve your goals. Before contacting a consultant, it’s crucial to think about your specific needs based on your business goals so each party can manage expectations about responsibilities and deliverables. Choose a consultant that gives you a plan upfront that includes a clear timeline as well as the detailed steps you will each take in your partnership to achieve success. It’s also a good idea to be wary of consultants in any industry that ask for payment with equity.
Takeaways
No matter how much rules and regulations change, you can keep a competitive edge with little disruption to you business. If you model your quality management system on other regulated industries — such as food safety and pharmaceuticals — you’ll proactively create a robust, government-friendly plan. Additionally, when you have a comprehensive plan in place, it’s easier to pivot when there are changes, to train new employees to meet the required standards, and to scale your efforts as your business grows.
Martha Ostergar is the marketing content manager at RizePoint, a quality management software company that has helped top brands to digitally manage compliance, quality assurance, corporate social responsibility, and supplier quality management for over 20 years. VisitRizePoint.com for more information.
VIDEO: The Cannabis Industry’s Banking Crisis – Explained
The cannabis industry faces many hurdles along the path to federal legalization. One of the major obstacles faced by cultivators, processors, and dispensary owners is a lack of clear direction for financial institutions about how to provide banking services for those state-legal, licensed cannabis businesses. In this educational video, learn more about the federal banking crisis and the Congressional solution that can fix it.
Member Blog: 7 Steps To Opening A Cannabis Dispensary
As cannabis reform barrels ahead like a freight train, entrepreneurs everywhere are eyeing ways to get in on the green rush. And for those without the background or interest in cultivation or manufacturing, cannabis retail can be a very alluring — and lucrative — prospect.
Of course, that’s not to say there won’t be work involved. Just like any other business, opening a cannabis dispensary requires a lot of planning, paperwork, and, of course, capital. It also requires a lot of additional compliance hurdles not often encountered in other industries.
Today, we’re looking at the seven essential steps you’ll need to address as you seek to launch your own cannabis retail venture.
Seven Essential Steps to Opening a Cannabis Dispensary
Find a suitable location.
While it might seem counterintuitive to talk about location before licensing, the fact is that in most jurisdictions, you’ll be required to have a prospective retail location identified before you can even begin filling out the licensing paperwork.
Naturally, your dispensary location will have to align with all applicable regulations, including local zoning ordinances and state-level mandates. Researching your state’s guidelines shouldn’t be too difficult, as most maintain a checklist on their official government websites.
Obtain a cannabis retail license.
This step is easier said than done — but in the end, no license means no dispensary. Each state has their own cannabis retail licensing and application structure, so once you’ve locked down a potential location, you’ll want to begin researching the requirements and getting all the paperwork in order.
Obtaining a license may take up to a few months, so you’ll be able to work on the other components of your dispensary as you work through the licensing process. But you definitely want to know exactly what you’re up against as early as possible.
Estimate your costs.
The total cost of opening a cannabis dispensary varies greatly by state and local jurisdiction. Application and licensing fees alone can range between a couple thousand dollars up to $20k. Again, you’ll need to research your state and local permitting guides to find out exactly what you’re looking at in terms of licensing fees.
Other major cost considerations will include:
Physical location (real estate rental/purchase as well as renovation, furnishing, and finishing costs)
Professional fees (insurance, legal, financial, etc.)
Payroll
Capital investments (security/surveillance system, dispensary technology, etc.)
Write your business plan.
No serious investor is going to consider bankrolling your operation without seeing a solid cannabis retail business plan. Financiers want to know that you’ve covered all your bases, and your plan should address the following key areas:
Finances
Compliance
Dispensary staff
Sales and marketing
Logistics/operations
Security
Of course, detailed information about your planned location will need to be addressed as well.
Secure your capital.
As quickly as the industry is progressing, federal cannabis banking reform could be here sooner than later. But until then, cannabis-friendly financial services are still very hard to come by. That means your primary source of funding will likely be private investors, friends, family, or yourself. There are also some well-established cannabis-specific investment groups out there that are worth looking into.
Consider your dispensary technology needs.
As a cannabis dispensary owner, you’re going to need a technology solution that not only keeps up with the typical retail performance burdens but also satisfies your state’s compliance requirements — in other words, seed-to-sale reporting.
Compliance reporting (a platform that can tie in directly to the state’s system and automatically report all necessary data can save you untold time and labor costs)
Reliability
Ease of use
Determine your product sourcing procedures.
Finally, you’ll need to determine how you’ll source your products. This is another area that you’ll need to reference your particular state’s rules and regulations on; some states prohibit dispensaries from being involved in cultivation, and others highly encourage it. Either way, you’ll likely have to obtain a separate license if you want to get into cultivation.
Start by identifying and interviewing local cannabis producers. This is also a good opportunity to determine the types of products you’ll want to offer and ways you can incorporate them into your marketing.
Want to Learn More about Opening Your Dispensary?
Get a more in-depth look at everything involved with launching your own cannabis dispensary by downloading our How To Open A Cannabis Dispensary e-book — it’s absolutely free.
Gary leads Cova’s charge into the legal cannabis space by guiding the vision, strategic development, ‘go to market’ plans and culture.
Before joining Cova, Gary was a principal in over a dozen tech start-ups in the mobile communications industry ranging from small VC funded companies to Fortune 100 firms, including Onavo, which was later acquired by Facebook. In those companies he led sales, marketing, business analytics and market expansions. He has also held a multitude of leadership roles with Verizon and AT&T.
Gary holds a degree in finance with a master’s in marketing from the University of Colorado.
As 2018 came to an end, the FINAL proposed text of the permanent regulations for California cannabis were submitted to the Office of Administrative Law (OAL) by the three regulatory agencies – the California Department of Food and Agriculture (CDFA), California Department of Public Health (CDPH), and the Bureau of Cannabis Control (BCC). The cannabis regulations submitted to the OAL are currently undergoing a 30-day administrative review to ensure alignment with MAUCRSA and statutory requirements. These “final’ regulations shall become effective immediately upon approval/adoption which should be on/before January 16th 2019.
What “final” means in this evolutionary process of California cannabis regulations is debatable, as there are already several Assembly and Senate bills queued up to be put through the legislative tango and all three of the regulatory agencies have indicated that there will be further clean-ups and clarifications of the “permanent” regulations. Although there will assuredly be changes ahead, this is a highlight reel of where California Cannabis stands now.
For those that dug into the October redrafts, much of the substantial changes that occurred in that version carried over into the final proposed text. Here we will highlight the top eight changes impacting cannabis businesses in California.
The Final Statement of Reasons from the BCC, which also included responses to pertinent comments received during the previous 15- and 45-day comment periods, is where some greater clarity about the regulatory changes and intents can be found. It is by spelunking into these deeper caverns of reasoning where the sweet ore of further clarity can sometimes be extracted.
Here are 8 highlights for anyone interested in California cannabis.
1. Ownership and Financially Interested Parties
In October we saw the expansion of the definition of ownership and financially interested parties that clearly sought to capture the identification of any and all warm bodies that stand to direct, control, or financially benefit from commercial cannabis. While there were some changes in sections §5003 and §5004 between the previous and current version, the scope and intent remained the same. One particularly vague line §5003.b.6.D “Any individual who assumes responsibility for the license.” was removed from the BCC’s definition of owner, this very line turned up over the in the CDPH’s update in §40102.a.4.D.
The Ownership and Financially Interested Parties disclosures dovetail into the White Labeling issues (See #2) in that “Brand Owners” that may be licensing IP to contract manufacturers have been impacted by the prohibition on non-licensees conducting commercial cannabis business with licensees. In the response to comments in the FSOR was this gem of insight, “In response to commenter’s questions, if a licensee includes as one of their owners a brand-owner, the licensee can produce the branded products because in this case the licensee is not engaged in commercial cannabis activity on behalf of an unlicensed person. Because the owner of the brand is an owner of the licensee, there is no unlicensed person involved.” Of course, before everyone runs off and adds brand-owners as owners of their contract manufacturing business, let’s take a moment to reflect on the value and critical importance of a well-drafted contract.
2. §5032 (b) The So-Called “White Label Prohibition”
5032.b shall go down in infamy as one of the more talked-about sections of the BCC’s regulations. This simple sentence, “Licensees shall not conduct commercial cannabis activities on behalf of, at the request of, or pursuant to a contract with any person that is not licensed under the Act,” brought with it a level of confusion and white-hot panic regarding the inferred white label prohibition contained therein. October’s version had more explanatory examples for the types of “on behalf of, at the request of, or pursuant to” activities that the BCC was talking about, such as, “procuring or purchasing cannabis goods from a licensed cultivator or licensed manufacturer. Manufacturing cannabis goods according to the specifications of a non-licensee, Packaging and labeling cannabis goods under a non-licensee’s brand or according to the specifications of a non-licensee, Distributing cannabis goods for a non-licensee.” This language was removed in the final version submitted to the OAL and is one of the examples of where the FSOR is enlightening.
From the BCC’s FSOR: “Initially, the Bureau determined that it was necessary to assist licensees with determining what types of activities may or may not be allowed under the Act and its implementing regulations. The initial proposed change identified certain transactions that would generally be considered commercial cannabis activities under the Act. However, the Bureau has determined that inclusion of the clarifying example transactions is causing more confusion. Accordingly, the Bureau has decided not to move forward with the proposed changes which identify examples of specific commercial cannabis transactions.” The definition of “commercial cannabis activities,” therefore, is an important one, and we can refresh ourselves on that one (Business and Professions Code §26001.k) “‘Commercial cannabis activity’ includes the cultivation, possession, manufacture, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, delivery or sale of cannabis and cannabis products as provided for in this division.”
This has been a hot, hot topic, and there have been some great analysis articles of this provision that dig further into solutions and scenarios related to this section. Get thee to Google and find out more!
3. Option to label THC/CBD post-final testing by Distributor
This was a big win for the industry! A substantial percentage of testing failures for “label claims” are due to products, previously required to be labeled with THC/CBD content prior to final testing (the one test that counts!) not falling within the 10% allowable variance threshold. It’s common knowledge that the science of cannabinoid testing is still getting dialed in, and the labs have some serious challenges in hitting the same tiny target twice. Especially when they are dealing with the vast array of cannabis product matrices, and an industry that it still learning about important things such as homogenization. The good news is, the CDPH now allows products to be labeled for THC/CBD content after that all-important final test, which should eliminate well-upwards of 50% of the product failures in California and ensure a steadier supply chain.
4.Regulation of Technology Platforms
The cannabis industry has always been a place of innovation and loophole-finding. These regulations are an attempt to close some of those loopholes that seem to have created a situation where unlicensed tech platforms were enjoying the privileges of licensed commercial cannabis without undergoing the slings and arrows of local/state licensure and regulation. Seeing themselves outside of the regulatory purview, certain business claimed that agencies such as the BCC had no dominion over their activities. Well, they may have wanted to wait until the ink dried on the final regs before making such an assertion, as now it seems the BCC has expanded its reach to embrace all kinds of advertising, facilitating, and delivery platforms.
5. Delivery to a Physical Address
This was (potentially) a huge win for patient access, however, it remains to be seen how this truly shakes out. When the BCC added the line that “a delivery employee may deliver to any jurisdiction within the State of California” it caused some serious outrage from municipalities that have banned commercial cannabis activity, the League of Cities, law enforcement, and others that saw this as a huge overstepping of the local authority ensured by Prop 64 and MAUCRSA. The LOC even launched a “wandering weed” campaign, in response to which it seems that a subsection that includes “a restriction on delivering cannabis goods to a school providing instruction in kindergarten or any grades 1 through 12, day care center, or youth center” was added to the regulations, for clarity. Whether the OAL will approve as is, and how this interacts with local bans, tax requirements, and law enforcement, and lawsuits… stay tuned! While the BPC (§26090.e & 26080.b) explicitly prohibits a local jurisdiction from preventing delivery, and transportation, of cannabis goods on public roads, it does not prevent localities that have banned commercial cannabis in their area from adopting ludicrous tax rates for deliveries that would in effect ban via taxation delivery in their area.
6. Sale of Non-Cannabis Goods (aka No Hemp)
While the seeming victory of the Farm Bill has folks leaping with joy for the future of hemp, statements from the FDA and other agencies have certainly rained on the parade of many a CBD vendor. Add to that the collections of California cannabis regulations that in effect eliminate hemp-derived CBD from cannabis dispensaries and products.
“In addition to cannabis goods, a licensed retailer may sell only cannabis accessories and any licensee’s branded merchandise.” (BCC §5407)
This limitation for retail (and retail delivery) is further clarified in the BCC’s FSOR in their responses to comments:
“Cannabis retailers are licensed to sell cannabis goods. The definition of cannabis within the Act explicitly excludes industrial hemp products. Industrial hemp is regulated by the California Industrial Hemp Program under the California Industrial Hemp Farming Act.”
“A retail license from the Bureau authorizes the retailer to sell cannabis goods and cannabis accessories. A retail license from the Bureau does not authorize licensees to sell items that are unrelated to cannabis.”
Combined with the retail prohibition on non-cannabis products, this trifecta from the CDPH extends that prohibition to manufacturers:
“A manufacturer licensee shall only use cannabinoid concentrates and extracts that are manufactured or processed from cannabis obtained from a licensed cannabis cultivator.” (CDPH §40175.c)
“Except for cannabis, cannabis concentrate, or terpenes, no product ingredient or component shall be used in the manufacture of an edible cannabis product unless that ingredient or component is permitted by the United States Food and Drug Administration for use in food or food manufacturing, as specified in Everything Added to Food in the United States, or is Generally Recognized as Safe (GRAS) under sections 201(s) and 409 of the Federal Food, Drug, and Cosmetic Act.” (CDPH §40305.a)iii. “Except for cannabis, cannabis concentrate, or terpenes, topical cannabis products shall only contain ingredients permitted for cosmetic manufacturing in accordance with Title 21, Code of Federal Regulations, Part 700, subpart B (section 700.11 et seq.) (Rev. March 2016), which is hereby incorporated by reference.” (CDPH §40306.a)
For now, it seems, non-cannabis derived CBD is DOA in CA.
7. Child Resistant Packaging (CRP) Requirement
Heads continue to spin (and cannabis business’ cash to hemorrhage) in response to the changes in the packaging requirements. As of July 1, 2018, all cannabis products were to be in child-resistant packaging, and retailers had converted back to the statutory requirement that all exit packaging was to be “opaque,” allowing them to use reusable totes and paper bags to satisfy this requirement. In the October regs, we saw a pivot that allowed for a seeming “grace period” for the child-resistant requirement to return to being able to be satisfied by the retail via CR exit bag. Some confusion remained as to whether products that were already IN child-resistant packaging would have to be put INSIDE of child-resistant packaging for the next year. The addition of the statement from the CDPH, “Until the date specified [1/1/20] the child-resistant package requirement [§26120] may be met through the use of a child-resistant exit package at retail sale.” (CDPH §40417.d) suggests that the significant ecological impact of CR packaging within CR packaging MAY be avoided, however, most legal counsel will probably be advising retail clients to use the CR exit bag to avoid potential liabilities. Viva Kafka!
In the CDPH’s Statement of Reasons, they said “This is necessary to comply with the packaging requirements in Business and Professions Code section 26120 while providing licensees with time to comply with packaging requirements.” Compliant operators were left somewhat confused, as they had been required to comply with these packaging requirements since July!
8. OSHA Training for Everyone!
All three regulatory agencies added the following requirement for OSHA training:
“For an applicant with more than one employee, the applicant shall attest that the applicant employs, or will employ within one year of receiving a license, one supervisor and one employee who have successfully completed a Cal-OSHA 30-hour general industry outreach course offered by a training provider that is authorized by an OSHA Training Institute Education Center to provide the course.”
This will be an additional training requirement, on top of existing state and local training requirements for cannabis operators. And remember, all that training documentation must be kept, like all other records, for seven years!
As with everything in life, more will be revealed as we get deeper into 2019.
Juli Crockett is a member of the NCIA’s State Regulations Committee and is Director of Compliance at MMLG. Slides from Juli’s recent Workshop on this topic are available for download here. You can also watch the workshop video in its entirety on MMLG’s Facebook page.
Member Blog: Hiring New Budtenders – Keep Your Eyes Out For These Red Flags
The success of your dispensary relies on many things – your location, the quality of the products you sell, and the people who work for you. While it might seem as if you can put just about anyone behind the counter and have them ring up transactions, the art of being a budtender is a completely different animal. Managers and owners who are in the position of needing to replace or expand their current staffing may not fully realize how their employees can make or break their business, so let’s go through a few important considerations.
It goes without saying that anyone can end up unintentionally hiring someone they shouldn’t have, so if any of the following scenarios have happened to you, don’t feel bad. This information can help in many types of businesses and will specifically save you a headache if you work in the cannabis industry.
Cannabis Knowledge
On-the-job training is certainly something that every dispensary manager should provide, as it’s impossible for someone to walk right in and run the show on their very first day. However, it’s another situation entirely if your new hire doesn’t know the first thing about cannabis. Not only is a basic understanding required pertaining to strains, methods of consumption, and weed culture in general, but if they bring knowledge to the table that impresses you, they’re a keeper.
Anyone who can’t answer simple questions about cannabis or CBD may not be the best choice for your operation unless you have the time and patience to teach someone from the ground up. Ultimately you want your customers to feel as if they’re consulting with experts, not the other way around.
Don’t Neglect Background Checks
This tip can take a two-fold approach, as the person you end up hiring is going to be trusted with access to tons of product, money, and maybe even the store keys someday. Reference checks are a must in today’s day and age, so if they don’t readily have people available for you to chat with, you may want to dig a little deeper.
Aside from simply calling previous employers, it doesn’t hurt to run a full background check on your potential new employee. You never know if people are representing themselves truthfully and it’s always better to be safe than sorry. Again, if your prospect is uncomfortable with this idea, you don’t simply want to brush it off and continue hiring them anyway. That’s not to say that you should instantly dismiss them either as some people have a criminal record they are embarrassed by but have changed.
Common Sense And Intuition
When it comes down to it, working as a budtender does require a specific set of skills but in general isn’t that much different than many other professional retail occupations. Take some time to consider everything a person brings to the table, listen to your gut, and above all else, let common sense guide you. If something doesn’t feel right about your new hire, pay attention to that notion or else it could cost you your business.
Courtney Elder is a cannabis and CBD expert. She’s a mother of 2 from Portland, Oregon and has done countless hours of research around both cannabis and CBD benefits. She’s written for some of the industries top authority sites and is the lead content creator at CBD Nerds.
VIDEO: Member Spotlight – NuLeaf Dispensary
In this month’s video member spotlight, we visit with NuLeaf Dispensary in Las Vegas, Nevada. Adult-use cannabis was legalized in the state on January 1, 2017, though licensed dispensary sales were slowly implemented throughout the year. Learn more about how NuLeaf’s marketing team overcomes the many challenges to both print and online advertising through in-store events and content marketing in tourist-friendly Las Vegas.
Expand your network and cultivate community with us in a fun, relaxed, cocktail-hour setting at NCIA’s new Industry Socials event series this year!
Our West Coast tour includes a stop in Las Vegas on January 22, 2019. Register now to secure your spot!
Note: NCIA member profiles highlight members and stories within our cannabis industry community. They do not constitute an endorsement or recommendation of specific products or services by NCIA.
Member Blog: Tax Court Decision for Harborside Health Center
The Tax Court’s recent decision in Harborside Health Center v. Commissioner is more bad news for the cannabis business community. The taxpayer, a prominent California dispensary, was assessed approximately an additional $30 million in tax by the IRS for the years 2007 to 2012, years in which Harborside had total revenue of approximately $102 million. Harborside lost, so it will have to pay that amount plus also pay another 20% of the tax owed in accuracy-related penalties – the Tax Court did not decide the penalty issue and left it for a later opinion. At this point, Harborside can either pay the tax (plus possibly penalties) or appeal to the Ninth Circuit Court of Appeals.
GROUNDS OF THE DECISION
The court decided against Harborside on every single argument made by its counsel. Three of the issues are straightforward:
The doctrine of res judicata didn’t apply, so the fact that a civil forfeiture case against Harborside had been dismissed with prejudice did not prevent the IRS from assessing a tax liability.
The language in Section 280E of the Tax Code that deductions are disallowed to a trade or business that “consists of trafficking in controlled substances” applies to businesses that have more than the one activity of trafficking. Harborside argued that “consists of” means the business must ONLY be trafficking for the disallowance to apply, and the Tax Court rejected that interpretation.
Harborside had only one trade or business so it could not deduct any expenses related to a separate trade or business. The taxpayer had argued it had multiple lines of business, but the opinion held that Harborside didn’t make significant profits from any of the other claimed lines of business so there was only one business.
MOST IMPORTANT CONSEQUENCE OF DECISION
The holding in the case that has the widest applicability to the cannabis community regards what Harborside may include in its cost of goods sold. The increase in tax owed by Harborside mostly comes from reclassifying expenses from cost of goods sold to ordinary business expenses and then denying deductions for those expenses under Tax Code Section 280E.
The taxpayer argued that the broader cost of goods sold rules under Code Section 263A applied in addition to the earlier (and narrower) definition of cost of goods sold under Section 471 However, the Tax Court endorsed the reasoning in IRS Chief Counsel Advice Memorandum 201504011 (2015) regarding the interaction of Section 263A and Section 471 with respect to cannabis-related cost of goods sold calculations. It is the IRS view that a clause of Section 263A prevents allocating indirect cannabis-related costs into cost of goods sold because the deduction for those costs would be denied under Section 280E.
Harborside contended that the Sixteenth Amendment to the Constitution compels using Section 263A rules in addition to the Section 471 cost of goods sold rules. The Tax Court was very dismissive of the argument, pointing out that “Section 471 wasn’t found unconstitutional during the many decades when it was the only means of calculating COGS [cost of goods sold], and it wouldn’t be unconstitutional now if Congress repealed Section 263A.”
It is also worth noting that the Tax Court held that Harborside was a reseller, not a producer, and that producers are subject to a different set of regulations under Section 471 that allow additional expenses to be included in cost of goods sold.
WHAT NOW?
Harborside is important because it is the first Tax Court case to squarely address the interaction between Sections 263A and 471 in the context of a cannabis business. However, there are other courts that can hear federal tax cases besides the Tax Court, and there are other arguments that can be made besides the one made by taxpayer’s counsel (even in Tax Court). While the best option for relief for cannabis taxpayers is to change the law, even if the law is changed, there will still be years of audits under the current law, so the questions raised by the Harborside decision will continue to be litigated. For further discussion, please see our blog on our website.
James B. Mann is a partner with the Tax practice group of Greenspoon Marder LLP. Mr. Mann has over 25 years of experience serving as a trusted advisor to a broad range of stakeholders in the energy and financial services industries. He counsels clients on the new changes in the tax law, as well as cannabis tax issues and cannabis tax controversy proceedings. Mr. Mann has a law degree from Harvard Law School and an MBA from Columbia University.
Rachel Gillette is among the first attorneys in the nation to dedicate her practice to the cannabis industry. Since 2010, Ms. Gillette has helped marijuana/cannabis businesses with licensing and regulatory compliance, business law and transactions, contract drafting and review, tax litigation, corporate formation, and tax matters, including audit representation. She works with startups and entrepreneurs, investors, and ancillary industry businesses to help develop the cannabis innovation ecosystem, and is a zealous advocate for the industry.
Ms. Gillette regularly represents clients before the IRS’s Examinations, Appeals, and Collections Divisions, including marijuana businesses facing the challenges of IRS adjustments under 280E. She has successfully protested local, state and federal tax deficiencies on behalf of her clients, having prevented hundreds of thousands of dollars in incorrectly assessed taxes, interest, and penalties. She can assist individual and business taxpayers in 280E proposed assessments, offers in compromise, audit examinations, innocent spouse claims, sales, use, and employment tax matters, trust fund tax penalty assessments, penalty abatement’s, and levy releases.
For several years, Ms. Gillette was the executive director of the Colorado state chapter of NORML, the National Organization to Reform Marijuana Laws. She was a founding member of Women Grow and the National Cannabis Bar Association. She an advocate as well as an attorney, and is committed to helping change laws – and perceptions – relating to cannabis and ensuring state licensed and legal marijuana businesses are fairly taxed and regulated.
Ms. Gillette received her Juris Doctorate from the Quinnipiac University School of Law in Hamden, Connecticut, where she served as Associate Editor of the Quinnipiac University Probate Law Journal. During law school, she interned with the New Haven Public Defender’s office, where she developed her commitment to advocacy for those facing the many challenges of the criminal justice system.
Member Blog: First Blush And Branding Need To Go Hand In Hand
Budding cannabis companies: Pay attention to labels from the get-go
Cannabis companies starting up in states where recreational and medicinal marijuana are just being legalized need to pay close attention to their label branding from the get-go. Too often, this critical part of a successful cannabis business becomes an afterthought — which can lead to major problems in compliance, competitive positioning and credibility in the marketplace.
As the cannabis industry expands in the U.S. and now Canada, it’s also maturing. Gone are the days when a purveyor could hang out a shingle and open their doors to teeming masses of buyers without any substantive concern about packaging and labeling beyond early-day regulatory compliance.
With the industry maturing, so is the sophistication of entities charged with compliance. As more is learned about all aspects of the industry — from edibles to raw cannabis — requirements being placed on purveyors are getting more complex. Plus, there are municipal and state regulations that may cross over one another.
Competitive Positioning It’s never too soon to get into the branding game, and distinctive labels that grab attention and share important information accurately are key to making a name for yourself.
A Forbes article earlier this year made the case: “Tim Calkins, Clinical Professor of Marketing at Kellogg School of Management at Northwestern University, foresees a highly competitive environment… an outburst of marketing and branding innovation… ‘We will see very creative brand-building activities in the years to come. I anticipate that marketing investment will grow exponentially as companies work to carve out a leading position and capture value in an emerging market…It isn’t often that you see an entirely new market emerge on the scene, especially one where brands will play a key role. Many people first experienced cannabis as a[n] unbranded plastic bag. This is not likely to be the future state. Cannabis will become a market dominated by strong, vibrant brands.’”
Compliance In their startup enthusiasm, purveyors may miss something on the label compliance scene. It’s easy to do, but can be very hard to fix. Products have had to be recalled, companies have been fined or even shut down for running afoul of regulations. Labels, as a product’s “front door,” are especially susceptible.
A Manufacturing.net report reinforces the point: “Often, cannabis products require specialized labels for traceability and stating suggested medical applications. State laws still vary greatly, and companies should be careful to know and have tools to track their compliance in all states and countries that they do business.”
Bottom line, newcomers to the industry need to be as diligent about their labeling and packaging as they had to be to get license approval. Anything less may result in more headaches than they can imagine.
Credibility in the Marketplace In Colorado’s early days of cannabis legalization, some labeling and packaging looked — to put it mildly — homespun. The look and feel of that early-day branding pales in comparison to the much more sophisticated label and packaging branding typically seen today.
But for industry newbies, there can still be a temptation to move ahead on operations at lightning speed, with branding, packaging and labeling lagging behind.
Ultimately, that may stifle credibility, giving competitors an opportunity to get a leg up. Ontario, Canada’s experience so far showcases how label problems can hamper credibility. Their online marketplace is the only “game in town” so far; there are no brick-and-mortar establishments. But, in a competitive marketplace, purveyor missteps can cause reputation damage as well as regulatory repercussions.
Notes a Civilized.life article, “Ontario Cannabis Store Faces Backlash Over Improperly Labeled Products… When Peter Lyon logged on to the OCS website on October 17, he did so with the intention of buying a strain high in THC — the compound in marijuana that gets you high. However, that is not what he got… Not only is the error in the product labeling upsetting for customers who won’t be getting what they paid for, cannabis retailers have a legal obligation to ensure that their labelling is accurate. Otherwise someone looking to unwind with a low-THC strain could wind up having a panic attack because the product they bought is way too potent.”
The first blush of entering a new marketplace deserves branding, labeling and packaging that measure up.
Gary Paulin is Director of Sales and Client Services for Lightning Labels, a Denver-based label printer that has been offering state-of-the-art affordable, full-color custom labels and custom stickers of all shapes and sizes to cannabis purveyors for more than a decade. They offer many options for materials and laminates and special effects to achieve digital short-run requirements (50 minimum) on up to 15 million labels, plus Lightning fast delivery. For more information and to place orders online, visit LightningLabels.com. For the latest in packaging news and labeling promotional offers, find Lightning Labels on, Facebook, Instagram, Twitter (@LightningLabels), Pinterest, Google+ and LinkedIn.
Committee Blog: Protecting Stash-Assets
By NCIA’s Infused Products Committee
Contributors include Radojka Barycki, Noval Compliance; Karin Clarke, KC Business Solutions; Lee Hilpert, Organnx; Danielle Maybach, Eva Gardens; Trevor Morones, Control Point; and Todd Winter, Winter LLP
You have spent months fighting sleep deprivation to build a strong pitch deck as the next most desired infused cannabis company. Educating staff, family, and friends, through role-plays and recent published journal entries. Blog after blog, inspirational book after book, and you start to believe that the deck is complete. Dress to impress then review the multi-colored sticky notes that list the risks of your operation. Some are likely, others are less, but what about the ones that are high? Is ALL of your due-diligence completed to pitch to the venture capital groups in the cannabis world?
The Issue
While legalization has quickly brought cannabis and cannabis-related products into international markets, relevant food safety regulations need to be implemented and adopted to protect patients and consumers. The infused product manufacturing sector, in particular, requires more uniform safety requirements to guide operating professionals, many of whom lack knowledge, resources, and incentive to standardize safety.
As target consumers range from large groups of adult consumers to medical users, safety is a paramount concern for all. This is especially true for medical users, as they are predominately high-risk consumers regardless of their specific medical condition.
The cannabis industry, especially the infused edible products sector, has a prime opportunity to incorporate and implement existing food safety regulations into their manufacturing processes. This will demonstrate alliance with the general food manufacturing industry and help to ensure that cannabis-infused product manufacturers are regulated no more stringently than any other food manufacturer.
The Risk
In addition to the already controversial nature of our industry, safety issues will undoubtedly garner public and press attention when as few one people become ill as a result of an unsafe product. Contamination inevitably comes from a variety sources, such as chemical, physical, or biological hazards in the growing and extraction process (and lack of testing), employee contamination (failure to use gloves, wash hands, dirty garments and tools, etc.), failure to adhere to basic food safety processing standards and practices (clean food contact surfaces, improper chemical concentrations, introducing biological contaminants).
Without clear and industry applicable guidelines and processes, product safety issues will emerge and take over headlines. Issues of product safety damage consumer and industry trust, resulting in lost revenue, loss of market share, decreased share value and loss of talent. One most recent example of the exorbitant cost related to product safety was made ominously clear in the multi-state Chipotle case. This incident caused a tragic decline in customer confidence and many days of double-digit stock value plunges.
The Solution
Site-specific training for all team members is the preventative action to reduce risks and generate positive audit results. Rigorous training programs expand food/product safety knowledge, generate a stronger culture, reduce risk, and prevent contamination. By focusing on how each employee can positively impact safety through their daily actions and contribute to the market value and customer satisfaction, employees take on a stronger safety and excellence culture, resulting in higher Net Promoter Scores (NPS).
Measurement is critical to quality control and ongoing excellence. Food Safety Management Systems (FSMS) provide operating structure and validate the process to prove the system is operating as intended. These proven systems operate on a foundation of integrity that mitigates risk throughout the process of a product. No doubt the learnings there transfer to the cannabis products, especially infused products.
What’s Next?
The IPC’s goals are to raise awareness, effectuate positive change, and help establish protocols and standards for food safety, dosing, and testing within the cannabis industry. This will establish baselines from which cannabis business operators can rely upon, prevent inapplicable regulatory requirements that are not relevant to our industry, and most of all provide for the safety of consumers.
Now, when did food safety leave a bitter taste in your mouth? Precisely! Never would we need an Upton Sinclair to transform the industry from a negative outlook on the truths. Collectively we will unite and hold our operations to a standard of excellence that will be called upon during the end of cannabis probation on a national level.
Committee Blog: Progression in Packaging – Challenges & Opportunities for Cannabis Brands
Any visit to a licensed dispensary is proof of how far we’ve come with the packaging of legal cannabis. Sure, we still have plenty of standard glass jars, CR pouches, pop-tops and cans; but we also now see proprietary package structures, full branded lines commanding shelf space and packaging so beautiful it doubles as a merchandising tool. Just in the past several months, cannabis packaging design trends have been covered by mainstream media including The Dieline and Packaging Digest.
These are exciting times to say the least, but packaging and labeling remains at the crux of the serious challenges and opportunities that cannabis brands face today.
Keeping Up With Compliance
Here in California, the challenge of keeping up with compliance is beyond real. The race to meet state regs by July 1st were only met with a new set of checklists (literally) the following day. Added labels is the name of the game for any California supplier. This is a real problem for those brands who are trying to stand out with their packaging. Understandably, companies are hesitant to invest in their packaging when the regulations are still in flux. Those who are in this for the long haul need to be agile and forward thinking when it comes to packaging and labeling.
Branding… Because it Really Does Matter With limitations on how a brand can reach today’s cannasumer, packaging is a critical marketing tool. It’s the one guaranteed touchpoint we have, and just like in traditional retail environments, every second counts when trying to capture a shopper’s attention. While it’s tempting to go with the standard compliant packages, a lack of brand value will commoditize your product (and thus, the price point). Brands should ensure that their package is reflective of their unique position in the market. Whether it’s a regional play, a potency position or targeting the growing number of boomer consumers—your packaging should speak directly to who your target market is. Now is the time to create brand loyalists!
Taking a Note from Natural Products
All across retail industries, we are seeing a market demand for products that have a more “natural” approach. From clean ingredients to plant-based everything, it’s impossible to avoid this trend. As the OG natural product, cannabis brands have a real opportunity to take advantage of today’s more discerning shoppers. Tell your story, explain your growing practices, show us your social responsibility… It’s all part of the package, literally and figuratively.
A Need for Sustainable Solutions
To really take our natural story to the next level, we can all agree on the need for more sustainable options for packaging and labeling. It’s great to see some brands, companies, and organizations like W Vapes initiating recycling programs. But as an industry, we need to rally together to work on this issue. It’s definitely a challenge that NCIA’s Packaging and Labeling Committee discuss regularly.
An Optimistic Future for the Realists
For those cannabis brands who can be agile, patient and focused—there is a bright future ahead. Despite the challenges of cost and compliance, an effective package can pay for itself. And if other industries like food and beverage are integrating technologies beyond the QR code (think AR and VR), we’re just getting warmed up. As both in-store and retail experiences evolve, so will the opportunities for cannabis packaging. Form, function, technology and product development are bound to take packaging and labeling to exciting new heights.
Member Blog: Know Your Regulations, Know Your Labels
Agility, timely data and printing performance drive cannabis label compliance
Ability to move quickly, accurately, and competitively is the lifeblood of cannabis purveyors. Timely compliance in such areas as labels and packaging is critical to staying in business; agility in grabbing a competitive edge is crucial to profitability.
To help make that happen, cannabis-savvy label experts must be able to provide near real-time information and clear, straightforward guidance to ensure full and timely compliance. With labeling and packaging regulations constantly changing across the land, getting and staying current is much easier said than done.
Sweeping changes include revising labels to make cannabis products less appealing to children, listing THC and CBD amounts, designating “hemp” versus “marijuana” products, and establishment of label regulations in states with new marijuana legalization laws. Then, there’s the entire country of Canada, which will legalize recreational marijuana effective October 2018.
California purveyors in particular are feeling the heat. New packaging and label regulations went into effect July 1, and Proposition 65 rules impacting all product labeling and packaging are now in force (full compliance deadline was Aug. 30).
Critical consequences of non-compliance
California’s July 1 requirements alone proved difficult for a variety of cannabis companies. A report on KPIX, the San Francisco Bay Area CBS affiliate, pointed out: “Empty Shelves At Some Bay Area Pot Dispensaries After New July 1 Label Law… Many California marijuana dispensaries seeing their profits are going up in smoke. Their shelves are sitting empty ever since a new labeling law took effect Sunday… the Associated Press estimated the entire industry would lose nearly $400 million because of unsold product.”
Obviously, lack of knowledge and compliance can carry severe penalties, crippling operations and hobbling profits. Here are a few tips to help cannabis companies stay on top of evolving labeling and packaging regulations and avoid regulatory repercussions:
Partner with companies providing accurate and complete label and packaging guidance, both on the information and hands-on production and printing fronts. There are companies dedicated to maintaining current and complete databases about rules and regs in municipalities and states where both medical and recreational marijuana laws are in effect. And there are label production and printing companies with extensive track records in creating cannabis labels. Make sure you get up to speed in both areas.
Confirm “agility ability” of these entities. All the information and capabilities in the world can be for naught if the capacity for executing quickly and competently doesn’t exist. As the cannabis industry continues to twist and turn all over the place, including labeling and packaging requirements, it’s absolutely critical to be able to move with—or optimally ahead of—developments. Having consistent, reliable resources in place can make the difference between plentiful shelves and profits and the emptiness associated with non-compliance—as many California purveyors discovered the hard way.
Use these established resources for predictive modeling. While predicting the future of cannabis rules and regulations may be difficult, cannabis companies with access to ample intel, experience and expertise may be able to better prepare for the future. Information showing trends, innovative ways to address what’s ahead with labels and packaging that “think ahead of the curve,” and overall insights into a variety of marketplaces can help make this happen.
To address both branding/printing and business/legal intelligence requirements at state and local levels, Denver-based strategic partners Lightning Labels and Highmark Data are giving cannabis purveyors fast and agile one-stop access to much-needed resources pertaining to labels and packaging. Lightning Labels is a Denver-based label printer that has been offering state-of-the-art affordable, full-color custom labels and custom stickers of all shapes and sizes to cannabis purveyors for more than a decade. Highmark Data provides comprehensive business and legal intelligence needed to make the smartest and most compliant decisions in municipalities and states nationwide.
Gary Paulin is Lightning Labels’ Director of Sales and Client Services.
A year ago, NCIA’s Infused Products Committee (IPC) made the decision to tackle the issue of cannabis testing. It is an issue we feel is at the heart of cannabis legalization and is negatively impacting cannabis businesses across the nation. Although it has been a struggle to get comparable lab results across different labs, IPC believes there is a future where cannabis testing will reach consistency.
We began our process by asking several questions and with the assistance of the NCIA, we crafted a survey that was sent to experts in the field. During our preliminary research, we discovered that most cannabis testing labs view their protocols and procedures as proprietary information.
To gain better insight about the testing sector, we asked Alena Rodriguez, a member of NCIA’s Scientific Advisory Committee (SAC) to participate in an interview. Alena represents Rm3 Labs, a cannabis testing laboratory in Colorado.
IPC: Are you concerned about the inconsistent and varying test results and the impact it has on consumer safety?
Alena: Yes, I’m concerned. I do not take my job lightly; I know that contaminated cannabis can be harmful and sometimes life threatening. That is why I am involved with state regulators and groups like NCIA’s SAC and Testing Policy Working Group. We aim to educate regulators and stakeholders on the importance of practices such as independent audits, proficiency testing and ISO/IEC 17025 accreditation for cannabis testing labs.
IPC: Do you think we are close to having consistent cannabis test results from different laboratories?
Alena: We are well on our way. In Colorado, licensed labs must undergo Proficiency Testing (PT) twice per year. PT is done through an inter-laboratory comparison where participating labs receive the same sample and analyze it using their methodology. Even though our procedures are not standardized to one method, most of the labs arrive at the same result. Unfortunately, not all states require PT yet, but I feel more and more states will adopt these programs.
Along with PT, consistent testing across labs requires the use of high-quality reference materials that are used to validate analytical methods and calibrate instruments. Cannabis testing labs in the United States have limited access to reference standards. Like cannabis, most industries started with limited resources, but over time the science will progress as federal barriers are lifted to make more research and better standards possible. It took decades to develop standardized, consistent methods in other industries, such as in pharmaceuticals and food testing. I don’t see the cannabis industry being any different.
IPC: Should there by penalties if a testing lab consistently provides drastically different results from prior tests of the same product?
Alena: It depends on the situation. If the lab is knowingly breaking the rules or trying to cheat the system, then absolutely. But, most of the time inconsistent results have causes other than fraud or negligence. This industry produces new products every day and some manufacturers and laboratories don’t “get it right” on the first try. There is a lot of research and development that is involved. Three of the biggest hurdles for consistent testing of cannabis products are 1) the variety of sample types 2) the lack of certified reference materials for uncommon cannabinoids and terpenoids and difficulties in obtaining concentrated standards and 3) inhomogeneity in some infused products or concentrates. Product uniformity is critical and should be confirmed by analytical testing for consumer safety. Variable results across multiple labs may suggest a product lacks uniformity.
IPC: Do you believe testing procedures and protocols areproprietary?
Alena: Yes, third-party cannabis laboratory protocols are just as proprietary as the protocols developed by cultivators, concentrate extractors and infused product makers. Testing labs having proprietary methods is not novel to this industry. If a lab in any other industry (e.g. food, medical, agriculture, environment) develops an alternative method to the standard method, they can use it if they can validate against the reference method.
IPC: Should labs be required to prove their analytical methods are accurate by submitting their practices confidentially to a regulatory body?
Alena: Absolutely! Colorado labs are currently required to send all new Standard Operating Procedures (SOPs) and method validations to the CDPHE prior to implementation. I hope more states adopt this practice, if they aren’t doing so already. As of January 1, 2019, all cannabis testing labs in Colorado will be required to be ISO/IEC 17025 accredited. ISO/IEC 17025 accreditation is the international gold standard for assessing the competence and quality management systems of testing labs across all industries to ensure consistent, accurate test results. More than a dozen cannabis labs have achieved this accreditation across the country.
IPC:Are you aware that the ASTM Committee D37 reportedly drafted testing procedures? If published, will cannabis testing labs follow published procedures that are not their own?
Alena: Yes, I’m excited! This is a great step for our industry. I imagine the committee will develop similar protocols to those being used by third-party labs. But as I mentioned before, labs will have the choice to use the published standard methods or their own alternative method, granted it is validated against the reference method. I expect some labs will attempt to validate their methods against the standard methods and some will adopt ASTM’s methods.
IPC: Are you aware of testing labs that allow for “tipping” on their order forms? Does this concern you, and why?
Alena:It concerns me that there are bad actors in the testing sector of the cannabis industry but I’m afraid there are bad actors in every segment of every industry. At Rm3 Labs, we do not participate in or condone unethical behavior such as paying for the results you want. We would never risk falsifying test results because we are aware immunocompromised individuals and children are possibly taking the products we are testing. I would not risk my entire scientific career to give you 5% higher THC potency results or lie about your contaminant testing results. I advise all cannabis testing labs to always act ethically because you are in the business of public safety and your lab is subject to investigation by regulatory agencies at any time.
IPC conducted the above enlightened interview with SAC. While we were inspired by some of the answers, much like our survey attempt this past year, many of our questions remain unanswered. For example, we don’t agree that cannabis cultivators or manufacturers are to blame for receiving inaccurate “clean/approved” test results from labs due to products being inhomogeneous.
That said, it is clear by a couple of the responses that some states, like Colorado, are making substantial progress in oversite and legal requirements for testing laboratories, while other states, like California, are still leaving significant and dangerous gaps.
In our opinion, the industry’s need for consistent and accurate testing results remains at the forefront of the issues facing commercial cannabis today. The ability to send the same sample, from the same batch, under the same conditions, and have it tested by multiple labs, achieving the same results, is paramount to our industry’s future and success. State laws should require it. The industry should demand it. And the consumers most certainly deserve it.
As such, the IPC will continue its mission to drive this conversation forward with both testing labs and operators alike. Only together, can we really solve this crucial issue facing our amazing industry.
Member Blog: The Cannabis Industry Requires New Security Thinking
The legal medical and adult-use cannabis market has grown to an estimated size of 7.1 billion dollars. With this growth comes an array of new opportunities and challenges for cultivation centers and dispensaries. These entities are looking for solutions to ensure they meet regulatory requirements, secure their facilities and produce products of the highest quality.
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Some of the security and operational concerns for cultivation centers may include:
Compliance with state-mandated requirements for facility and security system design
Tightly controlled access
Secured storage vaults
Complete security camera coverage, with the exception of bathrooms and locker rooms
Ability for state officials to log in to the security system remotely
Monitoring of the environment in cultivation rooms
Revolution Cannabis, a cultivation center located in central Illinois, addressed these challenges with a new access control system. The company not only met state regulatory requirements but also prevented any incidents from occurring.
To learn more about how Revolution Cannabis was able to solve their security and operational challenges, read the full case study.
Tom Dillon is a marketing associate at S2 Security, the leading developer of complete enterprise security solutions. As marketing associate he helps manage S2 Security’s marketing initiatives including content development, public relations product marketing.
The Cannabis Business Banking Crisis
By Rachelle Lynn Gordon, NCIA Editorial
The fledgling legal cannabis industry has faced numerous challenges since California voters made the state the first to approve the plant for medical use in 1996. Since then, an additional 29 states and the District of Columbia have legalized cannabis for either medical and/or adult-use purposes yet it still remains a Schedule I controlled substance in the eyes of the federal government. This has caused immense headaches for cannabis business owners in a multitude of ways – especially when it comes to balancing the books. The majority of traditional banking institutions refuse to work with clients that touch the cannabis plant, leaving many businesses to operate as cash-only while at the same time missing out on the traditional financial and lending opportunities given to other businesses.
“Being forced to hire an armored truck just to pay taxes or provide payroll isn’t only a hassle – it’s also extremely dangerous,” says Harry Resin, who longs for the day when he can open a business checking account for his cannabis company, URB Delivery. “People’s livelihoods – and frankly their lives – are constantly at risk when you’re dealing with large amounts of currency.”
Lack of security isn’t the only detriment to cannabis business owners unable to find banks who will work with them. Business loans, savings accounts, 401Ks, and credit lines are all out of reach for those wishing to develop their operations and plan for the future.
“I would love to be able to expand my operations but because I don’t have the option to take out a small business loan, I either have to get loans from friends and families or potentially give up equity to private investors,” Resin adds. “It makes things difficult.”
While many believe that it is illegal for banks to do business with those in the marijuana space, it turns out the opposite is true.
“We actually have regulations on how to bank the cannabis industry, but most banks don’t want to go through the expense and hassle of opening new departments,” explains Jim Marty, CEO of Bridge West CPA. “They’re already making tons of money, so they don’t feel the need to enter a new space. It’s going to take Congressional action on legalization before the big players enter in.”
While it’s not clear how exactly cannabis reform will play out, Marty cautions that while moving cannabis to Schedule II status could be positive for advocates of legalization, it may also negatively affect the entrepreneurial activity the emerging cannabis industry has shown.
“Right now, we have a lot of start-ups and small businesses that are getting funding from angel investors or private equity funds. If cannabis becomes Schedule II, there’s a chance that Big Pharma, Big Tobacco, and Big Alcohol will come in and there will be two or three major producers. So something that could fix a lot of the problems may do more harm than good.”
Marty notes that the introduction of bills such as The SAFE (Secure and Fair Enforcement) Banking Act (S. 1152, H.R. 2215), which would offer protections for state-legal financial institutions working with marijuana businesses, are steps in the right direction for the cannabis industry but that it is going to take hard work and perseverance by all in the community before real change is made.
Help us grow even more support for the SAFE Banking Act in Congress. Contact your members of Congress and urge them to support federal protections for financial institutions that work with the regulated cannabis industry.
Learn more in this report by NCIA’s Legal and Banking Committee: Investigating the Role of Financial Institutions in the Legal Cannabis Industry NCIA’s Legal and Banking Committee, comprised of NCIA members within that sector, produced this white paper following a meeting with California State Treasurer John Chiang and other cannabis industry leaders in mid 2017. The paper provides discussion and evaluation of challenges faced by businesses operating within the legal cannabis industry, while highlighting some of the benefits the industry brings to financial institutions and the communities they serve. (February 2018)
The following topics are areas to be aware of while creating and designing packaging. Using these tips can save you time and money in the process of creating or selling cannabis products.
Originality of content – Imitating consumer packaged goods for your packaging design through parody of a popular brand logo or using parody in packaging design can lead to serious issues. Use packaging is an opportunity to define your brand.
Lead times – Timing and shipping are usually underrated factors that can cause headache and unnecessary costs. Depending on the complexity of the packaging, if tooling is be required, this can easily add six weeks to your delivery time. Is your packaging being produced domestically or internationally? How much space will packaging use and where will it be stored?
Issues compliance labeling on design – If you are creating a product to be sold at a dispensary, make sure to consider additional labeling that will appear on the final product delivered to customers at retail. There needs to be enough surface area or clever design to make sure your packaging identity isn’t lost amongst compliance stickers. If you are a retailer, it is important to educate salespeople about where to place required labels to not obscure important information that may be on the packaging.
Adaptable – Rules change constantly. Your company’s strategies to deal with changing regulations should include packaging and labeling. You could predict and order units based on when regulations go into effect, or start with packaging that goes beyond current standards. As a retailer, can you find a way to insist the brands you carry comply with child resistant standards or order more exit bags? Going above and beyond current regulations can save you money and elevate your product.
It is important to have packaging graphics that get noticed at retail. Consumers often skim shelves quickly looking for brands that are known to them or graphics that catch their eye. With limited space in dispensaries it is important to have branding that is well presented in the packaging. Creating packaging that represents your brand is best done early in the process so that it is not rushed and attainable lead times for desired packaging can be met. In our industry, states can update packaging guidelines at any time, make sure your final packaging adheres to all regulations structurally and graphically.
Committee Blog: Child Resistant Requirements and Challenges
Child Resistant requirements for cannabis products is part of the regulatory structure for almost every state that has legalized marijuana for both medical and adult use. These requirements pose challenges to the entire supply chain from growers, manufacturers, dispensaries and customers.
Child resistant packaging is defined by the CPSC on a federal level. Most states refer to the CPSC guidelines for testing and certification of packages. There is no such thing as a child proof package. There is only a child resistant package as defined by the CPSC or other state cannabis regulators.
No one likes child resistant packaging – that’s a given. It is used because regulations require it. The cannabis industry is one of only a few that have to use this type of special packaging.
Start your search early in your development process to find the right package solution. Customization takes time with your manufacturer to design, develop and engineer to meet your branding and production needs. There are both single use and multi use child resistant packages. Ask your regulatory advisors which type of child resistant feature you need to use for each type of product.
Make sure your child resistant packaging has been tested and certified by an approved ASTM third party testing agency. Your packaging manufacturer should have the certificates from these outside agencies for you to have on file to support your regulatory compliance.
Costs for these certified child resistant packages are going to be more expensive than non child resistant options. Build these costs early into your total spend.
Our industry is going to push the design and engineering solutions for child resistant packaging to support the branding and marketing of all these great new products. Other issues such as sustainability and use of recycled materials will also be demanded by the cannabis industry. Manufacturers and suppliers of child resistant packaging will have to step up their game to support this new and exciting industry.
Member Blog: Three Security Must-Haves for Marijuana Dispensaries
The proliferation of both legalized medical and recreational marijuana has, not surprisingly, led to a massive boom in dispensaries — and, with that boom, increased focus on these burgeoning businesses and their increasing security needs. “Inventory will increase, cash holdings will increase, and the number of people accessing legal cannabis for the first time will naturally evolve to a larger customer base,” writes Marijuana Retail Report. To many industry and security experts, this presents a perfect storm — high value products, cash on hand and less scrutiny over who’s coming through the door.
If you’re launching or scaling a marijuana business, it’s essential to unpack several basic security challenges and overarching needs. By safeguarding your business from day one, you’ll be better positioned to protect your inventory, your customers and your business, while maintaining a well-designed, welcoming environment for workers and buyers.
1. Security Guards
Many dispensaries want to avoid a visible security presence — which makes sense. Because of marijuana’s history and, still, the stigma that exists in many communities, seeing a security guard can make customers feel skittish or even avoid coming in entirely.
The solution? Have point-of-entry security that facilitates a positive customer experience. Many businesses, for example, opt for plain-clothes guards or guards with uniforms that mimic the rest of the in-store team. “Since they are the first point of contact,” explains MMR, “ensure that they are helping consumers feel welcome and invited, yet are able to maintain a zero-tolerance stance on any customer activities that could present a perceived threat to your dispensary, staff and other customers.”
2. Secure Transportation
Getting marijuana from growers to dispensaries and shops presents another layer of security concerns. Because the product is so in-demand and so valuable, it’s an appealing target for retail crime, from the minute it’s harvested. If you’re handling transportation yourself, be sure your fleet is equipped with the basics — bullet-resistant finishes, GPS tracking and streaming videos that feeds to your security “home base,” for starters.
For many businesses, though, managing this level of high-stakes transportation is too much to take on, especially in the beginning. For them, there are a variety of transportation-focused companies who specialize in cannabis and medical transport, and can ensure your product arrives safely and securely every time.
3. Internal and In-Store Theft Prevention
The majority of dispensary losses come from employee theft. While there are several steps businesses must take early on — thorough employee screening, background checks and a solid inventory management and POS system — it’s essential to maintain in-store security measures that discourage “heavy-handedness” and full-on theft.
During the onboarding process, supervisors and dispensary owners should be clear that employees cannot sell to themselves. Beyond that, ensure you have a clear-cut “friends and family” discount policy in place and that it’s communicated and adhered to. No discounting allowed? Make sure that’s made crystal clear, too.
Taking things a step further, be sure to integrate physical protections for your product. Senseon Secure Access recently topped IndicaOnline’s list of the top five security services for marijuana dispensaries, with a specific eye on the company’s smart cabinetry systems. With automatic relocking and customizable permissions for staff, it’s easy to safeguard cannabis while, at the same time, maintaining a close eye on who’s accessing what when — if there’s a problem with products, tracking down the culprit is easier than ever. And, with a keyless entry, there’s no risk keys will end up in the wrong hands ever.
As the cannabis landscape grows and expands, security needs will, too. But, for now, focus on these three must-haves to protect your dispensary today and tomorrow.
Evan Hicks is Marketing Coordinator for Senseon Secure Access, a product of Accuride International. As coordinator, he helps manage Senseon’s marketing initiatives covering communications, events, and research & development. With an unquenchable thirst for learning, Evan frequently finds himself deep in the rabbit hole conducting research for Senseon’s multiple markets.
A graduate of California Polytechnic University, Evan has nearly a decade of experience in security and public relations in both the public and private sector.
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Martha Ostergar is the marketing content manager at RizePoint, a quality management software company that has helped top brands to digitally manage compliance, quality assurance, corporate social responsibility, and supplier quality management for over 20 years. Visit
James B. Mann is a partner with the Tax practice group of Greenspoon Marder LLP. Mr. Mann has over 25 years of experience serving as a trusted advisor to a broad range of stakeholders in the energy and financial services industries. He counsels clients on the new changes in the tax law, as well as cannabis tax issues and cannabis tax controversy proceedings. Mr. Mann has a law degree from Harvard Law School and an MBA from Columbia University.
Ms. Gillette regularly represents clients before the IRS’s Examinations, Appeals, and Collections Divisions, including marijuana businesses facing the challenges of IRS adjustments under 280E. She has successfully protested local, state and federal tax deficiencies on behalf of her clients, having prevented hundreds of thousands of dollars in incorrectly assessed taxes, interest, and penalties. She can assist individual and business taxpayers in 280E proposed assessments, offers in compromise, audit examinations, innocent spouse claims, sales, use, and employment tax matters, trust fund tax penalty assessments, penalty abatement’s, and levy releases. 
Branding… Because it Really Does Matter
A Need for Sustainable Solutions
To address both branding/printing and business/legal intelligence requirements at state and local levels, Denver-based strategic partners 
Tom Dillon is a marketing associate at 
“Being forced to hire an armored truck just to pay taxes or provide payroll isn’t only a hassle – it’s also extremely dangerous,” says Harry Resin, who longs for the day when he can open a business checking account for his cannabis company, 
Child Resistant requirements for cannabis products is part of the regulatory structure for almost every state that has legalized marijuana for both medical and adult use. These requirements pose challenges to the entire supply chain from growers, manufacturers, dispensaries and customers.
Many dispensaries want to avoid a visible security presence — which makes sense. Because of marijuana’s history and, still, the stigma that exists in many communities, seeing a security guard can make customers feel skittish or even avoid coming in entirely. 
Evan Hicks is Marketing Coordinator for