Committee Insights | 7.13.23 | Know Your Hazards – Occupational Health and Safety Considerations in Cannabinoid Ingredient Manufacturing
NCIA’s #IndustryEssentials webinar series is our premier digital educational platform featuring a variety of interactive programs allowing us to provide you timely, engaging and essential education when you need it most.
In this edition of our NCIA Committee Insights series, originally aired on July 13, we were joined by members of NCIA’s Cannabis Manufacturing, Scientific Advisory and Hemp Committees for an in-depth discussion highlighting the occupational health and safety considerations to make during the manufacture of cannabinoids and provide recommendations for mitigating risk.
There is no mistaking that manufacturing cannabinoids is here to stay. It is more and more prevalent to see historically plant/naturally derived bulk ingredients being manufactured in a controlled environment in the lab or through innovative processes like precision fermentation. It is likely that bulk ingredient manufacturing of cannabinoids will go this route too.
For cannabinoids like HHC, that do not exist naturally in the plant or in high enough quantities to be commercially viable for extraction, it is most certainly the case that manufacture of these compounds will occur in the lab. To produce these compounds safely, we can luckily look toward existing regulations and occupational health and safety guidelines for producing novel ingredients for use in foods and non-foods.
Learning Objectives:
• Recognizing common occupational safety hazards associated with manufacturing cannabinoids and recommendation to mitigate these hazards
• Learning the different occupational safety considerations between isolation and purification of naturally occurring cannabinoids and the manufacture (synthesis) of cannabinoids in the lab
• Understanding the special safety considerations that processes like hydrogenation and others have and why these are critical to mitigating liability for your business
Safeguarding Consumers in the Cannabinoid Product Landscape (Part III):
Know Your Hazards – Occupational Health and Safety Considerations in Cannabinoid Ingredient Manufacturing (Part IV): https://bit.ly/3rEUeKP
Concepts for Regulatory Consideration – Shifting the Conversation from “Cannabis vs. Hemp” to “The Cannabinoids” (Part V): https://bit.ly/3P3r5AW
Member Blog: Quality Over Quantity – Why Stronger is Not Always Better
by Andrew Kaye, Sweet Leaf Madison Capital
Over the last 15 years, cannabis has seemingly catapulted away from the days of schwag and dirt weed. Today, we are seeing THC levels well beyond percentages that were displayed in dispensaries 10 years ago when cannabis first became legal in certain states. Advancements in technology, a better understanding of growing cannabis, and strain cloning has allowed for growers and chemists alike to fine-tune the plant to offer more bang for our buck – but not everyone needs to blast off every time they light up, right?
Right.
Recently, there has been a shift in the way we approach cannabis use, especially for medicinal purposes – proper dosing is everything. These stronger strains that have been Frankensteined together to ensure a potent one-hit high making it nearly impossible to provide a controlled dose for someone just looking for a chill evening or relief from their chronic pain. Granted, these strains have their place among seasoned tokers, but for others who are novice cannabis enthusiasts or patients looking for a treatment, stronger does not necessarily mean better. More intention should be put toward partaking, and it is as simple as asking yourself a few questions: How do I want to feel? What do I want to do? Where am I going? What hurts? Who is part of the experience?
Realistically, when was the last time you went to the bar to enjoy a casual night out with friends and started throwing back tequila shots until your knees buckled?
Hopefully, you are not recounting a night where that happened, but if so, you can probably guarantee that you would not put yourself in that situation again, at least not right away. Be honest with yourself, answer the questions above and chat with budtenders to find the best solution for you.
Knowledge is Your Best Friend
For a lot of people entering dispensaries for the first time, they see these high THC numbers and equate it to a better high, but the reality is that cannabis potency can be attributed to more than the THC percentage. Terpenes, differing cannabinoids and other compounds found within the plant also play a major role in how strong the strain is and what effect it has on your body and mind. Think of the subtlety of wine versus the kick of jello shots.
This is why it is important to talk with budtenders to better understand which strain is going to work best for what you are seeking. The problem today is that dispensaries are experiencing high turnover rates, as 55% of budtenders who held jobs over the last year left within 12 months of starting, according to a Headset market report. Losing seasoned employees not only impacts the store itself, but customer service tends to take a hit (no, not that type of hit). Inexperienced budtenders might be rushed to the counter without proper training, leading to misguided direction and customers walking away with flower or edibles that will send them to space, or to a space that they did not intend to go. Again, there is nothing wrong with having highly potent strains, but making and distributing them comes with a responsibility toward customer and patient care. As more states migrate to adult use cannabis, many are abandoning the medical dispensary model and focusing on high-profit strains, not curative or palliative care. Dispensaries need to ensure they are properly onboarding and training new employees to provide the best service possible.
The Future of Cannabis
As science improves and technology becomes more refined, cannabis potency is going to continue to go up, but it also means that mid- and low-potency strains will get better. If you look at the craft beer industry, the days of high abv IPAs and stouts are slowly fading and more focus is being put on taste and balance.
Since 2014, there has been an almost “gold rush” mentality where growers were fine-tuning their product at a high rate to offer a better punch than their competitors, but in 2023, after nearly 10 years of legal cannabis, customers are looking to refine their tastes and highs.
For most, the quality of the strain is going to be far more beneficial than the quantity of THC, but at the end of the day it is all preference. So do yourself a favor the next time your supply is low and chat with budtenders – lean on their expertise and compare with your own research. Try different strains along the potency spectrum and really consider taste. No one consumer is the same; make your experience yours. The higher the price is not always the nicer the nice.
Andrew Kaye has been involved in all aspects of the financial services industry, as a fund portfolio investment manager, investment banker, family office investor and attorney. He has worked with start-ups on their first raise through global enterprises undertaking billion-dollar stock offerings, and has significant investment experience in the cannabis industry. Currently, Andrew works as Sweet Leaf Madison Capital’s Chief Commercial Officer. Lending his expertise toward the creation of middle market financing solutions for real estate and equipment financing needs in the cannabis space.”
“Sweet Leaf Madison Capital provides non-dilutive, asset-based lending solutions to the underserved middle market of the cannabis industry by originating real estate loans, equipment financing, securitized term loans, and more for entrepreneurs and businesses. The company is based in Denver, Colorado and has offices in New York City and West Palm Beach, Florida. To learn more or complete a loan application, visit Sweet Leaf Madison Capital online, or continue the conversation on LinkedIn, Twitter and Facebook.”
Andrew J. Kaye is Chief Commercial Officer of Sweet Leaf Madison Capital. He can be reached at akaye@sweetleafmadison.com.
Member Blog: Think Your Disposable Gloves are Clean? Think Again.
For those working in the cannabis industry, disposable gloves provide a protective barrier when working with products during the cultivation, harvesting, and processing stages. The benefit to wearers is essentially twofold. While “food-safe” rated gloves can greatly reduce the threat of cross-contamination between the wearer and products, they also help keep employees safe from dermal threats such as THC exposure, chemicals, fertilizers, and a wide variety of pesticides, especially if utilized during the growing season. In one well-documented incident, the culprit for a costly product recall turned out to be cross-contamination from single-use gloves, when O-Phenylphenol (OPP) – a cancer-causing chemical compound – was discovered in a seemingly pesticide-free cannabis operation.
If cannabis employees are under the impression that all disposable gloves are clean, intact, and contaminant-free right out of the box, you may want to reevaluate your perception.
Recent Study Identifies Glove Contaminants
The recent findings from a multi-year study on the potential for glove contamination revealed some alarming results about new and unused gloves. 2,800 gloves from 26 brands were subjected to four separate metagenomic testing sequences to determine the presence of contamination on both interior and exterior surfaces. Of all the samples analyzed and tested, 50% of the gloves contained traces of human fecal matter. In addition, the testing also detected other harmful pathogens which can lead to cross-contamination in cannabis supply chains. These included various yeast species, and a wide range of distinct genera of fungi – including Penicillium, Cladosporium, and Aspergillus.
How Can This Happen?
You may be wondering how it’s possible for unused disposable gloves to be contaminated right out of the box. Because the contamination occurs during manufacturing, before they are packaged in their box – and there are two root causes that contribute to the potential threat. First, not every glove supplier manufactures their products in a clean and hygienic environment. Putrid water sources, unsafe raw materials, and inadequate processes for quality control plague many of the factories where single-use gloves are produced. Compounding this problem is the lax oversight and enforcement of the FDA’s current regulatory policies, which actually don’t require imported food-compliant gloves to be pathogen-free or tested for performance such as rips, tears, and holes.
All Glove Suppliers are Not Equal
Before you adopt a defeated mindset about the safety and quality of gloves you wear, there are suppliers and distributors that go the extra mile to make sure their product lines are free from harmful contaminants. Glove suppliers that adhere to the highest industry standards for performance, quality, and safety are known for self-policing their manufacturing processes, ensuring that products are produced with proper raw materials, absent of unsafe chemicals, toxins, or microbial contaminants. They also conduct routine audits to test the effectiveness of their manufacturing process, and some have even adopted product traceability to ensure a contamination-free supply chain from initial production to final shipping and delivery.
Buying the cheapest gloves may save you a little on the front end, but also come with elevated contamination risk. In the long-run, premium quality gloves are much more cost-competitive than you think. And you’ll have peace of mind in knowing that your required PPE will probably never be the cause of a costly product recall that can be damaging to your organization’s profitability and reputation.
Justine Charneau is the head of cannabis industry sales at Eagle Protect, a disposable glove supplier dedicated to the responsible sourcing of quality products that ensure customer safety and impact reduction, ultimately mitigating customers’ risk. Eagle Protect is the only global PPE supplier that is a Certified B Corporation, a designation that a business has met the highest standards of verified glove safety and performance, accountability, and transparency. She can be reached at justine@eagleprotect.com
Committee Insights | Meet the Minors (Novel, Minor, Synthetic Cannabinoids – Part II)
In this edition of our NCIA Committee Insights series, originally aired on May 11, 2023, we were joined by members of NCIA’s Cannabis Manufacturing, Scientific Advisory and Hemp Committees for an in-depth discussion of the most talked about minor, novel, and synthetic cannabinoids.
What scientific publications exist for each compound? What do we know about each molecule’s physiological, psychoactive, and therapeutic effects?
You’ll find out during this informative session featuring leading chemical experts, manufacturers and product development specialists. Along with audience members they explored these compounds from various perspectives to examine their implications for consumers, medical practitioners, patients, producers and regulators.
Learning Objectives:
• Molecular Structures and Identification of novel, minor, and synthetic compounds
• Published Physiological and Psychoactive effects of these compounds
• Perceived therapeutic effects
• Opportunity to ask about other new compounds not in presentation.
Safeguarding Consumers in the Cannabinoid Product Landscape (Part III):
Know Your Hazards – Occupational Health and Safety Considerations in Cannabinoid Ingredient Manufacturing (Part IV): https://bit.ly/3rEUeKP
Concepts for Regulatory Consideration – Shifting the Conversation from “Cannabis vs. Hemp” to “The Cannabinoids” (Part V): https://bit.ly/3P3r5AW
Member Blog: Reaching The Highest Common Denominator
by Raina Jackson, Founder & CEO of PURPLE RAINA Self Care Member of NCIA’s Diversity, Equity, & Inclusion Committee (DEIC)
This past September I had the pleasure of lobbying in D.C. for the first time as part of NCIA’s 10th Annual Lobby Days. The lobbying process was demystified for me, and I found that lobbying isn’t easy, but it isn’t that hard when you share your talking points from your heart, representing your own and others’ experiences. I learned that the NCIA delegation shares more common ground than we realized with Congressmembers, especially through their younger and more hip staffers and family members. One senator has a daughter who used to be a budtender and now podcasts about the industry, Senator Gary Peters (D-MI).
I was encouraged by how receptive legislative aides and advisors were to the factual talking points and statistics NCIA provided us to appeal to their sense of reason and fairness. They recognized the public health and economic benefits cannabis has delivered and its potential, without being distracted by useless moral arguments against it. Our team gave an overview of the cannabis landscape and advocated while offering solutions to our varied struggles as cannabis entrepreneurs.
We highlighted that 47 states have adopted some form of cannabis commerce and decriminalization, representing 97.7% of the U.S. population! The majority of the American public demands safe access to cannabis. Why not ride the wave?
Cannabis has been found to be a “gateway” medicine for a more safe withdrawal from opioid addiction, especially crucial to states experiencing high overdose death rates.
We discussed the DEA recently approved funds for even more substantial clinical research on the myriad of proven and potential health benefits delivered by the cannabis plant in a wide range of forms. Yet existing cannabis research is often more robust and held to higher standards than over the counter aspirin. Many pharmaceutical drugs are advertised on TV as the best thing since sliced bread one day (albeit with alarming potential side effects), then next named in TV ads for class action lawsuits for their harmful effects.
A case for an enhanced SAFE Banking Act
The legal U.S. cannabis market is valued at $17.7 billion, with a substantial amount unbanked, causing a public safety crisis. Our discussions illuminated our common ground regarding the public safety improvements and economic benefits that the bipartisan supported SAFE Banking Act will bring to each state choosing to introduce its own customized hemp CBD/low THC, medical, or adult recreational cannabis program.
When compliantly banked these funds will offer financial institutions of all sizes more capital for lending to spur economic recovery and a safer industry. While no financial institution will be required to participate, the risk mitigation and sizable financial benefits can’t be ignored.
SAFE will remove the risk of federal prosecution for compliant financial institutions already offering banking to cannabis businesses, while encouraging more banks and credit unions to join them. Too many existing entities providing cannabis banking services tend to mitigate risk by charging exorbitant monthly fees, financially hobbling startup cannabis businesses or excluding them altogether.
SAFE would also support hemp CBD businesses like mine, still navigated the grey area regarding access to banking, loans, leases/mortgages, and payment processing.
In my follow-up email to the Congressional aides and advisors we met with, I attached a white paper authored by the Cannabis Regulators of Color Coalition (CCRC) offering best practices for increasing financial access to cannabis businesses, prioritizing groups that have been historically underserved by traditional financial institutions and disproportionately harmed by prohibition.
What’s next?
This regulated cannabis industry is so new that we must allow each other some grace as stakeholders. As cannabis advocates, we have learned that “calling people in” for discussions on the benefits of the SAFE Banking Act and comprehensive cannabis reform is more effective than “calling them out.”
Elected officials and their staff don’t understand first-hand what we experience as cannabis entrepreneurs, and many care more than I expected. Lobbying and sending them emails on new and modified policy recommendations helps them to be well-informed enough to support us. My highlight was meeting with a CA legislative aide who is a fellow CA native and sincerely wanted to be updated on my progress and pain points. We all had a laugh about him agreeing to let me go into “the weeds” concerning the licensing process, pun intended.
Since Lobby Days, President Biden announced the upcoming FDA and DEA review of cannabis as a Schedule 1 drug. It could potentially be de-scheduling within the next 12 to18 months! However, to date, only seven states provide licensing priority, exclusivity, or set aside a percentage of licenses for qualified social equity applicants. The same way the SAFE Banking act should be passed with amendments fostering equity, state, and future federally legalized cannabis programs must include targeted equity programs to help level the playing field. I look forward to returning to D.C. in May for 2023 NCIA Lobby Days!
Raina Jackson is a multifaceted cannabis brand strategist, product developer, and advocate, and is the founder & CEO of PURPLE RAINA Self Care, the culmination of her love for beauty wellness products, the color purple, and the musical and cultural phenomenon Prince. For the past 7 years she has worked in the San Francisco Bay Area cannabis industry in sales management, field marketing, distribution, and product development, and a verified SF Cannabis Equity applicant in Oakland and San Francisco. For the past year she has served on the NCIA Diversity, Equity, & Inclusion Committee and the Regulatory Compliance subcommittee.
Raina has over 15 years of experience in beauty/wellness care product development, sales/ marketing management, and product education at Maybelline, L’Oréal Professional, and Design Essentials Salon System and has taught cosmetology at The Aveda Institute in SoHo NYC. A San Francisco native, Raina earned a B.A. degree in cultural anthropology and linguistics from Stanford University and an MBA in marketing and management from NYU.
Member Blog: Payment Processing In The Cannabis Space
There is a lot of confusion about payment processing in the cannabis space because payment processing is somewhat confusing to begin with, and because, in the cannabis space, ambiguity is a way of life.
The title of this very blog post could, realistically, seem misleading to some.
So, to be clear, when I say, “Cannabis Space,” I mean the entire industry — from plant-touchers (CBD included) to the ancillary businesses built up around it.
The passage of the 2018 Farm Bill marked an exciting new chapter for the industry. Suddenly, CBD, or, more specifically, any ingestible cannabis product containing .3% THC or less by volume, was classified as hemp. And since it is marijuana, and not hemp, that is defined as a Schedule I substance under the United States Controlled Substance Act, the Farm Bill, technically, made products like CBD as legal as cow milk — federally, anyway.
The upshot of this new classification is that now, at least some players in the cannabis space can market their products to a national base of consumers and clients, and they can do so by accepting credit cards as payment.
However, the myriad Acquiring Banks across the United States have not exactly jumped for joy at the prospect of providing credit card processing in the form of merchant accounts to CBD retailers. Reticence rules. CBD is considered high risk, and four years on, only a handful of them have thrown their hat in the ring.
Jargon Alert I: Acquiring Banks and Issuing Banks
In merchant processing parlance, banks fall into two categories: Acquiring Banks and Issuing Banks. Acquiring Banks, or, Acquirers, provide merchant processing accounts to businesses wishing to accept credit card transactions. Issuing Banks, short for Card Issuing Banks, are banks that offer branded payment cards directly to consumers. For example, if your bank has ever offered you a Visa card, it is an Issuing Bank (not that it couldn’t also be an Acquiring Bank, too).
Jargon Alert II: CBD is ‘High Risk’
CBD is deemed high risk by the card associations (i.e., Visa, MasterCard, American Express), and when the card associations deem a product or industry high risk, most Acquiring Banks tap out. This is because financial institutions are, by nature, risk averse (subprime mortgage crisis notwithstanding).
So let’s talk for a minute about risk. High risk, that compound term, is a truncation of a longer phrase: ‘Higher risk of fraud or chargebacks.’
Why are CBD products at higher risk of fraud? It’s impossible to say for sure since the Visas and MasterCards of the world are publicly traded companies with their own trade secrets and IP, but there are several characteristics unique to CBD, or any cannabis product now federally legal, that likely figured into that decision.
Those FDA disclaimers that CBD retailers must print or paste on all product packaging and webpages are as good a place as any to start. They are mandatory because none of the benefits assigned to CBD have been clinically proven. There just isn’t enough data or testing at this point, and no big story there. That’s what happens when you demonize a plant for 100 years.
Consequently, from the perspective of the FDA, and the card associations, by extension, consumers are making CBD purchases with baked-in expectations based, exclusively, on word-of-mouth advice and anecdotal data. That’s a recipe for dissatisfied customers. And dissatisfied customers tend to charge back transactions.
The card associations, and the banks who provide merchant accounts, worry incessantly about fraud and chargebacks.
Too Close for Comfort
Dissatisfied customers aside, there are onerous legal nuances that make the prospect of boarding cannabis merchants, even those selling products that are federally legal, daunting for banks.
Selling a product with .31% THC across state lines is felonious. It is a federal offense. Violating a law like that could get a bank’s charter revoked, or, at a minimum, result in massive fines.
On the other hand, selling a product with .30% THC across state lines is 100% federally legal. As stated above, safe as milk, federally.
That is a heck of a distinction. If any product contains more than .3% THC by volume, it is ‘marijuana’ in the eyes of the federal government. From the perspective of the banks, that’s a little close for comfort. Furthermore, banks don’t operate laboratories. They must rely on testing data presented to them in the form of third-party lab reports — Certificates of Analysis or COAs for short — to verify that the products being sold are federally legal.
The last thing an Acquiring Bank wants to do is violate a federal law EVER. It could result in a loss of their charter, lawsuits, and massive fines. And it’s important to keep in mind that the Acquiring Banks out there offering merchant accounts to CBD retailers are not giant, publicly traded institutions like Bank of America or Wells Fargo. They tend to be much smaller, and therefore, have infinitely smaller war chests for court cases.
Still, separating the federally legal Tier I cannabis product from the federally illegal Tier I cannabis product should be pretty cut-and-dry. If the product you’re selling is .3% THC by volume or less, it is exempt from the Controlled Substance Act (CSA). If that threshold is documented in the product’s Certificates of Analysis (COA), you ought to be able to sell it.
Unfortunately, it’s not that simple. When bank underwriters look at percentages of Delta 8, Delta 9, and Delta 10 on the COAs that cross their desks, they’re frequently at sixes and sevens trying to figure the whole thing out.
From the perspective of the 2018 Farm Bill, a cannabis product is hemp if it contains .3% Delta-9 THC or less by volume, but what everybody says is “.3% THC or less by volume.” Consequently, when the compliance officer at the bank is performing her due diligence by inspecting the COAs corresponding to each product, she may encounter a lot of crooked numbers, and she may blanch at the results.
Those results, often, look something like the following:
00.195% D9-THC
52.475% d8-THC.
Federally, the Delta-9 threshold is the only threshold that matters. The 2018 Farm Bill says as much, and the 9th Circuit Court of Appeals in California affirmed it in a ruling this past May. Therefore, in the example above, the Delta-9 threshold has not been crossed. It’s not even close. It is textbook HEMP, even if the Delta-8 threshold is off the charts.
However, if the compliance officer was provided the remit, “.3% or lower,” he’s likely to look at this and say, “Fail,” without realizing that the Delta-8 THC information is irrelevant as far as federal law goes.
Complicating the underwriting further is the fact that there is, to date, no standard template for COA reports. Every lab presents them differently. Bank compliance officers rarely moonlight as scientists. Like most of us, these CBD COAs are probably the first lab reports they’ve looked at since high school chemistry.
Furthermore, the banks can set their own rules. They don’t have to board CBD merchants. Few do, and those few that do have their own standards and practices.
Todd Glider has been an e-Commerce leader since the start of the Internet age. He has an MFA in Creative Writing from the University of Miami, and has served as CEO for small and medium-sized technology companies in Spain, Austria and the United States. As our Chief Business Development Officer, Todd introduces MobiusPay’s suite of award-winning financial services to new industries, and implements the development strategies and key partnerships needed to bring value to new customers.
MobiusPay, Inc. is a U.S.-based global financial services organization that is committed to empowering individuals and businesses. For more than a dozen years, MobiusPay has leveraged state-of-the-art secure billing technology, long-standing relationships with financial institutions and award-winning customer support to provide merchant processing and payment solutions to brick and mortar and digital businesses around the world.
Member Blog: Report Shows Inflation Will Reduce Dispensary Profits – Here’s What You Should Do
A new survey from CBD Oracle found that if inflation drives cannabis prices up, most customers will start to buy less cannabis. Unfortunately, inflation isn’t going anywhere anytime soon, currentlystanding at 8.3%, and things are very competitive for both dispensaries and growers. Plus, the survey shows that the fear that customers will go to a competitor if you raise prices is actually very justified. So what can companies do? We’ve put together some suggestions that play on consumer psychology to help you stay profitable.
The Survey: Why It Looks Bad for the Industry
Thesurvey from CBD Oracle asked 1,450 Americans in adult-use states about their buying habits and how they may change with inflation. While there were many results, the most interesting ones concerned how people would respond to more inflation and the price of cannabis increasing.
They found that 54% of respondents would buy less cannabis if prices increased as a result of inflation. Although over a third (37%) would buy around the same amount, it’s clear that there will be some impact on companies’ bottom lines. The survey also asked about the maximum amount people would be willing to pay for an eighth (around 3.5 g) and found that while 83% would pay $30, only 57% would still buy at $40.
But with increased prices for everyone from growers to dispensaries, it’s difficult to make ends meet at current prices. Mature markets like Colorado have an even bigger issue, with more than enough stock and tons of competition, so increasing prices may really feel like a gamble. The situation is totally unsustainable, andaround 30% of dispensaries will be raising prices in the near future, if they haven’t already.
Andrew Livingston, Director of Economics & Research at Vicente Sederberg commented to us, “Cannabis is clearly not ‘inflation proof.’ Companies struggle to operate profitably as their cost of labor, distribution, and input ingredients climb along with prices across the rest of the economy.”
Raising Prices While Retaining Customers: A Guide for Dispensaries
The survey shows that the problem is on the horizon, but what’s the solution? Here are some suggestions.
Use Price Anchoring
Anchoring is a very useful psychological concept for dispensaries, and there aremany ways you can benefit from it. The way it works is really simple. Imagine you have a “regular” price on the tag crossed out, and a sale price below it. Even if the sale price is still higher than customers might want to pay, customers note the crossed-out price and then look at the other relative to the original amount. So if your eighth is labeled “$35 $25,” customers “anchor” onto the $35 and the $25 seems like a bargain. This specific type is called strike-through price anchoring.
Anchoring Through Product Grouping
Price anchoring can be very powerful when used intelligently. For example, you could have your biggest-selling product on the shelf, but with a much more expensive strain beside it, ideally marked and labeled such that it’s hard to ignore. While very few customers will pay for that $50 eighth, that will make the $30 one sat beside it look much better.
Costco-Style Anchoring
In this approach, you arrange your store so that higher-price items greet customers – again, made hard to ignore through ads and positioning – and they anchor onto higher prices. Then as they make their way into the store and see your regular prices, they seem cheaper, even if they haven’t changed or have even increased.
Raise Prices Elsewhere to Keep Cannabis Cheap
You can also try to balance less profitable products out with other items. AsMcKinsey & Company suggests, raising prices on secondary and tertiary items (think grinders, bongs, vape pens, and other accessories) can help you recoup losses on key-value items (cannabis products). Combined with other approaches, this can be a clever way to boost profits while minimizing the risk customers will simply go elsewhere for weed.
Focus on Your Brand
With over half of dispensary customerssticking to the same seller, one way to minimize the impact of inflation is to make your brand their brand. Shopify’sreport on the Future of Retail recommends focusing on your brand story (why are you in business? What sets you apart from the competition?), showing that your values align with customers’ and treating your employees as a “brand audience.” If you educate your employees about your brand, you will make them brand evangelists, improving customer loyalty as a knock-on effect.
Cut Costs Wherever Else You Can
Simply reducing costs on packaging – child-proof plastic packets rather than glass, for instance – can help you stay in profit without pushing costs to customers. Freezing hiring or even laying off staff is another alternative. This isn’t ideal, but if there are ways you can streamline, automate or digitalize processes, you may be able to cut back until the economy gets back on its feet.
Collect Data and Adapt
Arguably the most important thing you can do alongside any of these changes is to improve your data collection and response process. This is simply so you know the impact of the interventions as quickly as possible. You need to combine this with an enhanced decision-making process so you can make company-wide changes quickly and efficiently. It’s unlikely you’ll be able to make one set of changes and leave it that way, so set up systems to streamline the process for the future.
Conclusion: Remember, We’re All in This Together
With the report showing tough times are likely ahead for the cannabis industry, the most important thing to remember is that basically every dispensary in your state is in the same boat. If you’re friends with any other businesses in your area, talk to them about it and how they’re planning on responding. If prices must rise, it’s much better if you can present a united front to consumers. One dispensary raising prices might be a death sentence; all dispensaries raising prices is just inflation, plain and simple. Be up-front with each other and customers, and you’ll be surprised at how well you can pull through.
Lee Johnson is a writer at CBD Oracle who has been covering science, vaping, and cannabis for over a decade. He focuses on research-driven deep dives into topics ranging from medical uses for CBD to industry and user statistics, as well as general guides and explainers for consumers. He is a passionate advocate of both CBD and cannabis, and a strong believer in informed choice for consumers.
CBD Oracle is a cannabis consumer research company working to improve the safety and transparency of cannabis products, producing in-depth research pieces, along with long-form analysis of social and legal issues.
Behind Closed Doors: NCIA at CANNRA’s June Conference
The discussion about the future of cannabis legalization is ongoing, to say the least. Recently, Cannabis Regulators Association (CANNRA) held a two-day conference in early June to gather Marijuana government regulators, trade associations, and businesses. The Cannabis Regulators Association (CANNRA) is a national nonpartisan organization of government cannabis regulators that provides policymakers and regulatory agencies with the resources to make informed decisions when considering whether and how to legalize and regulate cannabis.
Representatives from NCIA participated in the conference – NCIA Board Members Khurshid Khoja (Chair Emeritus) and Michael Cooper (Board Secretary), and we caught up with them in this blog interview to better understand the goals and outcomes of the event.
From a bird’s eye view, what was the overall goal of this conference?
MC: The conference was an opportunity for regulators from around the nation to hear directly from stakeholders on the current and future challenges that face these markets and different models of regulation to tackle them.
KK: I’ll add that our own goals, as the current Policy Co-chairs for NCIA, were to better understand the priorities of state and local cannabis regulators across the country, and anticipate future developments in cannabis policy early on, so we could take that back to the NCIA membership and the staff – especially Michelle Rutter Friberg, Mike Correia, and Maddy Grant from our amazing government relations team.
Let’s talk about who was invited to participate in these panel discussions. From cannabis industry associations to those who regulate cannabis, who else was there?
KK: Michael and I each spoke on a panel. The other speakers included reps from federal trade associations, lobbyists, vendors, and ancillary companies who were helping to underwrite the event (along with NCIA). Given that CANNRA is a non-profit that doesn’t receive any funding from their member jurisdictions, and has a single paid full-time staff member, I thought they were still able to obtain a fairly diverse and interesting set of speakers at the end of the day – including NCIA Board and Committee alums Ean Seeb, Steve DeAngelo, Amber Senter and David Vaillencourt (representing the Colorado Governor’s Office, LPP, Supernova Women and ASTM, respectively), as well as folks from Code for America, Americans for Safe Access, and the Minority Cannabis Business Association, U.S. Pharmacopeia, NIDA, the CDC, and the Alcohol and Tobacco Tax and Trade Bureau, representatives of the pharmaceutical, hemp, tobacco and logistics industries, and public health officials.
Were there any organizations or sectors of the industry that were not in attendance, whether they weren’t invited or just didn’t participate, and why is it important to note the gaps of who was not represented?
MC: No licensed businesses were invited. Instead, organizations that represent industry members were invited. As a result, we felt it was crucial to inform these discussions with the perspective of the multitude of small and medium-sized businesses otherwise known as Main Street Cannabis that have built this industry and continue to serve as its engine.
KK: Sadly, we did not have an opportunity to hear from members of the Coalition of Cannabis Regulators of Color. I can’t speak to why that was, but it was unfortunate for us nonetheless. And while we had some public health officials there, I know that CANNRA Executive Director Dr. Schauer would have preferred to see more of them in attendance.
Across the spectrum of policy and regulations and legislative goals, what topics were covered in the panel discussions across the two-day conference?
KK: We covered a ton, given the time we had, including the federal political and policy landscape; interstate commerce; the impact of taxes on the success of the regulated market; social equity and social justice; preventing youth access; regulation of novel, intoxicating and hemp-based cannabinoids; the prospects for uniform state regulations; technological solutions to improve compliance and regulatory oversight; and delivery models.
What information or perspectives did NCIA bring to the panel discussions that were unique from other participants? What does NCIA represent that is different from the other voices at the event?
MC: There really are a wide variety of perspectives on how best to regulate this industry. We felt it was essential that NCIA give a voice to Main Street Cannabis, the small businesses that so many adult-use consumers and medical patients rely upon. We emphasized, for example, that these are often businesses that cannot simply operate in the red indefinitely, but provide essential diversity (in the background and life experience of operators as well as in product selection and choice). NCIA wants to make sure that the future of cannabis isn’t simply the McDonalds and Burger Kings of cannabis. There are times when consumers want that, but there are also times when they want something unique and different. And it’s crucial that policy not destroy the small and medium-sized, frequently social equity-owned, businesses that provide those choices.
What else was interesting to you about this gathering of minds? Were you surprised by anything, or was there anything you heard that you disagreed with?
MC: There are a ton of different perspectives and approaches to cannabis, and that’s no surprise to anyone who has followed these issues closely because the tensions are very clear in the policy debates that are ongoing.
As the voice for the industry, we sought to urge an approach grounded in reality. Americans want these products. That’s clear from the ballot box and public polling. The question should be about how to encourage Americans to purchase regulated, tested versions of these products.
KK: There was definitely stuff we didn’t agree with – some of it from folks that we otherwise largely agree with. For example, our good friend Steve Hawkins of the USCC shocked a few of us in the audience when he seemed to indicate some receptivity to re-scheduling cannabis on an interim basis, rather than moving to de-scheduling immediately. I think that while rescheduling may benefit scientific research and pharmaceutical development, it could ring the death knell for Main Street Cannabis businesses. NCIA has consistently advocated for de-scheduling rather than re-scheduling.
After two days of panels, did anything new come through these discussions, or were any accomplishments achieved?
KK: I think there’s a growing recognition that addressing social equity solely through preferential licensing and business ownership for the few isn’t enough and that the licensing agencies and regulators that execute social equity policies have a very limited (and often underfunded) arsenal to comprehensively redress the harm caused by federal, state and local governments prosecuting the war on drugs. In my remarks, I said it was time for us to start discussing additional forms of targeted reparation and had a number of regulators approach me afterward to continue the discussion. Candidly, I expected my remarks to fall on deaf ears. They didn’t. That was very encouraging.
MC: There was definite progress. At the end of the day, these cannabis regulators are working hard to try to get this right. But in such a new area, and with so many competing perspectives and voices, their job isn’t easy. We were heartened to see the level of engagement from regulators on these points, including follow-ups to get more information on some of the pain points we identified for small and equity businesses in the industry.
It was definitely rewarding to provide NCIA and our members’ perspectives in a forum like this, and we’re looking forward to continuing to further strengthen NCIA’s relationship with CANNRA and regulators around the country.
by Gary Paulin, VP of Sales and Client Services at Lightning Labels
With expansive product choices, it’s no longer enough to rely solely on product quality and availability. Today’s maturing cannabis marketplace requires differentiation to resonate and succeed.
Three pillars of that differentiation are stellar customer service, total transparency, and excellent education. At the core of each, sincerity and truth must predominate. In this age of “fake news,” anything that doesn’t seem trustworthy and true likely will backfire on the company sooner or later.
It only takes one unsubstantiated quality control or product claim to hit the social media lie detector, then potentially go viral. At the very least, one consumer badmouthing your company via word-of-mouth and/or digital messaging will harm your reviews and ratings. In most cases, the damage will be undetectable until it reaches a level where revenues and reputation are noticeably impacted.
Following are four basics of stellar customer service, transparency, and education:
Interact authentically. Scripts and canned phrases instinctively don’t resonate with most consumers. One obvious example is the “I’m so sorry you’re having a problem” response. How likely is it that the person is really sorry and not just parroting something they’ve been told to repeat time and time again? Instead, communicate in a real way by tuning into what the existing or prospective customer is trying to address.
For example, when someone complains about lengthy waits to receive live phone support (including disconnects while waiting), it’s okay to say something like, “I get it. We’ve been having challenges. Now that we’re on the phone together, let’s address your needs right away. And, please give me your phone number, just in case this call drops. I’ll call you right back.”
Offer multichannel communications preferences. Some people want live phone support, not a digital option. Chat bots can be extraordinarily frustrating unless the programming and ability is advanced. Ditto for “live chat.” As much as possible, make it easy and meet everyone’s preferences. Email, live phone support, texting, website knowledge center, and digital chat should all be offered to meet the customer in a way that works best.
Offer total and transparent education. Knowledge centers (and associated forums) and FAQs can be excellent tools to help provide priority information, but they’re only one piece of the puzzle. Consumer questions and concerns can cover anything. There should be an easy way to find more information through the above-referenced channels as needed. Product labels can provide easy access to a variety of information, starting with label content and extending to either Augmented Reality or QR digital gateways for more in-depth education. Those digital gateways should contain valuable information, along with easily found follow-up calling, emailing, live chat, and additional educational options (including possibly Knowledge Center, FAQs, and keyword-search forums/articles, et al).
“Full disclosure” should be at the core of all things educational, both in information repositories and customer service support. For example, CBD can make some people cranky and anxious. Full disclosure must override the desire to sell. By fully informing a consumer of risks as well as rewards, the experience is much more likely to result in high marks for the company.
Conversely, incomplete or inaccurate information provided by salespeople motivated only by making sales will backfire when less than optimum outcomes occur. In contrast, a salesperson willing and able to fully educate will help build long-term customer relationships with the company.
Hire motivated, attentive, smart people. No matter what policies and training are in place, ultimately companies need to focus on hiring the best candidates — those dedicated to top-notch customer service, truthtelling, and education. Workforce shortages are not a valid reason to abandon these core values in the name of expedient hiring. Be committed to employee wants and needs, and be prepared to follow through. Offer generous wages, but beware of those who seem overly money motivated and demanding. They likely will be gone as soon as the next “shiny toy” opportunity comes along.
There are companies that have weathered supply chain and workforce shortage issues — and even inflationary pressures — well. One that comes to mind is Costco. Unlike many retailers during the pandemic, their quality of service has remained high. Product availability and selection have been maintained. Prices, although subject to some upward movement, don’t seem to have risen as much as most retailers.
Clearly, Costco found solutions instead of blaming challenging conditions and using those as an excuse for failure. Follow this example. Find ways to do more with less, get creative about becoming more efficient, and plan ahead so that emergent problems don’t become overly taxing.
Cannabis companies that excel in being trusted, liked, and respected will outperform their competitors willing to live with mediocrity.
Gary Paulin is VP of Sales and Client Servicesat Lightning Labels, a Denver-based custom label printer that uses state-of-the-art printing technology to provide affordable, full-color custom labelsand custom stickers of all shapes and sizes. Contact: sales@lightninglabels.com; 800.544.6323 or 303.481.2304.
Committee Blog: Cannabis Lounges – Coming to a City Near You?
Although the concept of state-legal cannabis has been around in some shape or form since 1996, cannabis remains illegal to consume in most public places. In other words, legal cannabis consumption remains relegated to back alleys, derailing efforts to “normalize” cannabis use. Tourists visiting popular cities where weed is legal are caught in the unenviable Catch-22 of being able to purchase, but not publically consume, the product. And those who attempt to use cannabis in public still face criminal penalties in some states, with minorities three times more likely to be targeted for arrest, perpetuating racial disparities at a tremendous social cost.
Enter the cannabis lounge. Cannabis lounges — also known as “consumption lounges,” cannabis cafes, or some variation on that theme — are in simplest terms the cannabis equivalent of a bar or restaurant. Depending on state and local regulations, lounges offer users the chance to congregate in a public place and smoke a joint, try out a $500 gravity bong, or sip on a cannabis drink. With any luck, consumers may enjoy their cannabis with a snack or dinner, but mixing with alcohol is typically not allowed.
As with any “new” risks, some cities, states, and insurers are… concerned. Despite some obvious tax and social benefits, detractors cite a host of reasons to prevent lounges from coming to a city near you, including at the forefront: fears of public nuisance (odors, theft, and disruption) and overconsumption — especially because most states insulate cannabis cafes from liability for harm caused by obviously intoxicated or underage users, unlike dram shop laws for alcohol.
As another NCIA member recently pointed out, even in states that do allow cannabis cafes, regulatory bodies continue to struggle with how to shape the laws and regulations governing lounges to afford adequate consumer protection while allowing businesses to thrive. Moreover, without a better understanding of the regulatory landscape, some insurers — whose business model hinges on the ability to accurately price a risk — may be unwilling to play in this new cannabis lounge market.
A Sampling of State Approaches to Cannabis Lounges
Alaska led the country in 2019 in licensing on-site consumption. A handful of states and localities have followed Alaska’s guide, and more are anticipated to join this year, including Michigan and New York. We compare a few regulatory schemes below and also consider the impact of dram shop legislation on risks faced by the industry.
California
California, governed on the state level by the Medicinal and Adult Use Cannabis Regulation and Safety Act, delegates to localities the right to open consumption lounges. Put simply, cities have to affirmatively “opt in” to allow lounges. With a few contingencies — including that patrons must be 21 or older and no alcohol or tobacco can be sold on premises — “a local jurisdiction may allow for the smoking, vaporizing, and ingesting of cannabis or cannabis products on the premises of a” licensed retailer. SeeBPC § 26200(g).
To date, only a few localities have opted in to allow cannabis lounges, including San Francisco, Oakland, and Palm Springs. West Hollywood, in efforts to create an epicenter for canna-tourism, plans to allow up to 16 lounges within its jurisdiction. Because state law provides little regulatory guidance for lounges, localities generally provide more specific guidance. As an example, West Hollywood’s local municipal code requires security guards on site, as well as within a two-block radius surrounding the business during operation, and allows the sale of cannabis to an individual “in an amount reasonable for onsite consumption.” West Hollywood Municipal Code §5.70.041. Only one lounge is currently open in West Hollywood, the Artist Tree’s Studio Cannabis Lounge, which offers not only lounge access but cannabis yoga, live music, and comedy shows, along with a revolving selection of local art. The Woods, another West Hollywood dispensary with a soon-to-open courtyard lounge space, is also slated to open in 2022.
Although California law significantly limits third-party liability for alcohol-related accidents, it does not afford cannabis owners the same protection. For example, California Civil Code §1714explicitly states that furnishing alcohol “is not the proximate cause of injuries resulting from intoxication,” which has essentially absolved bars, restaurants, party hosts, and most others of potential liability for selling or furnishing alcohol to customers and guests with an exception for liability arising from the furnishing of alcohol to an “obviously intoxicated minor.” SeeCalifornia Business & Professions Code § 25602.1. Without similar protections for cannabis lounges, injured parties could attempt to sue under a negligence theory if a business or employee serves an intoxicated patron who causes harm.
Colorado
As of January 1, 2020, local jurisdictions in Colorado can opt-in to the state’s cannabis hospitality business license regime (Colo. Rev. Stat. § 44-10-609), and as of March of 2022, the City of Denver has approved cannabis hospitality businesses for operation. Denver operators include the first social equity applicant in Denver approved for a hospitality license, the Tetra Lounge, although from its website Tetra Lounge’s website describes itself as “a private lounge,” requiring a monthly or annual membership fee and a liability waiver to gain access.
As to dram shop liability, although Colorado law authorizes damages against a licensee for willfully and knowingly selling or serving alcoholic beverages to a visibly intoxicated person, the Colorado Legislature caps liability at $150,000 (Colo. Rev. Stat. § 12-47-801 (3)(II)(c)). This damages cap improves (i.e., reduces) the ISO hazard grade, resulting in the improvement of insurance options available for liquor liability. The legislature has not adopted the same or a similar damages cap on liability for cannabis consumption establishments.
Nevada
In June 2021, Nevada’s Governor signed Assembly Bill 341 into law, authorizing the Nevada Cannabis Compliance Board (“CCB”) to license and regulate consumption lounges across the state, subject always to local approval. The State plans to issue up to 65 lounge licenses (40-45 for lounges attached to existing dispensaries, 20 for independent lounges) with 10 reserved for social equity applicants.
Most recently, on June 28, 2022, the CCB voted to unanimously approve a host of regulations for cannabis consumption lounges. Nevada’s extremely detailed state regulations prohibit the sale of “single use cannabis products” with more than 3.5 grams of “usable cannabis” and 10 mg of THC for edibles; prohibit the removal of any cannabis products from a lounge; require a mitigation plan for impaired driving and detailed employee training for overconsumption; and require consumer education and warnings to customers, among other things. As with other states, Nevada allows local jurisdictions to prohibit consumption lounges and to implement more stringent regulations than state law.
Unlike other states, however, Nevada law carves out protections for cannabis lounge operators just as it does for alcohol. Nevada law already protects businesses that serve or sell alcoholic beverages from injuries inflicted by an intoxicated person. And while any person who knowingly furnishes an alcoholic beverage to any person under 21 years of age is guilty of a misdemeanor, the law provides only for criminal penalties, not civil liability. The Nevada Supreme Court has repeatedly refused to impose responsibility on vendors selling alcohol absent a legislative provision. SeeSnyder v. Viani, 885 P.2d 610 (Nev. 1994) (holding consumption is the proximate cause of alcohol-related injuries and dismissing the negligence claim against a tavern owner for alcohol service). The same rules will apply to cannabis operators.
Illinois
Over two years after full legalization of adult-use commercial cannabis in Illinois, cannabis lounges in Illinois are still relatively rare, with the first Chicago-area marijuana consumption lounge opening on April 20, 2022. Like other states, the State of Illinois does not directly license lounges, but it allows local governments to opt in.
Illinois creates a cause of action against sellers for injury by an intoxicated person. § 235 Ill. Comp. Stat. 5/6-21. The standards for liability under the Illinois dram shop law include: (1) sale of alcohol to any person who, while intoxicated, causes injury, and (2) any person owning, renting, leasing, or permitting the occupation of any building or premises with knowledge that alcoholic liquors are to be sold therein, severally or jointly, along with the person selling or giving liquor. In Illinois, the Dram Shop Statute provides the exclusive remedy for alcohol related injuries. See Charles v. Seigfreid, 65 NE.2d. 154 (Ill. 1995). The Statute also provides stringent limitations on recovery of damages. There is no equivalent in Illinois for cannabis entities.
The Takeaway for Business Entities and Insurance Providers
As with cannabis law generally, lounge operators face a patchwork of state and local regulations that vary tremendously by jurisdiction. In most places, cannabis lounge owners are not protected by dram shop/gram shop laws that otherwise insulate bars and restaurants from liability for overconsumption. This means that companies must be vigilant in protecting themselves from liability by instituting compliance and risk-management procedures.
In some instances, such as California’s West Hollywood, which has far fewer safeguards and guidelines than Nevada, operators are largely left to their own devices in implementing adequate risk transfer and risk management, compliance, employee training, and consumer education to limit risk of liability. While the West Hollywood municipal code requires lounges to limit cannabis sales of cannabis “in an amount reasonable for onsite consumption,” the “reasonableness” standard is rife with ambiguity and could lead to disputes regarding liability and assumption of risk if a patron overconsumes.
Evaluating and preventing overconsumption and intoxication will be particularly difficult for cannabis when: patrons have varying experience levels with cannabis; products can be sold in more than a single serving, and no specific consumer education is required. Thus, even in locations that have more stringent regulatory oversight, companies would be wise to consult with experienced counsel and consultants to avoid or limit potential risks associated with regulatory uncertainty, civil liability, and government penalties for non-compliance.
This brings us full circle to the question of insurance. Even in the states that allow consumption lounges, very few insurance companies provide coverage for on-site consumption (although some do). If an exclusion prohibits coverage, the company may not have coverage for important and sometimes catastrophic events, such as property damage by fire, theft/robbery, cyber events, sexual harassment or discrimination claims by employees or others, and bodily injuries to, or caused by, patrons (on and off premises).
Most existing property, general liability, products liability, and other insurance policies — including those written for the cannabis industry — expressly exclude coverage for on-site consumption or bodily injury caused by intoxication. In fact, some existing cannabis insurance companies include a “health hazard” exclusion in their policies, which exclude coverage for any bodily injury arising in any way from the use of cannabis, including any health injury. Cannabis insurance policies may also exclude coverage for intentional or illegal acts, which some insurers may try to apply to any claim involving cannabis on the basis that the sale of cannabis violates federal law (the Controlled Substances Act), even if it is state legal.
For current licensees that are planning to open an attached or adjacent consumption space, current insurance policies may not cover injuries arising in the lounge space. Further, any failure to identify a change in business type could prompt an insurance carrier to deny coverage for subsequent claims based on a theory of misrepresentation.
In closing, cannabis owners should attempt to negotiate separate and/or broader coverage that carves out coverage for their cannabis-related activities, including on premise consumption, with their current insurer or seek to obtain coverage from a different carrier. Experienced insurance coverage counsel can assist with identifying reputable insurance brokers and negotiating policies that provide such coverage. Because of the limited options, companies would be wise to begin the process of identifying experienced insurance coverage advisors at the beginning of their licensing journey.
Midsummer Movement: The Pre-August Recess Rush in D.C.
Photo By CannabisCamera.com
By Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
As Congress gets ready to beat the D.C. heat and leave Washington for their annual August recess, there’s at least one thing on their minds: cannabis.
Last week, Senate Majority Leader Chuck Schumer (D-NY) along with Finance Committee Chair Ron Wyden (D-OR), and Sen. Cory Booker (D-NJ) introduced their much anticipated Cannabis Administration and Opportunity Act (CAOA), which is now the Senate’s only pending legislation that would provide comprehensive cannabis policy reforms across the nation.
The landmark bill would remove cannabis from the federal Controlled Substances Act and move regulatory responsibility from the Drug Enforcement Administration (DEA) to the Alcohol and Tobacco Tax and Trade Bureau (TTB), the Food and Drug Administration (FDA), and other agencies to protect public health and safety. The bill would also institute a federal excise tax of 5-25% on cannabis on top of the already-hefty state taxes imposed on the industry, concerning advocates for small cannabis businesses and equity operators.
The long-awaited CAOA was introduced after sponsors circulated a discussion draft last year. NCIA and other advocacy organizations provided comprehensive feedback to the bill’s authors last year. Notable changes to the legislation include:
Increases the permissible THC by dry weight from the current 0.3 percent to 0.7 percent and refines the definition of “hemp,” and consequently “cannabis” by taking into account the total THC in a cannabis product, rather than just delta-9 THC.
Changes to the weight quantity to qualify a person for felony cannabis distribution or possession charge under the section from 10 pounds to 20 pounds.
Provides that a court shall automatically, after a sentencing review, expunge each federal cannabis conviction, vacate any remaining sentence, and resentence the defendant as if this law had been in place prior to the original sentencing.
Enables a noncitizen who has received a deportation order based on a cannabis-related offense to file a motion to reconsider that decision. If the motion to reconsider is filed within 30 days of the removal order, the motion may allow for the cancellation of the deportation order.
Establishes a new 10-year intermediary lending pilot program in which SBA would make direct loans to eligible intermediaries that in turn make small business loans to startups, businesses owned by individuals adversely impacted by the war on drugs, and socially and economically disadvantaged small businesses.
Removes the requirement to maintain a bond for any cannabis business that had less than $100,000 in excise tax liability in the prior year and reasonably expects excise tax liability in the current year to be below such amount.
Incorporates rules similar to rules currently applicable to permitted malt beverage producers and wholesalers.
While the historic nature of the CAOA cannot be understated, the bill has a multitude of challenges ahead of it. Not all Senate Democrats support the legislation, making the 60-vote filibuster threshold nearly impossible. Plus, with only a couple dozen legislative days between now and the end of the session, time is also working against advocates.
Dovetailing with the introduction of the CAOA, the Senate Judiciary Committee’s Subcommittee on Criminal Justice and Counterterrorism will hold a hearing titled “Decriminalizing Cannabis at the Federal Level: Necessary Steps to Address Past Harms” this Tuesday. While the witness list has not been made public as of publication, expect the hearing to focus on the newly introduced legislation and how it would affect communities most impacted by the war on drugs.
In other news, the House and Senate will vote on a revised research bill, the Cannabidiol and Marihuana Research Expansion Act, this week. The bill is expected to pass both chambers and be sent to President Biden’s desk for his signature. The Senate bill is sponsored by Sens. Dianne Feinstein (D-CA), Chuck Grassley (R-IA), and Brian Schatz (D-HI) and passed by unanimous consent in March. The House bill is sponsored by Reps. Earl Blumenauer (D-OR) and Andy Harris (R-MD), and passed 343-75 in April. One of the notable areas of compromise? The House bill would have allowed researchers to do their studies on cannabis that’s actually being sold to consumers in dispensaries. That was removed during negotiations, meaning that researchers will still have to obtain their cannabis from the University of Mississippi’s cultivation facility.
There’s still time before recess begins, so make sure you stay tuned to NCIA’s podcast, social media, and newsletter to stay up-to-date on all the latest from Washington, D.C.! Interested in making more of an impact? Don’t forget to register for our upcoming 10th Annual Cannabis Industry Lobby Days on September 13-14, 2022!
Committee Blog: Best Practices During Planning and Design to Prepare for a (Relatively) Painless Permitting Process
The cannabis industry is an emerging and dynamic industry, but just how leading edge is it in your community? If you are considering constructing a new facility it is important to understand the experience level and “hot buttons” of the Authority Having Jurisdiction (AHJ). Navigating the waters of a new market is different from that of an established market, but both can be treacherous.
In a new market, you may be part of the first round of projects that the AHJ has reviewed for this industry. Codes are meant to be interpreted and every AHJ has a different interpretation. Although this may seem like agriculture, it most likely is not seen that way in the eyes of the AHJ. The facility’s classification (commercial, industrial, agricultural, etc.) is key in driving the balance of the facility design, and it will have a significant impact on schedule and costs.
Many new markets will utilize established markets as a model and plan reviewers may be trained to emulate the existing model markets for code interpretation. It is well worth the research to understand if there is a model market being utilized, as it will create footsteps to follow even if you are the first one on the path.
Whether it is a new market or an existing market, each AHJ has its “hot buttons.” Do your homework to not only determine what these hot button issues are, but understand why, and how it is based in code. Many jurisdictions provide for a “round table” or a pre-submittal review. Take advantage of these processes to ferret out key issues. Do this early in the design stage to avoid surprises later in the process.
When the AHJ takes issue, or has a unique or overly conservative interpretation of the code, take a breath. Choose your battles wisely. If you have a strong case and it is a hill to die on then there are opportunities to work with the AHJ to find a more reasonable interpretation. However, this must be done with a positive and collaborative approach. Don’t win the battle and lose the war. If you have been in the cannabis industry but have not experienced a traditional entitlement process before, there will be many requirements that seem unreasonable. Common sense and past practices are always trumped by current code interpretation unique to each AHJ.
Pick your design and construction team wisely, spend smart money to assemble a seasoned group that has specific specialty knowledge in this industry. When assembled, listen to your team, know your strengths, and recognize theirs. Being part of an emerging industry creates many opportunities and challenges. Your ability to navigate these uncharted waters determines your success.
Construction: Making the best of properly zoned leftovers
In a perfect world, we would purchase existing facilities that are of the proper construction type or a green field site to construct a purpose-built facility. Given the nature of our industry this rarely, if ever, happens. Typically we must make do with the properly zoned leftovers. Understanding how your operations will interact with your existing building’s envelope is key to creating a successful facility.
Creating and maintaining the ideal environment is the ultimate focus, but how your plants function in this environment is only part of the equation. Understanding how your building will function in this unique environment is key to having a successful operation. A major component of this is water vapor – you may not be able to see it but it is all-powerful.
If you are contemplating constructing an indoor cultivation facility in a region that experiences cool temperatures, then you and your team need to understand the concepts and principles involved in a Hygrothermal Analysis. This analysis examines the movement of heat, air, and moisture flow through building enclosure assemblies (walls, roof, floors etc.). Without an understanding of these principles, you risk having significant condensation issues which can result in mold growth, deterioration of building components, and ultimately significant facility costs to properly address.
Since most existing building envelopes were not designed and are not suited to maintain this environment, in most cases the best solution is a “room within a room.” Constructing grow rooms out of insulated metal panels (IMP, think walk-in cooler panels) solves most of the issues. These panels not only provide a complete vapor barrier, but they reduce the volume that must be conditioned and provide ideal wash-down conditions. Thermal bridging is eliminated, and you are provided with an extremely well insulted, controlled, sanitized space.
You may not be able to select the ideal existing building for your facility, but knowing its limitations and appreciating the uniqueness of the environment that is being created is fundamental to your facility’s success. Utilizing products such as IMPs is just one of the methods to address the various pitfalls when working with existing buildings and making the most of the leftovers.
Financing – Show me the Money!
The structure of project funding is extremely important to not only manage a large number of funds properly but to foster an environment that encourages contractor interest while providing security for your investor partners. The continued federal prohibition has eliminated most of the financial mechanisms that other industries utilize when constructing facilities. This coupled with a less-than-stellar initial track record of timely payments to contractors has created a serious issue in our industry, however, there are solutions.
Show me the money… it is literally that simple and the mechanism for this is an escrow account. An escrow account is an account that is set up specifically for the project costs and funds can only be accessed with authorization from both parties (owner and contractor). This ensures that the funds are available and will remain available for the purpose intended. However, parking all the funds required for a project that will take many months or possibly a year to construct has a significant cost of money aspect, but there is a solution.
Contractors generally get reimbursed for work in place 30 days in the rears, if there is an issue with financing, it can take another month to two months to close down a project. Therefore, a contractor’s financial exposure is three months of project cash flow. In lieu of placing the entire project’s funds into the escrow account, three months of cash flow is deposited and then replenished with each monthly draw until the balance in the account equals the cost to complete of the project. This approach minimizes the amount of funds that must be parked in the account while ensuring the funds are available for the contractor.
This topic must be addressed at the onset of the project to ensure that you receive the full benefit of this approach. While you are in the process of selecting your general contractor partner this should be a topic of discussion. Knowing this mechanism is in place will increase contractor and subcontractor interest and may result in lower fees as the approach reduces contractor risk. The structure of project funding and utilization of financial mechanisms outside of mainstream financing is a key component of a successful project.
Committee Blog: Everything You Wanted to Know About Cannabis Facilities but Were Afraid to Ask Field Guide – Part 4 – Retail
by NCIA’s Facilities Design Committee Jacques Santucci, Brian Anderson, David Vaillencourt, and David Dixon
Continuing our five-part series on the behind-the-scenes workings of the legal cannabis industry. This series focuses on all of the inner dealings and industry advice from established professionals to craft this unlimited How-to-Guide to assist you in setting up your own facility. These articles cover cultivation, extraction, infused products, and retail facilities as well as support activities. In general, remember to be compliant with all local rules and regulations and contact a licensed contractor and industry expert.
Part Four, Retail & Dispensaries: Top Things to Consider When Planning Your Cannabis Dispensary and Retail Operations
Retail and dispensary design presents challenges that are distinct from the other areas of cannabis production and manufacturing. The biggest difference is that the design must now account for customers as well as employees. Listed below are a number of issues that an operator should consider as they are in the process of designing their retail or dispensary operations. Always remember to be compliant with all local rules and regulations.
Security Camera: Minimum Area of Coverage
Most states require a hundred percent minimum security coverage in any area where marijuana products are stored, displayed, or sold. Designing a camera system and placements to avoid “dead spots’ ‘ (i.e. areas with no camera coverage) can be challenging, especially if the operation is taking over an existing space, as opposed to building a new facility from scratch.
Bonus Consideration: Think about having an HVAC system specially dedicated to your security room. Security rooms for video monitoring and storage can sometimes be an afterthought. But these locations should be treated more like computer server rooms as opposed to standard office space. And with the amount of technology placed in a (typically) small space, things can overheat rather quickly. This can lead to damage to the system and ultimately, you could be out of compliance for video storage and retention.
Another Bonus Consideration: do not forget about placing security cameras to cover the entrance and exit points to the parking lot. Think about the field of view around doors, especially if the door is near the corner of the building or if there are other obstructions that can block the camera’s view of the area. Multiple cameras may be needed for this critical function. Contact a licensed professional.
Security Camera: Minimum Data Storage
Video storage and retention requirements for cannabis facilities are fairly stringent. Typical requirements include 90-days of on-site storage and up to five years of off-site storage. Off-site data storage is required for future legal needs. Many states require a minimum video resolution of 1080p. The video storage needs for even a moderately sized facility can amount to petabytes of data. For this reason, many facilities outsource this function at least in some measure. If you do decide to handle this all yourself, you should be sure that you have the technical expertise on your staff to handle this potentially complex technical issue.
Security Alarm: Monitoring
Like it or not, retail cannabis facilities will probably always be targets for crime. Having a security system probably seems like a no-brainer. But simply having an alarm system isn’t typically enough. You will need a system that is actively monitored. This allows the company to initiate actions on your behalf depending on the alarm status (e.g., call the police or fire department in response to a remote alarm). Your alarm should be monitored by at least one reputable company. Redundancy might not be needed, but check to be sure that you are in compliance with local rules and regulations. Talk to your licensed professional.
Security: Line of Sight
Customers should only see the public retail area of the location. Customers should not see the back-of-house operations. There is no need for them to see how business is conducted other than at the sales counter. Similarly, there is no need for customers to be able to view the offices, inventory areas, working areas, employee break room, etc. Keeping these areas private helps to avoid bad actors from learning operational routines that might make it easier for them to exploit.
Safety and Injury Handling
This is an easily overlooked area but can definitely get your dinged upon inspection. Be sure you have the appropriate amount of first aid kits and burn kits onsite as reunited by local regulations. Pay particular attention to the regulations about the placement of these kits as they are sometimes required to be within visual distance of specific rooms within your facility. It can be a hard pill to swallow to not be able to get your operation certificate for forgetting such a simple item, but it happens all too frequently.
Employee Access
Having a non-customer door or access point is a best practice. Non-customer access points are where employees and products are brought into the facility without customer line-of-sight. In some states, this is a requirement so check to be sure your facility is in compliance with laws and regulations.
Product Delivery
Getting cannabis products into a retail facility is a critical part of the merchandise flow and one of the most vulnerable points for theft. For maximum safety and control, consider the use of an air-lock/man trap/sally port door arrangement. If not possible due to location or architecture, planning for business hours separation and process can keep customers separated from deliveries.
Employee and Counter Safety
The counters where transactions occur in a cannabis retail setting can pose some risks especially since most facilities are cash-based operations. An open style counter can open up opportunities for theft. Consider a security barrier counter. The idea is to attempt to prevent customers from having access to products, cash, or employees where possible.
Security: Egress
Customer flow can be somewhat challenging, especially in facilities that have a registration lobby that is physically separated from the retail sales floor. Having separate entry and exit doors for customers can help with the flow of customers. Not a requirement but potentially a good customer experience design.
Customer Environment
Dispensaries and retail locations can be busy places at times. In COVID times, this can be a big issue. But even under non-pandemic circumstances, there may be a need to control the number and spacing of customers for both safety and privacy. Social distancing- the process of limiting the number of customers for the available space within the building- can be enhanced through various design elements. These can range from the use of rope and stanchion barriers, to signage and floor stickers.
Lobby design for restricted access – if access to the sales floor is restricted to registered customers, a secure lobby space should be provided with a separated check-in space and access-controlled doors both for customer entrance and egress.
And do not forget bathroom access for customers. You can have a single facility that is unisex but it should also be ADA compliant.
Environmental Consciousness
Unfortunately, like most other retail spaces, cannabis retail still generates a significant amount of waste. And much of it may be recyclable. Business recycling bins should be provided.
Energy-saving considerations can also be important for retail facilities. Motion detecting light systems can reduce energy consumption in non-occupied spaces. At the very least, interior lighting switches should be located in the same area for easy use upon space exit. HVAC systems should have an occupied and unoccupied night setback capability.
Parking Lot
Depending on the total number of employees and customers you anticipate visiting your business at its peak times, you will need to design a minimum number of accessible parking spots.
If curbside pickup is legally allowed in your area, be sure to map out and reserve spaces exclusively for this activity. It should be close to the exit door where the product will be delivered to the customer. Remember to keep parking spaces for handicapped people and even maybe for motorcycles.
NCIA Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.
Committee Blog: Everything You Wanted to Know About Cannabis Facilities But Were Afraid to Ask Field Guide – Part 3 – Extraction
by members of NCIA’s Facilities Design Committee Jacques Santucci, Brian Anderson, David Vaillencourt, and David Dixon
Continuing our five-part series on the behind-the-scenes workings of the legal cannabis industry. This series focuses on all of the inner dealings and industry advice from established professionals to craft this unlimited How-to-Guide to assist you in setting up your own facility. These articles cover cultivation, extraction, infused products, and retail facilities as well as support activities. In general, remember to be compliant with all local rules and regulations and contact a licensed contractor and industry expert.
Part Three, Food: 10 Things to Consider When Planning Your Manufacturing of Infused Products (MIPs) Operations
Food safety and handling practices are an issue for any industry working with or processing products for human consumption and often come with strict guidelines that need to be followed. In the cannabis industry, edibles and other processed or infused products Manufactured Infused Products (MIPs) are ready-to-eat foods, so many states are regulating them as foods under the cGMP requirements of 21CFR117. We feel this is likely the approach that will be appropriate when cannabis becomes federally legal. These 10 things should be considered as you begin to plan your facility. Always remember to be compliant with all local rules and regulations.
Sanitary Design and Operation
A production room is straightforward, conceptually: design the space so walls, floors, and ceilings can be washed and sanitized, then verified (ATP swabs) to confirm the cleaning process is effective. To facilitate cleaning, everything needs to be pulled away from the walls, the ceiling needs to be solid and the walls need to be sealed. Insulated metal panels (IMP) are a cavity-free construction that is seeing wide acceptance in the industry. To keep the space clean during operation, slope the floors to spot drains, install coves along with the floor/wall interface and avoid ledges and traps for water or dust.
Employee Hand Washing
A stringent internal process for sanitation and washing of hands is crucial. Make sure that lavatories are available throughout your facility for proper sanitation. Confer with the municipal board of health for locations and quantity. Generally locate any place where employees are handling consumable products or encounter the potential for microbiological.
Boot Washing
Sanitation includes making sure all boots/shoes are free of contaminants. Employee captive corporate footwear programs prevent contamination potential from non-business-related employee activities.
Cart Washing
For carts that transport ingredients and materials, it is important to prevent floor debris getting transferred from one area to another. Two areas of concern; are wheels and cart shelves. Either wheel or shelf area can be addressed from multiple washing devices specific to each type of cart used.
Product Storage
Food safety temperature and humidity separation of products are an important factor. The purpose is to store food products at such a temperature and humidity level to prevent the growth of undesirable bacteria.
Allergen cross-contamination
Make sure to arrange products to avoid cross-contamination of open and unopened products. Keep the first pallet off the floor at a height of 6” AFF to avoid picking up contaminants. OHSA SHARP may apply how to organize products.
You can design barriers to keep contamination from entering a room.
Limit contamination by having and always renewing Personal Protective Equipment (PPE), since the adjacent hallways may transport raw biomass. Test all ingredients, including THC, to ensure that everything is microbiologically safe. Wipe down, or unpackage ingredients, materials, and supplies before bringing them into the ‘clean environment’ room. Wear specific scrub, clean boots, and wash off any carts entering the room.
Employees entering the food production space
Contaminants can enter via the employees. It is essential to have all employees and agents clean up before entering the food production space. You must provide facilities to wash and sanitize hands as well as boots. Continuous training of employees and monitoring adherence to the procedures is important. Your procedure will include how sanitation is necessary, where are smocks hung, how are shoes cleaned, etc. Typical controls are in the FDA Food Code for jewelry, open sores, illness, etc.
Food Safety Inherent in the Recipes
Complete a Food Safety Hazard Analysis to know if you need to implement an upstream preventative control, such as for chocolate, or if you need to manage a thermal kill-step such as cooking the gummies mass. Low water activity, high acid, or a natural biocide additive, can all be considered.
Control for Allergens
MIPS often contain soy, flour, eggs, dairy, peanuts, tree nuts, coconut, and perhaps others. Each has special considerations for allergen separations and allergen cleaning.
Ware Washing and Clean Parts Storage Room
Don’t Underestimate the Ware Washing and Clean Parts Storage Room. Adjacent to your MIPs production room, consider building a washroom with a commercial dishwasher for utensils, kettles, wetted parts, trays, molds, etc. You might install a three-compartment sink. And make sure to safely store clean items, so they dry and do not get recontaminated prior to use. This room is maintained at negative pressure to the MIPs production room.
Plan for the Pantry
Store ingredients, materials, and supplies in a pantry off the MIPs room can be considered. It is much easier to clean the MIPs room if such items are stored outside production. If you pre-weight, or decant in the pantry, cardboard and plastic are kept out of production. It is a great idea to provide a door also to the adjacent hallway to drop off ingredients, then your staff can enter from the MIPs room. Special care is taken when storing opened products.
Keeping Final Products Food-Safe
The best practice might be to put products such as chocolate bars into primary film envelopes or fin-seal gummies while still in the MIPs room. Often, subsequent packaging is done where there are other possible contaminants such as open bud, pre-rolls, chipboard or corrugated, etc. If the food products are already protected by primary packaging, you will greatly reduce the risk of recontamination.
HVAC, Humidity Control, and Filtration
HVAC, Humidity Control, and Filtration are critical. The MIP production room should be air-conditioned and filtered to at least MERV 14. Cook kettles may be a source of humidity that could be placed under a commercial hood. Cooling and tempering of chocolates and cooling and drying of gummies/jellies have their own special considerations. And consider provide enough HVAC capacity to dry out the production room after a heavy cleaning.
Airlocks and Room Pressurization
Airlocks and room pressurization should be planned properly based on your goals, budget and facility. The MIPs room pressure should be positive to all other adjacent rooms: washroom, pantry, extraction, corridors, lab. There are a wide variety of approaches to airlocks, from a pharma approach with air showers down, to just a door with sufficient air supply to the production room to ensure that it is always positive to the adjacent hallway.
Committee Blog: Everything You Wanted to Know About Cannabis Facilities But Were Afraid to Ask Field Guide – Part 2 – Extraction Facilities
by members of NCIA’s Facilities Design Committee Jacques Santucci, Brian Anderson, David Vaillencourt, and David Dixon
Continuing our five-part series on the behind-the-scenes workings of the legal cannabis industry. This series focuses on all of the inner dealings and industry advice from established professionals to craft this unlimited How-to-Guide to assist you in setting up your own facility. These articles cover cultivation, extraction, infused products, and retail facilities as well as support activities. In general, remember to be compliant with all local rules and regulations and contact a licensed contractor and industry expert.
Part Two, Extraction: Top Things to Consider When Planning Your Cannabis Extraction Operation
The extraction environment is akin to an industrial process and should be approached away from a safety and chemical handling standpoint. Here are some general considerations as you begin to plan your extraction operation that we often see assumed or overlooked resulting in major unanticipated barriers that significantly impact decision costs and timelines. Always remember to be compliant with all local rules and regulations.
Interior Building Materials
The walls and floors should be designed to be easily cleanable. In areas with solvent use, should have floors and walls made with the material, and ultimately the method for effective and ease of cleaning such FRP (Fiberglas Reinforced Panels).
Facility Specifications
There are many established standards from organizations like the NFPA and ICC-IFC which are commonly cited and required by Fire Marshalls with appropriate fire engineering controls, room interlocks, etc. Knowing which classifications are required based on the room type has a major impact on facility specifications (e.g. C1D1, C1D2, etc.) and the ultimate design. This requires knowing which solvents you will be using (and equally important, solvents you will not be using) as well as identifying all of the activities you will be doing in your extraction/processing facility (winterization, purification, bulk or final product packaging, and more) and whether the rooms will be wet and dry (how will you be cleaning these rooms?). How you answer those questions will help you and your team select the appropriate room materials and overall design.
Electrical Power Ideal Recommendations
Evaluate your utility power infrastructure, including street transformers and available power to your site when designing your facility. The power demand for a cannabis facility is significant and grid limitations can destroy or significantly delay the ability for a business to operate.
Losing power due to weather or events outside of your control are another major risk. When considering alternative power generation, consider a generator with auto-transfer switching and the appropriate fuel type, depending on location and local weather. Contact a local licensed professional. A generator can be an invaluable insurance policy as even a short duration power outage can destroy an entire crop and any products that must be maintained at critical temperatures.
Equipment Rooms and Maintenance Rooms
Appropriate space for equipment and dedicated rooms for maintenance is commonly needed. These all come with different combustion air requirements, venting requirements, air exchange rates, vacuum lines, and more. You may consider a room for spare parts and tools.
Appropriate Storage Area: Biomass, Volatiles, Raw Ingredients, and More
Separation of raw materials with appropriate and dedicated storage areas is needed for the various types of raw ingredients and materials utilized within a cannabis facility. Volatile solvents require extremely specific storage requirements, which will become part of your Chemical Hygiene Plan once you are operational. Refer to your local Fire Marshall for code considerations and from code organizations like the ICC and NFPA.
Cleaning and sanitation agents should be segregated from materials that are utilized in final product formulations (e.i food ingredients, oils, etc.) and raw materials ahead of the design is critical to ensure appropriate storage requirements are met whether indoor or outdoor. Biomass storage can vary based on whether wet or dry and often require controlled temperature and humidity. Finally, do not forget the dedicated space needed for finished good inventory.
Electrostatic Discharge (ESD) Safety
Do you know that shock you get when you are in your car in the winter or flipping on a light switch? Innocent in everyday life, but potentially lethal in an environment such as extraction rooms where highly flammable solvents could be present. Consider rated and non-rated clothing and other personal protection measures.
Food Grade Oil Considerations and Inspections
Extracted oils that will be used downstream in edibles and beverages are akin to ingredients that require Food Safety endorsements such as cGMP.
Equipment Ratings
Before selecting equipment for use, evaluation criteria should be established based on your business needs and compliance. Some authorities having jurisdiction require extraction equipment to come with stamps, certifications, or endorsements from organizations such as ASME, UL, and NFPA as relevant to ensure equipment safety and fit for use.
Room Environmental Controls
Grinding rooms often need separate dedicated ventilation and filtration to be checked against grinding method/equipment and concentration of particulate (typically measured in parts per million (ppm) in the air. Dust collection systems for grinding equipment are effective ways to keep dust levels at manageable levels, reducing the need for time consuming cleaning procedures. Extraction and final product rooms may require additional ventilation considerations and monitoring sensors depending on the extraction method or final product type. Example: Solvents will require sensors and air exchanges located near the ground level since most solvent fumes tend to be heavier than air.
HVACD Management
Designing your facility involves HVACD (Heating, Ventilation, Air Conditioning, and Dehumidification) management that considers airflow controls areas, airflow, and fire protection within control areas. Rooms may require positive and negative pressures with calibrated pressure indicators. You should aim at having a leveled constant environment.
Safety and Injury Handling
Facilities need to have sufficient accessible First Aid and Burn Kits on site. Safety and Emergency Showers are often determined by code and the type of extraction solvent in use at the locations. Eye wash stations may also be required.
Spill and Solvent Safety
In areas where solvents are or may be used, you will need to have barrier/spill kits specific to the solvents and extraction materials on hand. This barrier can be built in or hand delivered per emergency. Solvent storage locations, depending on the type of solvent and hazardous rating.
Having one or two dedicated people to run point on spills can be part of a comprehensive spill procedure that would include evacuation of the area, assessment of the spill and of the clean up technique, disposal method, etc. There are many materials that are not compatible or properties that make them volatile under certain circumstances so having dedicated people to evaluate the situation will save you time, money, and any possible mishaps.
Solvent Storage
Indoor and outdoor solvent storage are dictated by NFPA, ICC-IFC, and local regulations. Storage types and limits are essential to check before buying or building a facility. Fire professionals base these limits on several factors of flammability including class and volatility. You may also need to adhere to SARA Type III reporting depending on the solvent and storage amounts. Do not forget about solvent tank types, whether they need to be mounted or chained to walls, security access controls, and SDS requirements.
Solvent Enclosure
C1D1, C1D2 is needed for solvent use. The actual type of solvents (e.g. CO2, Ethanol, etc.), and volume of solvent will dictate the different requirements for enclosures. This section pertains to areas in which the solvent would be transferred, mixed, extracted, recovered, etc. The type of enclosure is dependent on the type and class of solvent. Most enclosures will have volume limits, containment, vapor detector, electrical and ventilation requirements.
Emergency Ventilation
Ensure wall switch and fast ventilation, automated ventilation when sensors are activated during spill of contaminate.Sensors to be located where appropriate for the substance in use. Coordinated with the fire marshall to meet local requirements through design with architect and mechanical teams.
Employee Access Control
Limiting door access, proper security labeling, and key sets for employees need to be part of your overall security plan. LThe idea is to prevent unauthorized personnel from accessing the extraction space compliant with the local regulatory body.
Equipment Regulatory Listing
There are requirements such as UL certifications/marks which are dependent on the actual device and intended use. Always contact your local code enforcement office and a licensed contractor.
A company’s brand is its identity. Branding elements – names, logos, colors, graphics, slogans – are how customers recognize a product or service as coming from a particular source. Done properly, brands can be as recognizable to consumers as a person’s face, name, and voice. In some cases, brands may be some of the most valuable assets a company may own. Protecting physical assets is common in the cannabis industry, but how do companies protect intangible assets, like their identity? Fortunately, there are bodies of intellectual property law designed to provide legal protections against others from using brand elements that are too close to your own. To take advantage of these protections, however, cannabis companies must understand how each one works and develop a branding strategy that leverages intellectual property laws.
This is the second article in a 3-part series about cannabis IP. The first article focused on patent law and can be found here. The series will culminate with a Q&A-based webinar on April 19th at 1:00 Eastern. Advance questions can be sent to paul@thalo.io.
Mechanisms of Brand Protection
Brands are protected most prominently by legal domains known as trademark and trade dress. Trademarks include a company’s name, logos, and slogans, as well as those of any individual products. In some instances, trademarks may also include recognizable elements like colors (UPS’s brown) and sounds (NBC’s chimes). Trade dress is a similar concept to trademarks, but applies to the distinct appearance of a product or its packaging. Trade dress can even be used to protect the unique look and feel of a retail establishment, such as a restaurant or dispensary.
Both trademark and trade dress is intended to reduce confusion in the marketplace as to the origin of a product or service. The idea is that the public is best served when they can reliably determine which company to associate with each product. Reliable product-company association increases quality accountability, facilitates safety controls, allows consumers to form powerful brand loyalty.
Companies that avail themselves of trademark and trade dress laws gain access to a set of tools to legally fence off others from using branding that is likely to confuse customers about the source of a product. And, unlike other forms of intellectual property, trademark rights can last indefinitely and even strengthen over time. Some of these rights arise automatically just by using a mark, others must be sought out through registration.
Principles to Consider When Selecting a Brand
Every company should consider trademark principles from day zero, when first selecting a name. U.S. trademark rights only apply to marks that are “distinctive,” meaning they are capable of distinguishing things bearing the mark from goods and services offered by others. The more distinctive a mark is, the stronger protections provided by trademark law. Names that merely describe the goods or services are non-distinctive and are typically not eligible for trademark protection.
There are five general categories along the spectrum of distinctiveness – fanciful, arbitrary, suggestive, descriptive, and generic – arranged from strongest to weakest.
Fanciful marks words that were invented specifically to serve as a trademark, such as Xerox or Nvidia. Because these words have no other meaning than to identify the source of goods or services, they are the most distinctive category of trademark and receive the greatest protections.
Arbitrary marks are the second most distinctive category of mark and include words that have alternative meanings, but only meanings in contexts unrelated to the goods or services being sold. These include Apple computers, Lotus cars, and Bicycle playing cards.
Suggestive marks are less distinctive than Fanciful and Arbitrary marks, but still considered sufficiently distinctive to receive trademark protection, though registration may be more difficult. Suggestive marks imply a quality or characteristic of the good or service the mark is used in connection with. Some examples of suggestive marks would include: Microsoft, a portmanteau of microprocessors and software; ChapStick, for a stick-shaped balm used on chapped lips; and Netflix, which is suggestive of an internet-based video service.
Descriptive marks simply describe the goods or services being offered and are, therefore, not distinctive. In some cases, however, descriptive marks can acquire distinctiveness and achieve a “secondary meaning” as a source-identifier through long-term use (usually +5 years), heavy advertising, or pervasive adoption. Examples of Descriptive Marks would include: International Business Machines (IBM Computers); Best Buy retail stores; and Sports Illustrated magazine.
Generic marks are terms that broadly identify the product or service being offered. Generic marks are so non-distinctive that they are not eligible for trademark registration, even if secondary meaning can be shown. The idea is that these marks are so fundamental to the product that it would be detrimental to consumers and the marketplace to allow a brand to have exclusive use of the term in connection with the goods. “Escalator” and “Dumpster” were once brand names but, because they were used widely to refer to all mechanized stairways and trash receptacles regardless of manufacturer, they lost all trademark distinctiveness.
Parody Does Not Apply – Avoid Famous Brands
A surprising number of cannabis companies have used trademarks that reference or parody famous brands. Gorilla Glue, Girl Scout Cookies, and many others have been used as names for cannabis products. Companies have used packaging that resembles well-known products such as Life Savers and Sour Patch Kids. This is a bad idea. While this practice seems to be increasingly limited to unregulated markets, a recently published (and ill-advised) application for the mark and logo MCWEED for apparel shows that not everyone has received the message:
Registration and Scope of Protection
Some trademark rights are established as soon as a trademark is used in commerce. But to obtain the full scope of legal protections available, trademark owners must register their marks, preferably federally. Federal registration stakes a claim to a nationwide priority date, increases protections available, increases potential damages, and embodies a definities property that can accrue value.
All trademark registrations begin as applications. Trademark applications must, among other things, identify the mark, the applicable dates of use. Applicants must also describe the goods and/or services the mark is (or will be) used with and select one or more classes from an international menu of product classifications. The classes selected and the description of the products can greatly affect the scope and validity of a registration, so it is important to consult with an experienced trademark attorney.
These applications are examined by the U.S. Patent & Trademark Office to ensure they meet the statutory requirements. Typically, the USPTO completes examination within about 6 months, but currently the office is experiencing some delays and it is commonly taking 7-10 months for an application to be evaluated. If the examining attorney identifies any problems, they may issue rejections, to which the applicant will have an opportunity to respond.
If the USPTO approves the application, it will be published for 30 days (expandable to 180 days) to allow other trademark owners to oppose registration of the mark. Sophisticated trademark owners can set up alerts to be notified when any similar applications are published that may be concerning. At the close of that period the mark is recorded in the federal register and the trademark registration is complete.
A qualified trademark attorney can help guide you through the process and provide counseling concerning how to maximize your chances of registering your trademark without prejudicing your rights. Trademark application fees run $250-$350 per class of goods or services and a trademark attorney will typically charge a few hundred to a few thousand dollars, depending on their experience and the level of pre-application clearance. While trademark mills and self-guided applications are available, there are many pitfalls to avoid while preparing and prosecuting a trademark application, and applicants should be wary of attempting to navigate the process without legal guidance.
Applicants should also be aware that many companies mine the USPTO database to send unsolicited offers to trademark applicants. While these offers can look official and typically include some deadline to respond, they are usually scams. Nevertheless, it can be helpful to have an attorney review any correspondence relating to the trademark application to ensure that no important correspondence from the USPTO is missed.
Embrace the Zone of Expansion
There are a lot of benefits to registering trademarks, but registration is not available in all instances. Under federal law, registrations cannot be issued that cover goods or services that are federally illegal. But the same mark can be registered for other, legal products, and the trademark rights will extend to a reasonable “zone of expansion,” covering products that the trademark owner could reasonably branch out to in the future. This allows a brand owner to obtain the benefits of federal trademark registration and use it to provide some umbrella protection for their cannabis brands.
One option is to sell branded accessory products, such as apparel or smoking accessories, for which a trademark registration will pass muster. It is debatable, however, whether cannabis products are within the zone of expansion of t-shirts.
Another option is to develop one or more low-THC hemp products under the same brand as high-THC cannabis products. At least one case is already working its way through the courts where a trademark owner is claiming that cannabis edibles are within the zone of expansion of a line of hemp-infused, low-THC edibles. Edible IP, LLC and Edible Arrangements, LLC v. MC Brands, LLC and Green Thumb Industries, Inc., (Case No. 20-cv-05840). Though that approach is also not without its pitfalls, as discussed below.
A final option that every cannabis company should consider is state trademark registration. State registration requirements are typically governed by state law and, therefore, state trademark registrations can often be obtained for cannabis products. State registrations are more limited than federal registrations, but can be a powerful tool in the current landscape of cannabis IP.
Products with CBD Can Be Trademarked, But You Can’t Trademark “CBD” Products
Companies that produce hemp products do not have the same problem with federal illegality as companies with high-THC products. Federal registration is available for trademarks that are used on hemp and hemp products. However, as most hemp companies should know, the advertising of cannabidiol or “CBD” is regulated by the Federal Drug and Cosmetic Act (“FDCA”), 21 U.S.C. §§ 321(g)(1), 331(d) and 355(a). Because CBD is the active ingredient in an FDA-approved drug (Epidiolex®), the FDCA prohibits marketing CBD products (absent a New Drug Application or Abbreviated New Drug Application). Though that may change. As of now, however, the USPTO will refuse to register marks that identify the goods as “CBD.” In re AgrotecHemp Corp., Serial No. 88979905 (issued Feb. 10, 2022) (finding that PUREXXXCBD for plant extracts should be refused registration).
Notably, the AgrotechHemp decision went further than previous USPTO decisions in that it also criticized the issuance of registrations for marks used on products “derived from hemp.” This may signal a crackdown on all hemp-related registrations, or it may be limited to registrations that explicitly identify the goods as containing “CBD.”
Where’s the Value in Trademarks?
It may come as no surprise that brands can be incredibly valuable assets. In some cases, a company’s brand can make up a significant portion of its balance sheet and brand-centric companies can fetch a premium when they are acquired, known as “goodwill.” Increasingly, specialized lenders are even willing to use secured IP as financing collateral. Nonetheless, the real value for many trademark owners is non-monetary.
When many people think about intellectual property, they recall headlines of jury verdicts with huge damages that can reach into the billions of dollars. The reality is that, absent intentional copying, trademark cases rarely result in large-dollar awards. More often, successful trademark suits result in an injunction preventing further infringement and some relatively minimal damages. The primary value of trademark rights is the ability to control your brand and how consumers perceive your brand in the marketplace. Trademark rights give you the tools to define your brand as a unique identity and preserve that identity in an increasingly crowded industry.
Video: NCIA Today – Thursday, March 24, 2022
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.
Member Blog: FDA Cites Multiple Violations for Selling CBD as Supplement, Food, Cosmetic, or Animal Food Ingredient
The FDA’s position on the use of CBD in dietary supplements and foods is steadfast. In 2021, five warning letters about CBD-containing dietary supplements and foods went out – three based on website reviews and two based on facility inspections. All cited violations relate to pain relief claims. The products are therefore unapproved new drugs. Two warning letters emphasize the FDA’s position that CBD does not meet the definition of a dietary supplement, from which it is excluded due to the authorization for investigation as a new drug.
In November 2019, the FDA published 15 warning letters in a “catch-all” effort regarding cannabidiol products. The products range from articles sold as dietary supplements, conventional foods, cosmetics, and animal food. The FDA sent out the 15 warning letters to companies in a number of states, including California, Texas, Oklahoma, Colorado, Oregon, New York, Florida, North Carolina, Arizona, and Kentucky based on the content of websites and social media sites. This was not the first time the FDA had sent warning letters regarding cannabidiol [CBD]. The first seven CBD warning letters were issued in March 2019, so attentive manufacturers could have been aware of t the FDA’s position and that enforcement actions might be taken.
In the 2019 warning letters, the FDA states that CBD in products sold as dietary supplements does not meet the definition of dietary ingredients in the Federal Food, Drug, and Cosmetic Act (321(ff)(B)(i)(ii)). This provision clarifies that a dietary ingredient cannot be a substance that has been approved as an active ingredient in a drug. The FDA has confirmed that CBD is an active ingredient in the approved drug Epidiolex.
Products containing CBD and sold as conventional food often worry the FDA even more, because they are often advertised for toddlers and infants. FDA clarified that CBD does not have an authorization as a food additive. Food additives need to be pre-approved by the FDA and there is no such regulation for CBD. CBD also is not a GRAS substance. This is based on the FDA’s review of publicly available data, which shows that CBD is potentially harmful and may cause liver injuries and interact with other drugs. Furthermore, studies in animals have shown that it might impair sexual behavior in males.
Similarly, the FDA states in relevant warning letters that CBD is an unapproved new animal drug because of the disease claims. The products are also adulterated animal foods because there is no animal food additive regulation that authorizes the use of CBD and there is no basis to conclude that CBD is GRAS for use in animal foods.
Besides the illegal status of CBD as a dietary ingredient, the warning letters regard the products as unapproved new drugs, because they claim that CBD cures, mitigates, treats, or even prevents diseases. Most warning letters are very long because the manufacturers cite numerous diseases for which CBD might be helpful. CBD is often depicted as a “cure-all.” Some of the popular disease claims involve pain relief, anti-inflammatory, diabetes, acne, anxiety, depression, and cancer. For example, one warning letter cites 45 diseases. Simultaneous to being unapproved new drugs, all products are regarded as misbranded drugs.
Most 2019 warning letters were signed by three FDA compliance directors from Center for Drug Evaluation and Research, Center for Veterinary Medicine, and Center for Food Safety and Applied Nutrition. In some of the earlier warning letters, the FDA also involved FTC – Federal Trade Commission – because of unsubstantiated claims. Both agencies are concerned that some of the efficacy claims may not be substantiated by competent and reliable scientific evidence.
There are clearly more than 27 companies in the market selling CBD. My thought is that the FDA has picked some of the worst offenders with respect to claims to establish impressive examples. Throughout the years in articles and press notifications, the FDA has always stated the regulatory position that CBD does not meet the definition of a dietary ingredient. This position has been challenged by industry and is a controversial topic. Some plaintiffs’ lawyers have initiated class-action lawsuits on the basis that clients were harmed by buying an illegal product and paying too much for it. It appears that the FDA is currently only enforcing against CBD products with disease claims. So far, the FDA has not written warning letters solely because a dietary supplement uses CBD. All of the mentioned warning letters could have been written to any dietary supplement making obvious disease claims.
So, what can be learned from the FDA’s actions? The first and most important step for manufacturers would be to “clear” all web pages, social media pages, and third-party referrals of disease statements. A second approach should be to not use CBD as a food ingredient or as an animal food ingredient. As a regulatory strategy, this may buy some time until the controversy about the legality of use in dietary supplements is clarified. For dietary supplements – in a conservative regulatory approach – a next step could be not using CBD as a dietary ingredient, because it is an approved drug.
A possible alternative legal ingredient is a full spectrum hemp extract which contains all hemp components – not just isolated CBD. Hemp-derived ingredients are eligible for use as dietary ingredients by virtue of being “botanicals.” However, hemp-derived substances must submit a New Dietary Ingredient notification 75 days prior to first marketing the hemp supplement. A less conservative regulatory approach for dietary supplements could be to wait and see what the FDA decides under the pressure from industry and consumers. Hopefully soon, the FDA will clarify the legality of use in dietary supplements.
Gisela Leon brings in over 33 years of experience in international labeling. She is well-experienced in USA labeling requirements of food, dietary supplements and cosmetics, in European food laws and multi-language labeling. As a regulatory consultant, she focuses on a concise review process, having reviewed hundreds of labels for U.S. compliance and helped international products to come into compliance with U.S. regulations. Her international labeling background allows her to point out differences or similarities with other countries.
After receiving her Master’s degree in Food Technology Engineering, Ms. Leon received her DGQ Audit-Specialist Certification from the German Institute for Quality, and her Master’s in Business Administration from George Mason University. For over 20 years she worked at Schöller Lebensmittel GmbH & Co KG as Director of Quality Management and Labeling Compliance. Ms. Leon speaks English, German, and French.
EAS Consulting Group, as part of the Certified Group of companies, merged with Food Safety Net Services, (FSNS), to become the global leader in testing and regulatory solutions for the FDA and USDA regulated industries.
EAS’ network of 200 independent advisors and consultants enables us to provide comprehensive consulting, training and auditing services, ensuring proactive regulatory and quality compliance for food, dietary supplements, pharmaceuticals, medical devices, cosmetics, tobacco, hemp and CBD.
The merger of FSNS (FSNS.com) with the Certified Laboratories group of companies, (certified-laboratories.com), has created a leading, national testing and regulatory consulting platform. EAS can assist with your regulatory and quality requirements and challenges, while offering access to a robust scope of testing services to meet your organization’s sophisticated needs.
From regulatory strategy, auditing, training, FDA inspection preparation, 483 & Warning letter remediation, quality system implementation, labeling compliance, preparation of technical submissions such as GRAS, Food Additive Petitions, DMFs, NDIs, 510(k)s and more; to FSMA compliance, expert witness services and due diligence assessments, EAS offers the expert knowledge and experience your company requires to ensure compliance through accurate and timely assistance. With our vast expertise in FDA’s and USDA’s policies and enforcement, EAS is the proven choice for assistance with product testing and other regulatory and quality consulting solutions. easconsultinggroup.com
Member Blog: Cannabis Extraction – Creating a Competitive Advantage Through Data
As customers become more sophisticated and discerning about the fast-growing cannabis extract market, from vapes to dabs to infused pre-rolls, the need to routinely produce consistent, quality extracts at scale is becoming doubly important for processors. Compounding the issue, the potential for federal legalization will bring significant growth opportunities but also increased federal oversight, including the need for Good Manufacturing Practices (GMP) and other onerous standards that will challenge unprepared operators.
Future-Proof Extraction Operations Through Data
To overcome these twin challenges, processors should start developing (if they have not already) a framework to capture, review, and analyze data at every stage of production to produce consistent, quality, and compliant products.
That framework should examine every aspect of the extraction process, starting with the type of material harvested from farms, including how it is stored and handled, through to the final, packaged retail-ready product.
It should also be tied to specific goals and clear objectives. Capturing data simply to capture data within a given framework but without a clear idea of how that data will be used can lead to analysis paralysis, or worse, endless trial-and-error that wastes time and material, eating into expected profits.
Leverage Design of Experiments Methodology
Design of Experiments, or DoE, is a scientific methodology that can help guide processors in determining the key parameters they want to track and how those parameters interact. This starts with assertions that map to specific goals or objectives, such as investigating the yield of a specific terpene with the goal of blending it with a distillate-based vape cartridge. From here, processors can design and set up experiments with varying inputs from temperature to pressure, to biomass composition, all to understand how the yield of a specific terpene is influenced throughout a given process.
When these learnings are applied at production scale, the framework developed through DoE methodology provides a guide for creating consistent products, but also to better manage and rectify issues that may arise. With specific goals in mind, processors can then determine what data they need to capture and analyze.
The Four Steps of Data Capture
Step 1: Chemical Makeup – When selecting or determining what plant material to use for extraction, processors first must examine the chemical makeup of the cannabis biomass. This can include the profiles of cannabinoids, terpenes, and the fat/wax/water content.
The exact chemical makeup of cannabis biomass can be difficult to determine because of its nonhomogeneous nature. Imagine closing your eyes and selecting a random sample from a container of bulk biomass. Maybe you grab a sugar leaf or flower, high in THC-laden trichomes, or maybe you grab a fanleaf with little to nothing to contribute to a high-quality extract. The chemical composition will look significantly different depending on how one selects the sample. So it’s important to be cognizant of what and how biomass testing is conducted, and often a single sample isn’t the answer. Knowing the approximate chemical makeup of the feedstock material will guide the processor to determine what type of recipe they will use for extraction and post processing and, ultimately, what end products are most valuable for a given input.
Once the chemical makeup has been determined, the processor will know the inputs of the material, such as the associated THC, CBD, terpenes, etc. They can then use that data to determine what will (or should) come out of the extraction process at its conclusion. This is the mass balance of the production process. It is difficult or impossible to optimize any process if one doesn’t know exactly what goes in and what comes out. Of course, this is much easier said than done given the nonhomogeneous nature of biomass.
Step 3: Identify and Maintain Key Process Parameters – Depending on the recipe and desired end product as determined through the above steps, the extraction process will need to maintain specific temperatures, pressures, times, and flow rates, among other key variables, to ensure a consistent, quality product. This is where a DoE or other similar process can add significant value. Analytical tools, such as the DoE, can help determine what process parameters need to be precisely controlled, and what parameters can have looser controls or can be ignored altogether. Compliance comes into play here as well. The ability to track and record these key data points is crucial to achieving GMP compliance as well as creating a consistent product that customers expect.
Step 4: Post Process Review – In order to understand how recipe parameters affect the end product, the processor needs to know its chemical composition as well as the composition of any waste materials (e.g., biomass, fats, waxes), or impurities that have been filtered out. Capturing this data is vital as it offers the critical clues to why a particular batch did not turn out as planned, for example, so the processor can investigate potential causes and corresponding solutions.
Step 5: Recording Data Between Each Process – What happens between each process is nearly as important as what happens during the process. Storage conditions can have an impact on quality and consistency, issues that may not be readily evident within the data capturing during processing. Those data points to know, among others, may include monitoring the freezer temperature where biomass is stored, measuring the humidity of the environment, documenting when and how equipment is cleaned, or even tracking how long material sits between extraction and placement in a vacuum oven.
Decision Making Via Data Analysis
After the data is captured and analyzed, managers may need to enact decisions if the data shows deviations from the expected outcomes. For example, as part of post-production lab tests (step 4), are acetone traces appearing in the finished product? If so, the organization may need to change its equipment cleaning practices (step 5) to ensure unwanted trace chemicals are not seeping into finished products.
Although enacting a program to better capture, review, and analyze data can appear to be a daunting task, doing so will provide the processor a significant competitive advantage. Not only will it help ensure consistent production while future-proofing the organization against coming regulations, it may also enable processors to experiment with and develop novel or proprietary extracts derived from a repeatable, scientific method that can’t easily be replicated by competitors.
Jack Naito is President of Luna Technologies, where he oversees operations, strategic growth, and R&D for the company he co-founded in 2016. Jack entered the cannabis industry after time spent as a Materials, Process, and Physics Engineer for aerospace giant Boeing. Jack obtained an Economics and Business degree from Colorado College and a Master’s degree in Mechanical Engineering from the University of Washington.
Luna Technologies engineers state-of-the-art extraction equipment for cannabis processors. The meticulously designed, automated equipment empowers operators to process fresh-frozen or cured plant biomass with stress-tested hardware and built-in failsafes to foster a superior level of workplace safety while also lowering labor costs. Luna’s Earth-conscious engineering approach helps decrease energy consumption while setting the industry standard for safety, quality, consistency, and customization in support of creating clean, consistent cannabis concentrates with medical and social benefits. Learn more atwww.lunatechequipment.com.
Video: NCIA TODAY – Thursday, March 10, 2022
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.
Committee Blog: Protecting Innovations in Cannabis Technology
The Role of Patents in the Industry, Now and in the Future
Paul Coble is an intellectual property attorney and Chair of NCIA’s Cannabis Manufacturing Committee; Scott Seeley is an intellectual property attorney with Eastgate IP and is Organizer of the Cannabis Manufacturing Committee
Competition in the cannabis industry has always been fierce. To date, most competition has focused on securing licenses and sales territory. But, as markets saturate and the green pastures are all claimed, the battlefronts must shift. Cannabis companies now look to collect non-geographic assets, such as market share, profitability advantages, and a durable brand presence.
Intellectual property law provides mechanisms to capture and monetize these intangible assets. Assets that give a company a competitive advantage can build value into a business beyond its balance sheet. Well-crafted IP portfolios not only deter freerider copying, but are also valuable assets that can be sold, licensed, or provide incentive for investment or acquisition by larger entities. Businesses with a strong IP strategy are able to maintain their edge over their competitors by protecting their investments in technology and marketing to discourage competitors from utilizing their newfound developments or improperly capitalizing on their brand recognition.
Ignoring cannabis IP not only leaves this value on the table, but exposes the business to unnecessary risk. As in all other industries, cannabis companies must recognize that competitors have IP portfolios that may need to be avoided or licensed. Modern competition requires solidifying your own rights as well as understanding the rights of others.
Intellectual property is often broadly broken out into four major categories. Each category is tailored to protect different forms of intangible assets:
This blog post overviews patents, and how patents can be used by cannabis businesses to protect their technological advancements. This is the first of a 3-part series about cannabis IP. The series will culminate with a Q&A-based webinar on April 19 at 1:00 PM ET. Advance questions can be sent to paul@thalo.io.
What are Patents?
Patents protect technological advancements and can be used to exclude others from making, using, importing, or selling a claimed technological innovation.
Patents are often used by businesses to build walls around technologies they develop to temporarily prevent competitors from using the same advantages. Companies also use patents to build portfolios of technology that can be sold or licensed like any other asset, or used to bolster their valuation for acquisition or investment opportunities.
But patents are not just used to block competition, they can also be a tremendous source of information about technological developments in the field. While patent discovery tools are admittedly lacking at the moment (GooglePatents is a good place to start), the details in a patent can often short-circuit months or years of work. Of course, depending on the patent claims, you may need to license the patent in order to use that information. But that type of information-for-licensing-rights exchange, with the right mentality on both sides, is the foundation of an efficient industry.
Here are just a few examples of the cannabis technology that may be patent eligible:
Cannabis Strains
Formulations for Extracts, Topicals, Tinctures, Vape Liquid, Edibles
Vaporizer Design
Cartridge Design
Extraction Methods
Manufacturing and Processing Methods
There are three types of patents that can be used to protect cannabis technology: Utility, Design, and Plant. These types of protection are not mutually exclusive and sometimes can be combined to form a more comprehensive protection strategy.
Utility Patents
Utility patents are the most popular type of patent, offering the broadest and strongest form of protection. Utility patents last 20 years from the date of filing and are good for protecting nearly any new technological innovation including formulations for extracts, topicals, tinctures, or edibles, new vaporizer designs, new improvements to processing or manufacturing methods, and similar developments. Utility patents can also be used to protect new cannabis genetics, at least theoretically. As discussed below, however, there are several practical barriers to patenting cannabis genetics.
A significant benefit of utility patents is that they can protect the actual function of an innovation, rather than just the outwardly recognizable features or the specific implementation. This aspect of protection sets utility patents apart from other forms of protection like design patents and copyright, which are limited non-functional aspects.
Design Patents
Design patents protect an item’s unique ornamental appearance. Design patent protection is sometimes easier to obtain than utility patents because design patents only protect the look of an item, not how it works. So design patents do not protect against someone selling a functionally identical device with a different outward appearance. This narrower protection also lasts only 15 years instead of 20.
Nevertheless, design patents can be a strong tool to protect products that have a novel and distinct design aesthetic. They can cover the visual appearance of vaporizer batteries or cartridges, retail packaging, even unique dispensary displays. In some cases, design patents can be effectively combined with trademark and trade dress protections to create a highly defensible brand style.
Patenting Cannabis Strains
The most common questions about cannabis patents usually relate to patenting strain genetics. Newly developed strains can be protected by both utility and plant patents, with varying rights and requirements. Cannabis strains may also, theoretically, receive pseudo-patent protection under the Plant Variety Protection Act of 1970 (“PVPA”). As noted below, however, current practical realities make PVPA protection unattainable for most cannabis strains.
Both plant and utility patents can protect cannabis strains, but they do so very differently. Utility patents cover newly invented compositions of matter and, therefore, can be used to prevent copying a novel genetic sequence. These patents literally cover specific sequences of DNA base pairs. A key requirement of utility patents is that the applicant must enable others to make and use the same invention once out of patent. While it may be possible to meet the enablement requirement with a transgenic breeding or CRISPR gene editing, the more common method of enabling plant gene patents is with a biological deposit of seeds or other propagation material with a public organization. So long as cannabis remains federally illegal, it can be difficult or impossible to make the deposit within the U.S. Some applicants have had success making the seed deposit at foreign centers, but the growth of cannabis genetic patents has been slowed by these requirements. When cannabis is eventually descheduled, the practical barriers to genetic patents will fall and that may trigger a rush by more companies to seek patents for their proprietary cannabis strains.
Plant Patents
Another form of patents, plant patents, can protect new plant varietals that have been reproduced asexually. Although cannabis plants are relatively easy to reproduce asexually via cloning or cutting, one disadvantage of this form of protection is that plant patents only cover genetically identical copies, reproduced asexually from the claimed plant. That means to infringe a plant patent, one must physically clone the patented plant–a narrow base for an infringement claim.
Plant Variety Protection Act
The last vehicle that can protect a new cannabis strain is the Plant Variety Protection Act that was designed specifically to protect sexually reproducing plants, such as cannabis.
The PVPA, however, comes along with a strict requirement that at least 3,000 seeds of the claimed plant species be deposited with the U.S. Department of Agriculture in Fort Collins, CO. The USDA will not accept any deposits for plants that are classified as controlled substances, including cannabis. Meaning that, for the time being, PVPA protection is unavailable for cannabis plants that do not qualify as hemp (less than 0.3% d9-THC).
The Process – How to Get a Patent
All patents start as applications which must be examined and approved by the U.S. Patent & Trademark Office (“USPTO”) to become granted patents. The application process, from start to finish, can last 1-5 years and cost anywhere between a few thousand to tens of thousands of dollars.
The examination involves a review of the patent application, as well as related literature published before your application was filed (also called “prior art”). An examiner with technical expertise in the application’s field will search for prior art and determine whether the application meets all statutory requirements. Most notable of those requirements are that the invention must cover eligible subject matter and be sufficiently inventive to warrant a patent.
The prosecution process typically involves letters back-and-forth between the inventor and the Patent Office. It is often thought of as a negotiation — nearly all patent applications receive at least one rejection. The applicant is given an opportunity to change what the patent covers or explain why the rejection was wrong. Only if and when the Examiner is satisfied that all statutory requirements are met will the application be allowed to issue as a patent.
How will Patents Shape the Cannabis Industry?
Like it or not, patents are rapidly becoming a major force in the cannabis industry. The cannabis industry is in a unique position to determine the role intellectual property will play, but one thing is certain: cannabis IP cannot be ignored. Some companies, like Canopy Growth, Nextleaf, and various pharmaceutical companies, are aggressively developing patent portfolios and high-stakes patent litigation is already underway. Additionally, holding companies known as “non-practicing entities” have been formed to purchase valuable patents covering key aspects of cannabis cultivation, manufacturing, and consumption.
But these forces do not have to dominate the industry. Patents were originally designed to promote scientific advancement, not inhibit it. When the IP rights of others are respected and technology is licensed widely at reasonable rates, intellectual property can cut years and millions of dollars from research budgets. Some industries have found success with patent cooperatives and similar pooled-patent arrangements. The future may see some combination of patent licensing with blockchain technology, NFTs, or decentralized autonomous organizations (DAOs).
We will continue the discussion as to what an enlightened approach to intellectual property could look like in the cannabis industry in our webinar scheduled for April 19 at 1:00 PM Eastern. Please send any advance questions to paul@thalo.io.
Member Blog: 9 Standard Operating Procedures Every Dispensary Should Have
by Tommy Truong, Director of Partnerships at KayaPush
Standard Operating Procedures (SOPs) are the documents, protocols, systems, and procedures that your cannabis dispensary should have in place to manage day-to-day operations. SOPs help dispensaries in many ways: From optimizing proper employeemanagement systems such as dispensary payroll and onboarding to ensuring compliance with regulations are consistently met, and more.
What are the top dispensary SOPs to use?
There are hundreds of dispensary SOPs that could be created, and they should constantly be evolving as your store grows.
Overall the goal of dispensary SOPs is to increase efficiency and help you become more profitable in the long run. That being said, these are the 9 types of dispensary SOPs we recommend you start with as you build and scale your dispensary store.
1 – Opening & closing procedures and SOPs
All brick and mortar retail stores should have SOPs in place for opening and closing the store. But especially stores that require high-security measures like cannabis retail stores. Opening and closing checklists for this special breed should include the following: Opening checklist:
Vibe check: Turn on lights, music, temperature, put out signs, clean.
Check for any signs of a break-in or forced entry every morning.
Make sure that all products in the display and stores are accounted for.
Put away any orders.
Review inventory.
Turn on and start up all software systems.
Ensure you are in dress code (if applicable)
End of day checklist:
Check that the security cameras are working.
Lock all the doors and display cabinets.
Check and report any obvious security threats/ logbook.
Generate sales and compliance reports.
Cash-out protocols.
Closing the cash registers and POS system.
Turn off lights, music, bring in signs.
Clean and sanitize the store.
Lock all doors and perform security checks.
2 – Customer check-in procedures and SOPs
Many cannabis dispensaries violate their customer check-in procedures and end up facing fines and license suspensions by regulators. Due to this, it is crucial that you implement customer check-in SOPs to ensure compliance.
Customer check-in procedures include:
Proper budtender training on protocols beforehand.
Screen every customer entering the store to ensure they are of legal age.
Ensure customers have a valid license to purchase cannabis.
Scan the customer’s ID to make sure it is genuine and valid.
Check the customer’s age, and enter these details into your customer database or tracking system.
Check the system to ensure the customer has not already gone over their purchasing limit at a different store.
Follow proper serving protocols.
3 – Sales transaction process and SOPs
Sales transaction processes are crucial to the business because this is how the company generates its revenues. Keeping track of these is key. Do you have the following sales SOPs? Sales transaction processes could include:
Greeter procedures (first customer contact),
Boxing and packing procedures.
Cashier procedures.
Answering customer product questions.
Recording product sales information into tracking systems.
Recording shipping information.
Processing various forms of payment.
Gathering sales tax to submit.
It would help if you integrated your SOPs with the technology you’re using, like cannabis-compliant POS systems.
4 – Delivery procedures and SOPs
Cannabis deliveries can get complicated as they tend to include strict guidelines around logistics. This is why it’s essential there are SOPs built around these logistics.
Delivery procedures could include:
Packaging and shipping guidelines with regards to the different types of products.
Procedures in place to pack and mark fragile deliveries — like glass bongs — clearly to ensure safe delivery.
Details and SOPs around third-party deliveries.
Sop’s around management tools or software.
Inputting data into the tracking software or POS system.
Proper accounting and documentation of the aforementioned.
5 – Security, accounting, and cash management protocols and SOPs
Cannabis retail stores face many challenges when storing and moving cash from the store to the bank. Since dispensaries are not legal at the federal level in the United States of America, they are limited in the services they can receive from banks. As a result of those limitations, dispensaries struggle with large amounts of cash being stored on the dispensary’s premises, so tight SOPs surrounding how to navigate these challenges are crucial.
Security and cash management protocols could include:
What employees are allowed in sensitive areas like stores and cash safes.
How long to keep security camera recordings and how to report a robbery.
How often armored trucks can pick up cash.
Who gives the cash to the trucks.
How the cash is stored while at the dispensary.
Who is keeping track of accounting and line items?
Who is keeping track of inventory management?
How are taxes being filed and accounted for, and by who?
6 – Track-and-trace & inventory management and SOPs
Track and Trace SOPs are important for every cannabis dispensary. In order to comply with the regulations, you have to adopt track and trace SOPs into your inventory management system.
These track and trace SOPs should cover:
Inventory management processes like procurement.
Transportation to store.
Product transfers.
Audits.
Track and trace software procedures that comply with local regulations.
Given how important track and trace SOPs are for compliance, you should automate this process if possible. Track-and-trace automation software can help you define the roles for each activity and integrate compliance checks.
7 – Quality assessment SOPs.
Quality assessment SOPs will make sure your product is up to the required standard by the regulators and that you are not violating any laws over what ingredients can be included in your products and how they are made. Failure to comply with these SOPs or pass a quality assessment could leave a dispensary owner at risk of losing their license. Quality assessment SOPs could include:
Purchasing products from verified sellers.
Ensuring products are tagged within tracking systems.
Ensuring you are selling products that you can legally sell within your geographic location.
Product feedback requests.
8 – Product recalls and emergencies and SOPs
Product recall SOPs will come into play when a defective product needs to be recalled from the market. This can be stressful for the team as it will lead to customers complaining, and management concerned about losses being recorded. One of the most valuable assets to have in this situation would be SOPs that guide your team on how to act in this situation without losing their cool or professionalism.
Recall SOPs could be:
How /who contacts purchasers.
Who is on top of product updates (do you have a compliance manager?).
Product recall script.
9 – Employee Management SOPs
Previously, these SOPs have been focused on inventory and store management, however, managing your staff is another large part of any dispensary operation.
When managing your staff it is recommended that you use employee management software to alleviate the stress of manually running operations such as dispensary payroll, scheduling,onboarding, ortime clock adjustments. Using software alone can eliminate the need for some of these SOPs but if you do choose to go the manual route you should have SOPs for the following procedures. Employee management SOPs could be:
How do you onboard employees?
Who manages their forms and licenses?
Who writes and manages the schedules?
How do employees swap shifts?
How do staff clock into shifts?
How runs payroll?
How are staff paid?
How are taxes paid?
How are employees’ performances reviewed, and by who?
Conclusion
These are the major SOPs that we believe you should have in place before opening or scaling, but don’t forget that enforcing them is just as crucial as implementing them!
The best way to run a compliant, systematic, and streamlined dispensary is to use great technology to help you succeed! Consider using a project management tool to help you stay on top of all your tasks, a people management solution for payroll, HR, time tracking, and scheduling, and a dispensary POS solution that integrates with track and trace technology and people management solution for the best results. By using the tools paired with standard operating procedures your dispensary is sure to succeed.
Author Tommy Truong is the Director of Partnerships at KayaPush; the cannabis software helping dispensary owners manage their employee HR, scheduling, and payroll. KayaPush also integrates with leading dispensary POS systems. Tommy loves hot sauce, fried chicken, and running with his Boston terriers.
Equity Member Spotlight: Toni Brands with Toni Scott
NCIA’s editorial department continues the Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
Tell us a bit about you, your background, and why you launched your company.
I grew up in Connecticut in the 70s and was repeatedly reminded of the cannabis stigmas, witnessing others partake in regular consumption, yet never noted any of the proclaimed stigmas; in fact, it appeared the exact opposite.
I’m a Master’s prepared Registered Nurse and Certified Yoga teacher, working in the healthcare industry for over 30 years. As a child and well into adulthood, I suffered from debilitating eczema, anxiety, and depression, treated with high-dose topical steroids, sedatives, and antihistamines, eventually leading to overuse. In the mid-’90s, I smoked my first joint; I also began pursuing my first nursing degree.
A few years after graduation, I began working as a travel nurse in Newborn Intensive Care Units across the U.S. Although I was very aware of the relief cannabis brought to my physical and mental wellness, I utilized it with underlying shame, guilt, and fear of a positive urine drug test, a legal pre-employment requirement for nurses.
By the early 2000s, I suffered a traumatic professional burnout; at the time, my health was poor, my stress-induced eczema exacerbations left me with painful cracked skin on my face, hands, arms, and legs. I was prescribed the highest dose of topical steroids and antihistamines with no resolve; I was a mental and emotional wreck.
Unfortunately, that wasn’t my first time feeling defeated in my skin; as a child, I ingested various prescribed medications. I can vividly recall feeling like a walking science experiment, constantly misdiagnosed and prescribed drug after drug. Nothing worked; in fact, the treatments left me worse off; it wasn’t until the professional burnout that I decided to take charge of my physical, mental and emotional health. I stopped taking ALL prescribed and over-the-counter medications; instead, I began to intentionally utilize yoga, meditation, dietary changes, and cannabis for self-care.
I began to dig deeper into the plant, educating myself about the endocannabinoid system phytocannabinoids, researching the history, and regular visits to local dispensaries. It was during the dispensary visits that I identified a massive pain in Gen X and Baby Boomer populations. Stigma, fear, and uncertainty keep many in this demographic away from reaping educational and wellness benefits of a healthy balanced endocannabinoid system, incorporating phytocannabinoids, physical movement, stillness, and creative expression.
I launched my brand to become the sought-after wellness thought leader, educator, and advocate for cannabis health equity in communities most affected and continue to be affected by the war on drugs.
What unique value does your company offer to the cannabis industry?
I bring my personal experiences of the therapeutic effects I’ve received from cannabis. As a nurse, I understand human anatomy and physiology, including the endocannabinoid system. Through continued education, I’m well versed in the relationship between endocannabinoids and phytocannabinoids and the effect they have alone and together on human wellness. I understand how incorporating movement and stillness practices in partnership with cannabis can provide many health benefits.
What is your goal for the greater good of cannabis?
I have three primary goals for the good of cannabis.
Wellness Thought Leader – As an aging woman who utilizes many Eastern wellness practices, my goal is to share with others a new approach to aging, using my handcrafted CBD-infused topical skin products, yoga, meditation, and creative expression practices.
Education – Cannabis stigma is a significant barrier between acceptance and usage in Gen-X and Baby Boomer populations. It’s my goal through easy to comprehend education, storytelling, retreats, and practice to begin breaking these barriers. Including educating our community leaders, political figures, dispensary owners, and religious leaders.
Advocacy – Cannabis health equity is not something Black and Brown folks should need to beg for; it’s my goal to be a voice for the voiceless, actively work towards better health and wellness in communities that are often overlooked when it comes to education, yet flooded with legal and illegal access to cannabis without any instruction or understanding. The lack of economic, social, and political health equity in these communities is a recipe for failure as adult use becomes legal and the impending federal legalization. We can’t afford to wait and see this out; we must address cannabis health equity now.
What challenges do you face in the industry, and what solutions would you like to see?
Unfortunately, being an African American woman in this industry is a challenge. My personal experience with the plant, professional education, and long-standing career in preventative wellness doesn’t seem to hold much weight. The industry is more vested in the marketing and sales of cannabis, touting social equity along the way for good measure. That’s not enough; cannabis health equity, education, resources, and sustainable outcomes must be provided. I’d like to see multi-state operators hire diverse directors of health services to their c-suite. A diverse leadership team can provide a balanced focus on cannabis social and health equity that serves the industry and the end-users.
Why did you join NCIA? What’s the best or most important part about being a member of the Social Equity Scholarship Program?
I joined NCIA for the opportunity to meet, learn, grow, and collaborate with other industry professionals. The membership fees can be steep for those bootstrapping, and I wanted to see what NCIA was about and if they walked the talk before committing to a full membership. It’s been a fantastic journey so far. I’m on the Education Committee, its retail sub-committee, and health equity working group. Our weekly social equity “Power Hour” is highly beneficial, a safe space to collaborate and support each other. It’s also been a great resource, and I appreciate the educational webinars, complimentary conference tickets, and business development support.
Member Blog: Will 2022 Be the Year for Cannabis Consumption Lounges?
Key Questions & Considerations for Those Looking to Ride the Next Big Wave
In the ever-evolving and fiercely competitive cannabis industry, consumption lounges (a.k.a. social or smoking lounges) are generating big buzz. Innovators and proponents for their legalization see it as a prime opportunity to better compete in a saturated market, attract new customers and grow market share. Opponents throw up a heap of red flags, including drugged driving, crime, and the health risks associated with smoke exposure.
Whether this new retail business model blows up in 2022 or not is anybody’s guess. Nevertheless, our industry must prepare for this next big wave in cannabis consumption. As an insurance broker who specializes in the cannabis industry and works with a wide variety of cannabis, hemp, and CBD businesses in every state where marijuana laws are established, we’ve done a deeper dive into the opportunities, and risks versus rewards for businesses looking to ride the potentially next big wave in cannabis.
The Opportunity
The concept of a cannabis consumption lounge is nothing new, really. Similar to a bar that serves alcoholic beverages, consumers at least 21 years of age can not only purchase flower, edibles, etc. from a budtender but also consume these products in a social gathering place. Amsterdam’s “coffee shops” serve as the inspiration and model for cannabis innovation in the U.S. In the Netherlands, however, coffee shops operate in a legal grey area with their products being supplied by an entirely underground cultivation market. Of course, here in the U.S., the burden falls on individual states since marijuana remains illegal at the federal level.
Analysts predict cannabis consumption lounges will be a budding business in states where recreational and/or medical marijuana is legal. This emerging business model is particularly attractive to states with more mature cannabis laws, like California and Nevada. Alaska became the first U.S. state to allow consumption lounges in 2019 and Nevada is the latest to announce plans for the first state-sanctioned lounges by mid-2022. In all, seven states including the aforementioned, as well as New Jersey, New York, Pennsylvania, and Illinois, are forging ahead with their plans to allow for consumption lounges in 2022. These states will likely serve as a blueprint for other states as their popularity grows.
Risks versus Rewards of Cannabis Consumption Lounges
State regulatory bodies are grappling with how to develop, implement and enforce the rules surrounding social consumption lounges. For example, what will the laws around consumption lounges look like? How will business mitigate the myriad of risks? From an insurance perspective, will there be a need for new products? Should coverages be similar to Bar/Restaurant/Lounge insurance (DRAM Insurance), as both types of businesses face similar risks?
They will also need to carefully address questions and concerns about public health implications. Could public consumption spaces cause people to over-consume? Will there be limits on how much cannabis a person is allowed to consume at a lounge in one visit? What is a “single serving” of cannabis anyway? These are all questions surfacing to the top.
Many see the potential benefits of licensed social consumption lounges as ways to curb the illicit market, regulate public consumption, ensure consumption in a safe space and bolster the economy. A “Designated Consumption Establishment License” is particularly attractive to entrepreneurs looking to enter the cannabis market, but aren’t interested in growing, processing, or operating a traditional dispensary. Furthermore, cannabis consumption lounges are particularly attractive for their potential to attract tourism dollars. The masses of tourists buying cannabis products in states that have legalized recreational marijuana have nowhere to smoke it legally — not on the sidewalk and not in their hotel rooms.
What Lies Ahead?
In order for the cannabis industry to continue to thrive and expand, new retail models must be considered. We believe it is highly likely that social consumption lounges will become increasingly common, especially in major U.S. cities with legal adult-use cannabis programs.
If you’re thinking about opening a cannabis consumption lounge, it’s important to stay on top of your state’s specific laws since they do vary from state to state and are likely to change and evolve. It’s equally important to make sure you have the right insurance policies in place. Many insurance companies have exclusions in their policies that prohibit onsite consumption, meaning your lounge would not be covered if an unexpected event like a theft, fire, data breach, product defect, accident, or any other type of lawsuit occurs. It’s important to examine your current policies and make adjustments, if necessary. It all boils down to the THREE P’s: being “Proactive, Prepared and Protected.”
Eric Rahn, Managing Director of S2S Insurance Specialists, is a highly specialized insurance broker and risk management professional with over 30 years of experience providing C-Suite executives strategies and solutions that protect and safeguard their businesses.
A graduate of Babson College School of Entrepreneurial Studies, Eric has held several executive positions in the maritime and casino/gaming industries, including CEO of the largest privately own casino concessions company operating on cruise ships around the world. Eric transitioned his knowledge of corporate business practices in highly regulated industries into the burgeoning cannabis space, establishing S2S Insurance Specialists in 2017.
Eric has served on the National Cannabis Industry Association’s (NCIA) Risk Management Insurance Committee since 2016. He is also a national speaker on cannabis insurance and author of NCIA’s Risk Management and Insurance’s “Introduction into Cannabis Insurance.”
Video: NCIA Today – Thursday, January 27, 2022
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.
Equity Member Spotlight: Raina Jackson – Purple Raina Infused Self Care
NCIA’s editorial department continues the Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
Tell us a bit about you, your background, and why you launched your company.
I am an Oakland-based hemp CBD & cannabis brand strategist, product developer/educator, and cannabis industry advocate who recently became a member of the NCIA DEI Committee.
I am a Black “urban hippie” born and raised in San Francisco’s Haight Ashbury neighborhood who earned a B.A. with honors from Stanford University in cultural anthropology and sociolinguistics as a first-generation graduate and an MBA from the NYU Stern School of Business.
A product junkie with over 15 years of experience in sales/marketing management, personal care product development, and education. I have worked in the cannabis industry in sales management, distribution, and field marketing since 2015 and have been a Verified San Francisco Cannabis Equity Applicant seeking a cannabis business permit and license since 2018.
PURPLE RAINA Self Care is the culmination of my personal and professional passion for self-care products, the color Purple, and the artist Prince. Prior to entering the cannabis industry, I worked for top NYC beauty/personal care companies Maybelline and L’Oréal Professional, trained at the Vidal Sassoon school in London, and taught cosmetology at The Aveda Institute in SOHO NYC.
Upon returning to the San Francisco Bay Area in 2013, I became enamored with cannabis dispensaries and the local cannabis culture. While waiting for my permit, I decided to offer a hemp CBD version of PURPLE RAINA to show proof of concept, gain market feedback, and to promote the benefits of hemp CBD to a broader audience. The THC:CBD version will be launched in mid 2022.
What unique value does your company offer to the cannabis industry?
PURPLE RAINA Self Care offers topical infusions that soothe sore muscles and joints, nourish the skin from head to toe, and pamper the senses with aromatherapy. PURPLE RAINA Self Care promotes “mindful self-care and grooming” and seeks to appeal to our collective humanity focusing on our common need for daily grooming and self-care on a physical, mental, and spiritual level.
PURPLE RAINA offers a fresh approach to the category through multi-purpose infused topicals that will serve a range of self-care and grooming needs from head to toe, regardless of gender. Most topical products addressing pain relief overlook daily skin/hair care, personal grooming, and aromatherapy. Many have unpleasant odors and can be irritating to sensitive skin. I created PURPLE RAINA for people like me seeking to moisturize dry/sensitive skin and to soothe sore muscles with aromatherapeutic plant-powered products free of allergens and artificial ingredients.
PURPLE RAINA will eventually employ people from the community. I plan to recruit a “Purple Posse” of brand ambassadors who will conduct impactful in-store product demonstrations for consumers and retail staff. The “Purple Posse” will earn income and gain valuable sales presentation skills training.
What are some lessons learned from the beauty industry that you brought into your cannabis business?
My career has more recently reached the intersection of beauty/personal care and cannabis products. I recently learned that some of the largest cosmetic/personal care companies in the world are now incubating emerging brands instead of regarding them as competition to be squashed or absorbed. Some are being groomed for future acquisition but not always anymore. It’s a more mutually beneficial business relationship.
These beauty behemoths realize the importance of an ecosystem of high-end products, mid-priced and value brands, mature institutional brands, and young indie/niche brands readily available online and in stores. It best serves the customer when they have multiple quality choices at a range of price points. These companies are also assuming their corporate responsibility to the industry and society. They are abstaining from unfair competitive tactics aimed at eliminating competition from emerging brands.
What is your goal for the greater good of cannabis?
The cannabis plant, as a metaphysical healing force, deserves to be represented by an equitable accountable industry under a new breed of conscious compassionate capitalism valuing Profit & People / People & Profit like Yin & Yang.
During the 2021 Meadowlands conference/retreat at Camp Navarro, CA, surrounded by majestic redwood trees, I imagined the notion of a relationship between big trees and little trees as an analogy for cultivating an equitable cannabis ecosystem where little trees can still thrive to grow among the big trees, some eventually becoming big trees themselves. Imagine if big trees could share the nutrients in their roots with neighboring little trees, as a metaphor for how corporate financial, technical, and educational resources could be redirected to help benefit emerging equity and legacy businesses. This doesn’t exist in nature but imagine the social and financial impact it would have on so many who have been systematically excluded and discriminated against, as well as on those who contribute these resources.
What kind of challenges do you face in the industry and what solutions would you like to see?
Challenges: I face financial challenges like so many other cannabis entrepreneurs. Yet this is compounded as a Black woman, a member of an underestimated undervalued group that is underrepresented as cannabis business executives and owners. We receive the lowest amount of investment funds across industries due to racism and sexism, though we are the fastest-growing group of business owners in the U.S. and tend to be successfully bootstrapped and financially savvy.
Additionally, there is a big disconnect in current equity programs between the criteria to qualify and the financial resources and business acumen necessary to succeed if you don’t have access to investors and sound cannabis business and legal advisors. Late in the game, I was even told that I didn’t need a cannabis license to make my products and can just hire a manufacturer to produce them under their license. This is a viable option initially to go to market but not long-term. I would have wasted significant time and money and missed the whole point if I abandoned the pursuit of my own license. Also, as a brand of customized topical formulations manufactured by contract manufacturers, my rare business model tends to be overlooked by local and state cannabis regulations. For example, it took a few years and forfeited application fees for the type 13 transport only/self-distribution license I now seek to be introduced, representing the only feasible path to licensure and the only way I could go to market, other than the type-S shared license which doesn’t work for me.
Solutions: As part of a corporate responsibility mandate, successful profitable cannabis businesses along the supply chain, MSOs, and future alcohol and tobacco corporations entering the industry should make contributions into a Cannabis Equity/Legacy Fund collected by state licensing agencies and administered by an industry non-profit like the NCIA or a group of B-corps operating in the highest integrity. These big trees would contribute financial resources and access to key technical services as part of their platinum “industry membership fees,” a standard cost of doing business. In the same way their license fees are proportionate to projected revenue, their contributions into the fund would be proportionate to recent and projected revenue.
Our allies are instrumental in helping those who are resistant or just don’t know what to do to recognize their responsibility to use their privilege for the greater good, ultimately benefiting all parties’ bottom lines and corporate morale. There’s no need for guilt or blame, just empathy, goodwill, good works, and collaboration to help undo historic wrongs over time.
I want to see U.S. cannabis legalization soon with equity and anti-monopoly policies already in place. The cannabis industry should under no circumstances become fully dominated by oligarchies/monopolies like the early telephone and utility companies that had to be split up or even the current social media and tech giants under scrutiny. This policy should demonstrate recognition of the value DEI and BIPOC partners bring to the cannabis industry along the entire supply chain. Government solutions would include SBA grants and forgivable PPP-like loans like any other industry receives.
Why did you join NCIA? What’s the best or most important part about being a member through the Social Equity Scholarship Program?
I always wanted to join the NCIA since I attended an annual conference years ago but couldn’t afford it. The best part of being a member through the Social Equity Scholarship Program is the weekly Zoom call held by Mike Lomuto for equity cannabis entrepreneurs and allies nationwide. We check in to discuss our triumphs and challenges and share valuable business insights and ideas for building a more equitable cannabis industry. These calls inspired me to apply for the DEIC and to intensify my cannabis equity advocacy and thought leadership.
Member Blog: Stickier Products Need Thicker Gloves, Right?
“My gloves keep ripping” is a common frustration we hear from cannabis businesses, especially growers and processors. If your gloves are ripping just buy thicker gloves, right? Maybe. It is a common misperception that thicker gloves are stronger, but this is not always the case. Here are four factors about glove thickness to understand that will help solve this chronic glove problem.
4 Things to consider before buying a thicker glove
Thicker does not mean stronger – A glove’s strength is directly related to the quality of materials used to make it. Period. A glove’s raw material ingredients account for 45% of the production cost. Gloves can have fillers, like carbon black, silica and chalk, added to manufacture them cheaper. Chalk doesn’t stretch. When fillers are added to reduce production costs, the glove’s durability and elasticity will reduce as well.
In one minute, this video shows how to estimate the quality of your nitrile gloves. When buying disposable gloves, always remember, a gloves’ strength is directly proportional to the quality of ingredients used to make it.
Musculoskeletal issues – Low-quality, thicker gloves have less elasticity which in turn makes workers’ hands use stronger muscle force, increasing the chance of injury. For example, a worker’s hand could have unnecessary force put on it with every hand movement they make while bucking or trimming the plant. A disposable glove needs to be of a high enough quality to perform the task and protect the product and the wearer, but excessive thickness can create additional issues. A better-made glove can be thinner while outperforming cheaper, thicker gloves.
Worker efficiency – Despite its thickness, a glove made with lower quality ingredients will rip more frequently. When your staff is constantly having to stop working to change failed gloves, productivity decreases. When workers are busy changing failed gloves they are no longer planting, growing, harvesting, trimming, or curing. Gloves that perform will increase overall productivity and efficiency, not to mention worker satisfaction.
Increased waste – Another possibly less considered consequence of buying thicker gloves is the environmental impact. Glove thickness directly correlates with the amount of waste, disposal costs, and environmental impact generated. A thicker glove equates to more material per glove being disposed of. A glove made of cheap ingredients that fails more frequently will also negatively affect a businesses’ sustainability efforts by increasing the overall quantity of gloves used. Generating more waste will in turn increase disposal costs and the amount of waste that ultimately is put into landfills.
Cannabis plants can be prickly, sticky, and sometimes relatively tough on disposable gloves. A better glove is needed. A better glove, not necessarily a thicker glove. Additionally, different stages in producing cannabis products, from growing to harvesting to processing to tinctures to edibles, can require different gloves. A single glove most likely will not live up to the performance and safety requirements at the various stages. The best way to know you’re buying a quality glove is to purchase from reputable suppliers with specific and ongoing quality control procedures in place. This ensures glove quality, performance and protection, all of which directly mitigate risk to your product and business.
Trustworthy and knowledgeable glove suppliers will be able to help arrange glove trials through which you will be able to determine the best glove to use for every task. Purchasing too heavy of a glove for a task increases costs unnecessarily. Investing the time into ensuring you are sourcing the correct gloves will protect your product, workers and budget.
Disposable gloves are not indestructible. Some tasks, like harvesting and trimming, do require a thicker glove even when they are made of the highest quality. But simply put, a thicker glove spec is not always the answer to a sticky situation.
Eagle Protect, the world’s only glove and PPE supplier to be a Certified B Corporation®. Eagle Protect supplies disposable gloves and protective clothing to the food processing, food service, cannabis, medical and dentistry sectors in both the U.S. and New Zealand.
Eagle is implementing Delta Zero, a proprietary third-party glove analysis program to ensure a range of their gloves are of consistent high-quality, and free from harmful contaminants, toxins and pathogens. The Delta Zero program mitigates the risk of product contamination and recall due to the unknown use of dirty gloves.
After establishing Eagle Protect as an industry leader in New Zealand, where the company supplies approximately 80% of the primary food processing industry, Steve Ardagh relocated with his family to the U.S. in January 2016 and launched Eagle Protect PBC. Steve brought with him Eagle’s values of providing products that are certified food safe, ethically sourced and environmentally better. Steve is driven to keep consumers safe, one high-quality disposable glove at a time, and has been instrumental in developing Eagle’s proprietary third-party Delta Zero program glove testing program.
Member Blog: How Can Hemp Businesses Better Self-Regulate?
The hemp industry is still in its early stages, especially when it comes to emerging products like delta-8 THC. While there is some regulation for hemp products, it’s much less than for legal cannabis, and this gives companies some freedom in terms of how they operate and what they do. For the most part, this is a good thing, but there is a downside too. Our report into the industry found that 76% of delta-8 THC products contained illegal quantities of delta-9 THC. This is terrible for consumers, but it also poses a risk to the industry: if you keep raising red flags, the government will eventually swoop in and take action. This is why self-regulation is a crucial concept for hemp businesses going forward.
Why Self-Regulate?
Self-regulation is crucial for hemp businesses because of the scrutiny the industry faces and to improve consumer confidence. Although CBD is generally accepted, this is especially important for companies selling something like delta-8 THC, which attracts more scrutiny because of its psychoactive nature. With states like Texas attempting bans on the substance and the findings of our report showing that the vast majority of products break legal limits for delta-9, the industry is in serious danger of attracting the attention of more lawmakers who may opt for an outright ban. In fact, there are already 18 states with some form of ban or restriction on the substance.
Jayneil Kamdar, PhD from InfiniteCAL Labs commented to us that: “The current delta-8 THC products on the market are very concerning because there is no regulatory body monitoring the safety of these products.”
In our report, we also found that companies tend to undercut customers on delta-8, that only 14% of companies perform substantial age verification checks and that two-thirds of companies don’t test their products for impurities.
It isn’t that self-regulation would be a cure-all, but if companies opt to act responsibly, it is much less likely that they will attract attention from lawmakers. In addition to this, though, self-regulation sends a strong message to consumers that you care about them and that they will get what they wanted when they buy your products. When this doesn’t happen,people will tell others about it.
The more the industry can mirror the regulations of regulated cannabis companies, the better things will go in the long run.
How Can Companies Better Self-Regulate?
However, “self-regulation” can’t just become a vague, catch-all term for generally responsible business practices: clear recommendations are essential in making this goal a reality. Luckily, our in-depth investigation of the delta-8 industry and other similar investigations into the CBD industry have revealed some key areas companies can focus on.
Provide Transparent Lab Reports with QR Codes
Lab reports are a vital part of building consumer trust, and you should ensure there is a QR code on the report so it’s easy for consumers to verify the report on the lab’s website.90% of CBD companies already do this, based on our industry analysis.
Offer a Lab Report for Every SKU
Many companies, however, only offer a COA for the base distillate, rather than every specific type of product it produces. If you sell vape cartridges, for instance, you should have a report available for each variation in flavor, strain, and potency.
Choose Credible Labs for Your Report
Not all labs are equal. If you get a report from a questionable or unknown lab, savvy consumers will still be wary of your product, and in some cases, the results may be unreliable. It’s best to choose a lab with a strong reputation, such as ProVerde, Anresco, SC Labs, InfiniteCAL, and CannaSafe.
Test for Impurities
With two-thirds of delta-8 companies not lab testing their products for impurities, this is a good way to stand out in the marketplace as well as good practice in general.
Verify Customer’s Ages
With most CBD companies not performing robust age verification checks, using a credible age verification system such asAgeChecker is a great step towards self-regulation. They stay up to date with FDA requirements, state laws, and merchant account policies, so you can set it up and then continue basically as normal. This is especially important for delta-8, but it’s also crucial for higher-strength CBD products too.
Label Your Products Accurately
What you claim on the label should be what’s in the product. Lab reports help you verify that this is the case.
Warning and Caution Labels
Only about 55% of hemp delta-8 companies use a warning label, but this is another key part of self-regulation. Suggested verbiage includes:
This product should be used with caution when driving motor vehicles or operating heavy machinery.
Use this product under the guidance of a physician if you have a medical condition, are pregnant or lactating.
Keep out of the reach of children.
This product was manufactured from hemp material that meets federal requirements for hemp products; however, consumption may be flagged by some drug tests.
This goes hand-in-hand with the above, but also, having your products that looklike a bag of Cheetos or anything along these lines is not a good look.
Avoid Medical Claims
Although many people opt to use delta-8 and CBD for medical purposes, if you’re selling the products, making medical claims that might not meet official organizations’ standards of proof is simply a terrible idea. Leave it to your consumers to determine.
Get Industry Certifications
Getting certified by an organization like theU.S. Hemp Authority is a great way to show your customers that you’re one of the responsible companies.
Conclusion
Self-regulation really just means taking a few basic steps to establish to both customers and politicians that you’re running a legitimate business which does what it claims to and is socially responsible. It might increase costs in the short-term, but over time and especially as consumer knowledge increases, it will pay off many times over. And the next time there’s a situation like what happened recently in Texas, the industry will have a much easier time defending its practices.
Lee Johnson is a writer at CBD Oracle who has been covering science, vaping, and cannabis for over a decade. He focuses on research-driven deep dives into topics ranging from medical uses for CBD to industry and user statistics, as well as general guides and explainers for consumers. He is a passionate advocate of both CBD and cannabis, and a strong believer in informed choice for consumers.
CBD Oracle is a consumer research company working to improve the safety and transparency of cannabis products, producing in-depth statistics on CBD and cannabis, detailed research pieces and analysis of social and legal issues.
Video: NCIA Today – Friday, November 5, 2021
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday on Facebook for NCIA Today Live.
On the latest episode, Bethany announces the keynote speakers at #CannaBizSummit this December in San Francisco, shares a bit about Exspiravit this month’s Member Spotlight recipient, and covers compliance and extraction.
Registration to the Cannabis Business Summit in San Francisco is now open with special limited-time super early bird pricing on tickets available, head to our website for more information today.
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Andrew Kaye has been involved in all aspects of the financial services industry, as a fund portfolio investment manager, investment banker, family office investor and attorney. He has worked with start-ups on their first raise through global enterprises undertaking billion-dollar stock offerings, and has significant investment experience in the cannabis industry. Currently, Andrew works as Sweet Leaf Madison Capital’s Chief Commercial Officer. Lending his expertise toward the creation of middle market financing solutions for real estate and equipment financing needs in the cannabis space.”
Justine Charneau is the head of cannabis industry sales at 
Raina Jackson is a multifaceted 
Todd Glider has been an e-Commerce leader since the start of the Internet age. He has an MFA in Creative Writing from the University of Miami, and has served as CEO for small and medium-sized technology companies in Spain, Austria and the United States. As our Chief Business Development Officer, Todd introduces MobiusPay’s suite of award-winning financial services to new industries, and implements the development strategies and key partnerships needed to bring value to new customers.
Lee Johnson
MC
Gary Paulin is VP of Sales and Client Services at 
By Jodi Green, Miller Nash LLP; Shay Gilmore, The Law Office of Shay Aaron Gilmore
Gisela Leon brings in over 33 years of experience in international labeling. She is well-experienced in USA labeling requirements of food, dietary supplements and cosmetics, in European food laws and multi-language labeling. As a regulatory consultant, she focuses on a concise review process, having reviewed hundreds of labels for U.S. compliance and helped international products to come into compliance with U.S. regulations. Her international labeling background allows her to point out differences or similarities with other countries.
Jack Naito is President of Luna Technologies, where he oversees operations, strategic growth, and R&D for the company he co-founded in 2016. Jack entered the cannabis industry after time spent as a Materials, Process, and Physics Engineer for aerospace giant Boeing. Jack obtained an Economics and Business degree from Colorado College and a Master’s degree in Mechanical Engineering from the University of Washington.
Author Tommy Truong is the Director of Partnerships at 
I grew up in Connecticut in the 70s and was repeatedly reminded of the cannabis stigmas, witnessing others partake in regular consumption, yet never noted any of the proclaimed stigmas; in fact, it appeared the exact opposite.
Unfortunately, being an African American woman in this industry is a challenge. My personal experience with the plant, professional education, and long-standing career in preventative 
Eric Rahn, Managing Director of 
I am an Oakland-based hemp CBD & cannabis brand strategist, product developer/educator, and cannabis industry advocate who recently became a member of the NCIA DEI Committee. 
My career has more recently reached the intersection of beauty/personal care and cannabis products. I recently learned that some of the largest cosmetic/personal care companies in the world are now incubating emerging brands instead of regarding them as competition to be squashed or absorbed. Some are being groomed for future acquisition but not always anymore. It’s a more mutually beneficial business relationship.
