Member Blog: Cannabis Seed To Sale Transparency Provides Solution To Vaping Illnesses
by Jessica Billingsley, CEO of Akerna NCIA Board Member
The day I sat beside the MRI while my daughter’s mystery neurologic symptoms were investigated, I began my crusade for product transparency. I didn’t know then that transparency in products would become life’s work. On that day, I only knew my daughter risked potential long term physical and mental disability due to unknown causes. I then spent months, which turned into years, hunting for a solution to her neurologic events, which started with an unexplained fever that would sometimes develop into lesions in her brain causing varying symptoms depending on the location of the lesions. Often the symptom manifested as trouble walking; however, one heartbreaking time, she slurred her words and couldn’t remember many basic components of speech.
She was diagnosed with recurrent ADEM, an autoimmune demyelinating illness that doctors didn’t understand and were at a loss to cure. The western medicine approach didn’t have an answer, and I wasn’t really surprised. Western medicine’s approach of diagnose and drug (or diagnose, surgery, and drug) rarely takes into account what we put in and on our bodies. And my gut told me I needed to take a closer look at foods and products to find the source of her illness. This is a lot easier than it sounds. We actually know very little about what’s in our products. There’s an assumption that harmful ingredients or additives have to be disclosed in products, but they don’t. My journey into product transparency — looking at ingredients, additives, and the chemicals used to make our products — led me to find a solution for my daughter that has resulted in her being 7 years in remission and counting.
My passion for saving my daughter and my tenacity in peeling back the layers in our consumer product goods supply chain left me with a sobering conclusion: Consumer transparency and public safety is not at the forefront of our current consumer goods regulations. We don’t have any requirements to give consumers transparency regarding what’s fully in the products we eat or absorb. That perspective is what inspired me to launch the first seed-to-sale tracking technology in 2010. I believed then that cannabis patients needed to know how their medicine was grown and the public needed assurances that we can identify the regulated, tested medicine from the illicit alternatives.
The number of vaping-related illnesses keeps climbing. The crisis has claimed at least six deaths and there are over 450 cases in 36 states and the U.S. Virgin Islands. And best, early thinking is additives – cutting agents, potentially Vitamin E – may be the culprit. I am reminded clearly of my daughter’s early years and my hunt for product transparency. We’ve done a lot of good with seed-to-sale tracking in cannabis. The regulated cannabis industry has the most transparent and accountable supply chain of any consumer packaged good.
For nearly ten years, my team has refined a technology that pinpoints most every aspect of every gram of cannabis tracked in our system — the plot of land it was grown on, soil nutrients, water and light intake, additional ingredients for edibles, when it shipped out and in what batch, and finally where and when the product was sold and to what patient. The exactness and granularity of this data enables prompt reactions in times of crisis that narrows down areas/people of impact, points investigators to probable causes, and importantly allows consumers and patients to make informed decisions.
As much as we do track in regulated cannabis, we need to track more. Most governmental compliance frameworks don’t require additives to be tracked and thus communicated to consumers and patients. We need to make this mandatory in our regulations.*
Consumers and the industry should rally around three things. First, the majority of the cartridges in this crisis were purchased on the illicit market with completely unknown ingredient sources, which gives more reason to legalize cannabis in every state for adult use. Second, legal markets should continue to implement seed to sale tracking compliance as table stakes. And third, we need to make additives information a requirement for cannabis oil manufactured products.
I knew the industry needed a means of monitoring products through its lifecycle and generating transparency and accountability to support the 3P’s — patient, product, and public safety. I know the data in our system has the power to do great good — for science and medicine, for food and agriculture, for communities and tax revenues, for governments’ ability to respond to issues and effectively direct investigations and enforcements. I contend that while the industry is part of the health crisis story today — we are part of the response tomorrow. I am as committed today as CEO of Akerna as I was when I started MJ Freeway; we can give consumers the full product transparency they deserve to make the best choices for their health. It’s what I want for my daughter, and it’s the solution I commit to deliver every day.
Jessica Billingsley is a technology pioneer, solutions creator and industry leader, providing proven compliance software solutions to the cannabis market. She is the Chief Executive Officer of Akerna—the first cannabis compliance technology company to be traded on Nasdaq—making her the first CEO from this market space to bring a company to a major U.S. exchange. Jessica is also the CEO of Akerna’s flagship subsidiary—MJ Freeway. She established MJ Freeway in 2010 and it is the leading seed-to-sale regulatory compliance technology provider and developer of the cannabis industry’s first enterprise resource planning (ERP) platform. Akerna also offers Leaf Data Systems as a government resource for public sector compliance. Combined entities tracked more than $16 billion in world-wide, client cannabis sales to date. She is the first woman ever from the cannabis industry to receive the prestigious Fortune’s “Most Promising Women Entrepreneur Award” and is also recognized as one of Inc.’s “Female Founders 100.” Jessica received a degree in Communications and Computer Science from the University of Georgia and lives with her daughter in Denver.
Akerna’s MJ Platform includes “additives” as ingredients clients can use to communicate to patients any additives in a finished gram of oil. We believe additive ingredients should now be a required data field captured and communicated to patients, and we’re committed to training our existing client base on how to do so.
The cannabis industry today is characterized by rapid growth and a degree of unpredictability as it faces issues including legality, stigma, and all the challenges that come with offering a product never before mass-retailed.
Dispensaries and other key market players have long been operating in the dark when it comes to their customers. With little data around the attributes and lifestyles of their target consumer, the new industry has a long way to go when considering marketing opportunities.
In order to shed light on the best marketing practices for this burgeoning industry, we surveyed over 8,000 consumers between the ages of 21 and 64, in the 21 states where cannabis is currently legal to create LOCALiQ’s Canna Curious Report. The report reveals the lifestyle attributes, shopping behaviors, consumption motivators and brand selection drivers for the industry’s top customer segments. The surveyed individuals were split into two groups, current consumers and acceptors.
Here are the key segments of consumers that industry companies should pay particular attention to impress:
Affluent Families with Children
We found that affluent families with children under the age of 18 were an active cannabis consumption group. Spending over $623 million on cannabis-related products, this group has the potential to grow to a market worth over $1 billion.
In this segment, dads were typically the more active purchasers, shopping at more than 4 dispensaries in the past 3 months, while moms tended to be more brand loyal and shop at the same dispensary.
The data supports that to impress this segment, dispensaries should focus on offering a wide variety of products, as well as prioritizing price and convenience.
Baby Boomers
Baby boomers were another top consumption group, with the majority of those surveyed going to a dispensary monthly, and 60 percent of non-consuming boomers more likely to consider it than millennials.
To reach this customer segment, companies will likely have the most success maintaining strong websites, advertising in newspapers, and creating online videos as these are top discovery sources for the baby boomer group.
The top motivator for usage in this group is strongly tied to health and pain management, with 58 percent of baby boomer respondents displaying a preference for alternative medicine.
Frequent Shoppers
The frequent shopper group is more diverse in demographics than our previous two categories, but has the most focused purchasing pattern, with most shopping at a dispensary 3-4 times per month. The frequent shopper group boasts the highest spending but tends to be the least loyal, easily swayed to competitors due to price, product variety and staff friendliness.
Promotions are more likely to be impactful with this segment, as 62 percent indicated receiving notifications of promotions through news sites and email or text message.
Acceptors
Defined as current non-users who are open to cannabis consumption in legal states, this group spans many demographics. These cannabis curious consumers cited reasonable prices, a good selection of products/strains, and friendly and helpful staff as their top brand selection drivers.
As dispensaries become more established in cannabis-legal states and competition intensifies, it’ll be more important than ever for sellers to understand their consumer, whose preferences vary widely by segment. For example, while a frequent millennial buyer may be well-targeted through personalized text message or email promotions, a baby boomer is much more likely to consult their local news for a trusted recommendation.
To grow alongside the quickly expanding industry, cannabis businesses should work to prioritize legal, digital marketing, storytelling, and target marketing expertise, to continue to attract and retain customers.
Anthony Bratti is the Regional President – West for the USA TODAY NETWORK/LOCALiQ. In this role, Anthony leads and supports the west coast sales teams as they drive digital advertising and strengthen relationships with local businesses. Anthony’s success as a leader and executive is rooted in nearly 20 years of global business experience ranging from early-stage start-ups to mid-level enterprises and Fortune 50 companies, as well as local community involvement. He is actively involved in the greater Phoenix economic development group and Phoenix Chamber of Commerce.
Prior to joining the USA TODAY NETWORK, Anthony enjoyed a long, global career at AT&T where he served both domestic and international markets, served as the SVP of Business Development at Buzzboard, and most recently, as the Head of Channel Sales at ReachLocal. His vast experience, deep knowledge of digital media, and innovative thinking make Anthony one of the most transformational sales and marketing leaders within the USA TODAY NETWORK.
Member Blog: Hemp And CBD Consumer Insights – Who, Why, And How
Hemp CBD became the fastest growing CPG product in 2019, following its legalization in the Farm Bill of December 2018. Consumers show great interest in its use for wellness, health & beauty applications and for pets. Its many distribution channels require integrating convenience store and shipment data not required for most dispensary products.
In U.S. Convenience Stores, total sales of CBD have increased 168% in the first half of 2019 while average weekly dollar sales increased by 235%.
The higher revenue growth accompanied CBD content per package increasing from 100mg on January 5, 2019 steadily to over 350mg on July 20, 2019, after having peaked briefly in June 2019 near 450mg per unit. See graph below.
Mg CBD per SKU at Retail
Medical Conditions Treated with Cannabis
Pain relief is the major reason cited as a medical condition for cannabis use, followed by nausea, PTSD, muscle spasms, IBD and opioid addiction as seen in the following table:
Source: Consumer Research Around Cannabis
Cannabis and Opioid Use Disorder
Of particular note is the growing number of consumers using Cannabis to treat Opioid Use Disorder (OUD). As of August 2019, seven states have approved medical cannabis for treating OUD: PA, NY, NJ, NM, MO, IL & CO. Twenty-one studies (2009-19) show the effect of cannabis on helping opioid users to reduce or eliminate the use of opioids to treat pain. NFL professional athletes have withdrawn from using opioids after they retire, with the aid of CBD and/or adult cannabis.
Consumer Purchase Drivers of OTC Hemp CBD
The top consumer drivers of OTC Hemp CBD are pain relief, reducing anxiety and helping sleep, as shown in the following graph.
Cannabis Product Composition and Patient Outcomes
Over the past several years, advances in technology have greatly enhanced the prospects for cannabis growers, processors, and dispensaries to provide medical cannabis products to patients that efficaciously treat the medical conditions and alleviate the incapacitating symptoms that they suffer.
Pre-clinical scientific research is determining the physiological effects of individual cannabinoids and terpenes on specific medical conditions and symptoms. Mobile apps are enabling the systematic querying of patients about the efficacy of specific cannabis strains and products in alleviating symptoms and conditions.
Collectively, these advances and other medical research are creating volumes of evidence to which human and artificial intelligence will be applied to develop insights for use by patients and medical researchers, growers, and processors in formulating products creating newer therapeutic options. Patients are already making informed decisions that improve individualized treatment of medical conditions progressively over time due to CBD being an approved over-the-counter consumer product.
Advanced Consumer and Patient Targeting to Improve Marketing and Medical Outcomes
Consumer attitudes, perceptions, and usage in local markets create richer, more actionable insights from customer segments, creating advanced quality scores and indices for scoring first-party internal data.
Cannabis consumer data is used for strategic and tactical product development, applications including:
Market Architecture: differentiating dimensions of product form and brand choice
Key Reasons for Use and Purchase
Affinity with Media, Channel, and other Product Categories
Multiple correspondence analysis of hundreds of consumer survey category questions is used to understand dimensional distinctions and differences between clusters. These key spatial dimensions for segmentation illuminate key differentiators, for use in innovation/new products, brand strategy, marketing execution, and digital media tactics.
Create Target Profiles
Merging cannabis consumer data with general consumer data such as Financial, Healthcare, Restaurants, Grocery/Drug Stores, and Media usage & exposure for each respondent facilitates creation of new consumer segments.
Using zip code identified respondent level data, the above Target Profile clusters can be integrated with other market and first–party data to prioritize personalization, enhance brand positioning, inform messaging, new customer marketing & acquisition efforts, and multi-touch attribution databases.
Mr. Stephen J. Gongaware is Sr. Vice President of Business Development at MSA (Management Science Associates, Inc.), a privately held diverse information technology development and service firm that for over 50 years has provided innovative solutions within its three core competencies of analysis, technology and data management. He has played a major role in developing and managing several MSA businesses in addition to his focus since 2014 on the medical value of cannabis for prospective patients, beginning with CBD and 20 other nonpsychedelic cannabinoids then measured by leading edge test labs. Other businesses he’s created and managed at MSA in the last 20 years includes services to develop/market pharma “rare disease” solutions, and MSA Casino Gaming solutions improving operation of slot floors, player satisfaction and also lead smart phone and sports book innovative projects with 6 of the Top 10 global casino operators and with several major gaming equipment manufacturers.
Prior to joining MSA, Mr. Gongaware was CEO of NetworkNext, an innovative national advertising firm; R&D Director at Cellomics, Inc. where he was awarded US Patent #US6365367; and an Electrical Engineer at Westinghouse Electric Corp. He received his BSEE degree from University of Pittsburgh in 1992 and his MBA from its Katz School of Business in 1995.
MSA is an Analytics firm with Big Data integration capability incorporated in 1963 to focus on improving government and management decisions. MSA has 800+ professionals with expertise in data science & AI, software development, test marketing, data management and management consulting and many of its innovations have become industry-standard solutions. MSA has served over 70 Fortune 500 Customers/Clients in the CPG, Media, Metals, Life Sciences & Pharma, and Casino Gaming & Sports Betting industries. It has been engaged in cannabis research since 2013 with the goal of providing the cannabis industry similar services to what has been now provided to the CPG, Steel, Tobacco, Casino Gaming, and Pharma industries for more than 50 years.
Member Blog: Borrowing for Cannabis – What You Need to Know
by Cheryl Dearborne, Director of Marketing and Financial Services at Lilogy
Now that cannabis is legal either medically or recreationally in 33 states, and hemp/CBD is federally legal, the cannabis industry is operating with high profit margins, and in order to scale and grow, cannabis companies require capital and financial services on par with any industry. However, the fight between cannabis progressive state laws and regressive federal laws lend to an unstable financial market for these budding companies.
Tax code 280E is a prime example of how cannabis merchants are playing on an uneven field. This tax code disallows cannabis companies to write-off business expenditures because cannabis (THC) is still considered a Schedule I controlled substance, thus creating smaller profit margins. The upside to that kind of disability from an investor’s point of view is that companies netting positively look particularly strong as they are doing so without the same financial privileges as most companies looking for capital. The same can be said for companies that are barely in the black, as they also are staying in operation sans privileges.
However, due to regulations like 280E and the uncertainty behind the federal government’s stance on cannabis, access to capital can seem impossible. Let’s look at some educational tools to help you obtain access to that capital if and when you need it.
Start-up with a solid team
The cannabis industry today can feel over-saturated because business resources are scarce, leaving millions of interesting companies in the lurch for lack of funding. Therefore, start-ups can feel far removed from the ability to access capital. As we mentioned earlier, capital is necessary to scale and grow, and once potential funding is sourced, there are a few measures that can be taken to place your company as a top priority for funding.
One such measure is building a solid team with industry (or position-relative) experience that proves your company has the ability to scale with the collective experience and success records of the executives attached. If any of your owners have a profitable company, it is always a possibility to use that company to guarantee your loan. We will address this further in the assets/collateral section below.
Have clear financial needs and a plan for profit
The companies most qualifying for financing have projected income and a clear plan for obtaining those financial goals for at least 2-3 years out from the current business year. What would be most advantageous is if you can show how the money you borrow would work into your projected financing.
For instance: Let’s say you want to borrow $1MM to purchase enough land to plant and harvest hemp and produce up to 30,000 lbs of biomass. Once on the market, you can project that you would make $1.5-2MM the following year once you put your product on the market (isolates, distillates etc).
The golden facts about this deal are that the borrower in question presumably has seeds, an equipped lab to produce the biomass, etc. and relationships/contracts with distributors that plan to purchase more inventory. Inventory, biomass, equipment: these purchases and obtainable results are also assets, and assets are most valuable in the borrowing process.
Keep collateral in mind and leverage what you have
There are several options to obtain funding if you have collateral in your business. Lenders will consider equipment, real estate and certain types of transferable inventory to reach your funding goals. Before you begin shopping, take a full account of the assets you possess and consider an asset(collateral)-backed loan.
Real Estate is the best collateral to accessing the max-funding for your qualifications If you have equity in any real estate (non-primary, if residential), you may qualify for a cashout-refi on your property or a collateralized business loan. The more equity the better. If you need $500k and would only qualify for $40k based on your business annual income (10-20% of your annual), owning over $500k in equity on your property would qualify you for a loan amount worth the value of the submitted property or group of properties.
If you are looking to purchase equipment or own equipment in which you have considerable equity, you may qualify for an equipment loan. Lenders are willing to lend specifically to the amount of the equipment you’d like to purchase, or refinance equipment you already own and have considerable equity in ($50k and up).
Inventory is valuable in the cannabis industry because the inventory itself is very valuable. Biomass can be used as collateral as long as there is a secondary market to liquidate the assets in case of a default. Some investors and lenders will even consider certain licenses in a collateral package.
The most important advice to note is that investors and lenders love assets. The more hard-assets on your balance sheet, the better. If your investors and lenders know their money will be spent on tangible, recoverable items, you will have a higher chance of securing funding.
Documents
Keeping and providing proper documentation of your business and its finances is the most important part of the process. Depending upon loan amount requested, your required documents will vary. It is worth it to prepare the following documents for submission to your lender of choice:
Lender Application(separate applications may be requested for real estate or equipment lending options)
6-12 Months of Bank Statements and Merchant Processing Statements
1-3 Years of Business Financials including Tax Returns, Profit & Loss, and Balance Sheet, and Accounts Receivables Reports
1-3 Years of Personal Financials including a Personal Financial Statement and Personal Tax Returns
A recent tri-merge credit report for all Principals
Business Debt Schedule including any short-term or long-term debt
An Organizational Chart that explains your business, verticals and any relationships between your legal entity and any subsequent companies.
Real Estate Owned Schedule (applicable if you have real estate to offer as collateral)
Equipment Owned Schedule (applicable if you have equipment to offer as collateral)
Drivers License and Voided Check (no matter what lending options you choose)
Documentation or Information on Inventory (applicable if you are considering inventory for collateral)
If cannabis related, Cannabis license information, if applicable
Time to Fund
In my experience, I’ve seen a million-dollar, short-term business loan deal close within a day of applying and I’ve seen real estate deals close after 3 grueling months of work for both the lender and the borrower. The timing will depend on how quickly you submit all documents requested among other loan-specific factors. Be prepared for potential site-inspections, bank verification, conference calls with investors, appraisals and other unique requests based on the due diligence necessary for your file. I’ve stated before in previous blogsand I will say it here for the NCIA community, try not to borrow in a pinch. If you need a large investment in a day or a week, please don’t be discouraged, your potential lender will hustle for your company, but have some patience and give yourself at least a week to lock in a term sheet, and at least 30 days to close on any loan besides unsecured short-term business financing.
I hope this is an encouraging and helpful article that will bring you closer to applying for funding. If you’re not sure if you’ll qualify, always reach out the funding specialist of your choice or several specialists from several companies to find a lender you trust to work efficiently and honestly on your unique opportunity. Don’t forget to rally for SAFE bankingso that this entire process will be easier and accessible to many more companies large and small within this amazing industry.
Lilogy
Cheryl Dearborne is the Director of Marketing and Financial Services for credit-investment firm, Lilogy in New York City. Her time at Lilogy has seeded a deep passion for educating borrowers in an effort to increase borrower eligibility and credit-worthiness throughout the American community of small business owners, especially so in Cannabis as merchants within the industry have substantial obstacles stacked against them until Federal Laws offer equitable protection and benefits.
Member Blog: What The Cannabis Market Can Learn From The Energy Sector About Overcoming Market Complexity
by Mike Elliott, Business Development Executive at DCM
In an industry where change is a constant, cannabis companies face big challenges when it comes to brand-building, communications, and bringing products to market. The sector’s complexity is only increasing, which is compounded by its continual evolution, along with tight, varied, fluctuating regulations, and in some cases, less-than-informed consumers.
While the path forward may seem uncharted, in fact, similar market challenges exist in other verticals. With the right strategies and tools, these hurdles—including rigid regulatory conditions—can be overcome. If you’re looking for a roadmap for success, look no further than the U.S. energy sector – specifically, utilities.
The recent shift toward deregulated electric and gas markets has created an environment strikingly similar to that of cannabis. Both sectors grapple with strict, unpredictable regulatory governance. Both must comply with state-by-state variances and prohibitive marketing. And both face the challenge of communicating with customers who are often unfamiliar with the sector’s legislation and production processes.
By gaining an understanding of these obstacles, cannabis operators can improve their own market and regulatory navigation. Following are a few key lessons learned from energy.
For both energy suppliers and cannabis providers, regulation and compliance are determined at the state level. State-by-state laws vary widely and become increasingly complex when factoring in additional local and municipal regulations—not to mention continual review and change. This complexity has a direct impact on communications and brand management. Rules on communication and packaging—including, for cannabis, dosage—can diverge greatly and shift quickly. And there are few signs of this framework getting simpler.
Energy suppliers have addressed this complexity through variable, highly responsive communication platforms that can—very quickly and at scale—accommodate unique market requirements.
For cannabis companies, similar success depends on razor-sharp management, including automation of intensive, often spreadsheet-based processes that are manually maintained and prone to error. Robust, technology-driven platforms can now deliver a wide array of materials efficiently and accurately across different markets, all while ensuring airtight compliance with each market’s specific regulations.
New opportunities call for a fast, location-specific response
Both energy and cannabis businesses must be agile and flexible when responding to new market opportunities. In adapting to fluctuating, state-by-state rules surrounding contract terms and conditions, energy providers have learned the hard way how inefficiency and error can delay market entry and reduce sales potential.
Faced with similar circumstances, cannabis producers need the support of automated, location-specific marketing – technology that efficiently allows for customized, regional messaging across multiple markets and channels while ensuring locked-down branding and regulatory compliance.
Perception is everything when it comes to reaching consumers
With deregulation, utility companies realized that many consumers were uninformed regarding the legislative changes and were unaware of product availability and their own ability to shop around. Educating consumers was key – and communicating to them a value proposition that would distinguish each provider’s offering from that of the competition.
While cannabis is not entirely unfamiliar to many consumers, the dialogue around legalization and products remains similarly dogged by a lack of information and general misunderstanding. Cannabis companies must now shift those perceptions and educate potential customers on product safety and use. Producers must look at developing innovative communications supported by tools like automation, multi-channel communications management, and 1:1 marketing. These can help target, personalize, and monitor communications to better connect with consumers.
With little room to communicate, companies need to get creative
Utility companies are highly restricted in not only how they can make changes to billing and service charges, but also how they can market to consumers. The scenario is the same for cannabis companies, though regulations are even more complex and restrictive, with federal prohibition blocking most traditional means of advertising, including social and digital channels.
Cannabis companies can combat these restrictions with genuinely creative thinking backed by a thorough understanding of the rules. That means combining market knowledge with creative expertise in a way that skillfully complies with regulations without breaking them. At the same time, creativity and customization cannot hinder efficiency. The right tools must be in place to make sure everything works together – for example, a platform that lets users customize branded collateral for different segments and channels, allowing for both efficiency and creativity – consistency and customization.
The bottom line: the stakes are too high for non-compliance
Fines for non-compliance in the energy sector can reach into the millions. Likewise, stiff penalties are levied for non-compliance in the cannabis industry. The financial implications can be devastating for cannabis producers – even more so if it comes to relabeling or pulling product from store shelves. To compound the risk, publicized mishaps can deliver a serious blow to consumer confidence for brands trying to win consumer trust. With that in mind, navigating the highly regulated cannabis landscape takes careful planning, constant oversight, and the ability to stay ahead of evolving regulatory requirements.While the opportunity is promising, it requires tools, technologies, and strategies that streamline processes, mitigate risk, and increase speed-to-market. Charting your course depends on careful planning, trusted advice, and experienced partners – along with the ability to learn from those who have been there and done that.
Mike Elliott is a Business Development Executive specializing in cannabis at DCM
From brand strategy and consumer insights to dynamic labeling and POS solutions, DCM helps build, protect, and bring to market North America’s largest cannabis brands. Learn more at http://www.datacm.com.
Committee Blog: The Employee Onboarding Process
by NCIA’s Human Resources Committee Kara Bradford of Viridian Staffing, Kerry Arnold of Canndescent, Heidi Quan of Murchison & Cumming LLP, Nichole McIntyre of Urban-Gro, Michelle Whitmore of H2 Talent, and Mark Hackett of Emerge Law Group
You’ve found, interviewed, hired the right person for a position in your business, and they have just accepted your job offer. Congratulations! Now what? In the second part of our three-part series, the HR Committee shares insights on the Onboarding of employees. Onboarding new employees can be critical to ensuring happy and productive workers that understand the culture and expectations of your company. Having an organized procedure for bringing on a new hire is crucial for both the company and the new employee. Your company should be as prepared and ready as the new employee is expected to be for their first day. This can be a missed opportunity to make a great impression on your new employee.
In order to help your company with the onboarding process, a new hire checklist can be utilized to help ensure that you are covering all the necessary areas for a successful and smooth entry into your workforce. We have prepared two checklists for the onboard process. One is more administrative in nature while the other is designed to assist managers to help smoothly integrate and transition the new employee into your company. In some companies, a Manager may need to perform the tasks on both checklists if the company does not have an HR Manager.
HR Manager Checklist
Starting with the HR Manager Checklist, it’s best to make sure that you’ve received a signed offer letter and/or employment agreement prior to the start date being determined. Some companies also prefer not to set a start date until the background check process has completed. Once this is completed, there are a series of steps to take prior to the new employee starting. You may need to order hardware/software, cultivation tools/equipment, etc. On their first day, it’s a best practice to have the worker complete all paperwork, including any W-4 documentation/I-9, etc, prior to starting on the job. We’ve also included instructions for I-9 completion.
Data has shown that employees don’t leave companies, they often leave managers; so provide your managers with the resources they need in order to inspire more confidence in the new employee for their manager. If the Manager isn’t the individual filling out the paperwork with the employee, have the manager greet the employee as soon as necessary paperwork is completed. Having a manager focus their attention on a new employee as much as possible during that first day will help to solidify the new employee’s sense of belonging to the organization.
Employee Onboarding Checklist For Managers
The manager should take time to introduce the new employee to all co-workers and other organizational stakeholders they may interact with while helping to familiarize them with the facility. The manager should then spend time setting/reiterating expectations of what the position entails and conveying any goals/metrics that the employee is required to meet. Finally, the manager should spend time training the new employee and setting them up for success, or delegating this to the appropriate subject matter expert on the team to do this.
We often have companies tell us they are struggling to retain their employees. By providing an exceptional onboarding experience from the very first day, this will help the new employee to realize you value them and the talents they are bringing to your company, thus helping to feel welcomed and continue their contributions longer to your firm.
In our next HR Committee Blog Post, we’ll provide a checklist with recommendations on how to handle Terminations.
Member Blog: Cannabis Retailers – Help Advance Cannabis Research
by Lisa Conine, Community Outreach Coordinator at Om of Medicine
Medical cannabis retailers are in the unique position of having large amounts of data available to them in the form of medical cannabis patients. Four years ago, Om of Medicine partnered with researchers at the University of Michigan to develop an IRB-approved survey study examining medical cannabis patients and their opioid use. We conducted a survey of 244 medical cannabis patients in Michigan with chronic pain for 3 months. The goal was to collect data to examine if using medical cannabis for chronic pain affected one’s opioid consumption. We saw testimonial evidence of this every day in our consultation rooms and we wanted to quantify that evidence to elevate our patient’s voices and bring them to decision-makers.
The results of that study displayed a 64% reduction in opioid use and a 45% increase in quality of life. The Journal of Pain published this research in their 2016 edition and since, the findings have been used as a tool for engaging with medical professionals and elected officials. Additionally, the results have been cited in publications such as the 2017 edition for the National Academies of Sciences, Engineering, and Medicine’s report: Health Effects of Cannabis and Cannabinoids. Soon after, the results were sited in Representative Earl Blumenauer’s Physicians Guide to Cannabis-Assisted Opioid Reduction. Blumenauer’s office took the initiative to put this document together and circulate it to his colleagues throughout Congress. These findings are intended to be a tool for advancing our advocacy for this movement and the patients we serve. You can find the study here and you are encouraged to use these findings in your lobbying and education efforts!
Currently, Om of Medicine is continually working to increase research around medical cannabis patient’s experiences. We now have launched our third IRB-approved study examining patient’s daily regimens, their knowledge on cannabis, and their relationship to their medical health care team. We are calling on the cannabis industry to help us increase our patient data set by circulating the IRB-approved survey to any networks you have with medical cannabis patients.
The survey is quick to complete and is completely confidential. The published work is intended to be used as a tool for all working in the industry and movement to use it as a piece for engagement with policymakers and doctors.
If you have any questions, you can reach me at lisa@omofmedicine.org. Sending out sincere gratitude to NCIA and participants who take this survey to aid in the advancement of understanding this plant and its revolutionary potential.
Lisa Conine is the Community Outreach Coordinator for the Om of Medicine, a medical cannabis dispensary in downtown Ann Arbor. Lisa works to prioritize relationships with Om’s local community non-profits, businesses, medical professionals, and elected officials. Outreach at Om is based in social justice and forwarding the cannabis movement by uplifting the work of partnering community organizations, providing education on cannabis to the public, and engaging politically, on all levels, to create sensible policy. Lisa is also a member of the newly formed NCIA Retail Committee.
Member Blog: New Data Reveals Market Share Changes for Cannabis POS Software Providers
by Ed Keating, Co-founder and Chief Data Officer of Cannabiz Media
Point of sale software providers are a critical part of the cannabis economy, and as the industry grows, a shift is happening.
In the first half of 2019, the dominant POS providers of 2018 held onto their positions as market leaders. Others merged or were acquired, and new providers launched. Even big brands like NCR, NetSuite, and SalesForce entered the market joining Quicken and Square in an attempt to gain a piece of what they hope will be a lucrative market.
Cannabiz Media conducted a research study to identify POS software providers and market shares in mid-2019 and compared the data to findings compiled in a similar year-end 2018 report. The full report is available for free download here, and the results may surprise you.
Key Findings for Mid-Year 2019:
There are 68 unique POS software providers in the U.S. cannabis industry (up 58% from 43 in December 2018).
BioTrack is the market share leader overall.
BioTrack is the market share leader in states with medical-only cannabis programs.
Green Bits is the market share leader in states with adult-use cannabis programs.
Green Bits is the market share leader in METRC states.
Cannabis POS Market Share Shifts in the First Half of 2019
In mid-2019, the top five POS providers account for 68% of the overall cannabis market, and the top 10 account for 84% of the market. Part of this change can be attributed to active California licenses expiring and revisions to the survey methodology.
Compare those numbers to how things looked at year-end 2018 when the top 5 POS providers made up 80% of market share, and the top 10 were responsible for 93% of the market.
In addition, the number of POS vendors servicing cannabis businesses increased by 58% from 43 in December 2018 to 68 by July 2019.
In other words, while the market is still highly concentrated, the market leaders have given up some market share, and new companies continue to enter the space.
The same shifts are happening in medical-only and adult-use states.
In mid-2019, 34 POS providers were active in medical-only states (up from 15 in December 2018), and 53 were active in adult-use states (up from 40 in December 2018).
At year-end 2018, the top five POS vendors accounted for 94% of the market in medical-only states, but in July 2019, they only account for 70.4% of the market.
In adult-use states, the top five vendors accounted for 78% of the market in December 2018 but only account for 71% of the market in mid-2019.
Top Cannabis POS Software Providers in Mid-2019
According to Cannabiz Media’s research, the top five cannabis POS software providers overall in mid-2019 are:
BioTrack
Green Bits
Flowhub
MJ Freeway
Indica Online
In medical-only states, the top POS software providers in mid-2019 are:
BioTrack
MJ Freeway
Indica Online
Flowhub
COVA
In adult-use states, the market share leaders in mid-2019 are:
Green Bits
BioTrack
Flowhub
Adilas
MMJ Menu
In METRC states, the top five POS software providers in mid-2019 are:
Green Bits
BioTrack
Flowhub
Adilas
MJ Freeway
Key Takeaways
While the POS market leaders have lost some market share in recent months, the biggest battle appears to be among the top two companies, which have approximately twice as much market share as the company ranked in third place in the overall market as well as in adult-use states and METRC states. In the meantime, the other 66 POS providers that service the cannabis industry are slowly chipping away at that share.
Get the Free Report with Detailed Data, Charts, and Commentary
Visit https://cannabiz.media/pos-report-2/ to download Cannabiz Media’s complete “Point of Sale Software in the Cannabis Industry: 2019 Mid-Year Report” for free to view all of the detailed market share data, the full list of POS vendors in the cannabis industry, 2018 vs. 2019 comparisons, and specific data about POS providers in the California and Oklahoma markets.
Ed Keating is a co-founder of Cannabiz Media and oversees our data research and government relations efforts. He has spent his whole career working with and advising information companies in the compliance space. Ed has overseen complex multijurisdictional product lines in the securities, corporate, UCC, safety, environmental and human resource markets and focuses on workflow products. Ed has spent the last twenty five years in the information industry. During that time he has worked for both startup and established information companies where he has led marketing, product management and sales organizations. These companies include Wolters Kluwer/Commerce Clearing House, CT Corporation, EDGAR Online and Business & Legal Reports. At Cannabiz Media, Ed enjoys the challenge of working with regulators across the country as he and his team gather corporate, financial, and license information to track the people, products and businesses in the cannabis economy. Ed graduated from Hamilton College and received his MBA from the Kellogg School at Northwestern University. He has been active with the Software & Information Industry Association for his whole career and managed the Content Division for six years. He’s was recently a Trustee at the Country School in Madison CT and a Little League Coach for seven years.
Committee Podcast: The Emerging National Hemp Market
In this interview, industry specialist and NCIA Infused Products Committee member Ashley Hanson of Humboldt Green Light Kitchen speaks with Mike Perry, President and founder of PNX Botanicals, about the emerging national hemp market. Ashley and Mike discuss the relationship between cannabis and hemp products, the effects of regulation on small and medium-sized businesses, and testing standards for hemp CBD products. With state and federal governments rapidly developing new regulations, the conversation focuses especially on improving the conversation surrounding dosing, labeling, and product quality standards.
NCIA’s Infused Products Committee focuses on edible and topical products, reviewing existing business practices and state regulations. Regulation of these products is the IPC’s initial key focus, but the committee’s purpose is to ensure the infused product sector is helping shape its destiny, rather than being driven by differing jurisdictional regulations. The IPC is also working with the Council on Responsible Cannabis Regulation (CRCR) to develop standardized regulations for legislators and regulators to adopt as their states legalize the industry.
Think about that number for a minute. Ten thousand. Just a handful of years ago, some cannabis conferences were struggling to attract 500 people.
This explosion in the cannabis industry has had a profound effect on our nation:
Tens of thousands of businesses have started – spurring economic growth and creating hundreds of thousands of jobs. According to Leafly, there are now more than 211,000 cannabis jobs across the United States. More than 64,000 of those jobs were added in 2018.
Legal cannabis is currently the greatest job-creation machine in America. The cannabis workforce increased 21% in 2017, gained another 44% in 2018, and is expected to grow another 20% in 2019. Those are record-setting numbers.
Real estate is another sector that is booming thanks to legal cannabis. A recent study led by a by a University of Mississippi economist concluded that legal retail cannabis in Colorado increased housing values. Researchers compared cities that permitted the sale of cannabis with those that did not and found that the availability of recreational cannabis in a given area created strong housing demand and higher increases in property values.
Clearly, legal cannabis is creating jobs, opportunities, and economic growth.
But there is a dark side to the cannabis numbers. According to the American Civil Liberties Union, arrests for cannabis possession account for over half of all drug arrests in the United States. In 2017, 659,700 were arrested in the U.S. for cannabis. Over 90% of those arrests were for simple possession. Moreover, 46.9% of people arrested for drug law violations are Black or Latino, despite making up just 31.5% of the U.S. population. Additionally, over 200,000 students have lost federal financial aid eligibility because of a drug conviction.
As a nation, we must ask ourselves, how does imprisoning someone or taking away their chance at receiving an education because they possessed a small amount of cannabis (or other drug), make our country better, stronger, or greater?
Since this blog is dedicated to numbers, I’ll leave you with this one: It takes 100,000 atoms to become visible to the human eye, and even at that amount, it is only about the width of a human hair.
But it takes far fewer people to make a difference in society. Our last presidential election was won by the candidate that received over 2 million fewer votes, but won the electoral college by having just a few more votes in some key states. Just 0.2 points or about 10,000 votes separated the candidates in Michigan. Only 0.7 points or about 22,000 votes made the difference in Wisconsin.
This is not a time for us in the cannabis industry to be complacent. We have won some hard-fought victories, but there is still much to do, many wrongs to right, and a lot of work ahead.
My hope is that everyone in this amazing industry will share the belief that while we have a lot to be thankful for, we still need to keep moving forward and progressively for a better future.
Get involved. Make your voice heard. And vote.
Enjoy the conference!
CEO Kary Radestock
Kary Radestock, CEO, launched Hippo Premium Packaging in March 2016 offering an array of services to the cannabis market, including: Marketing Strategy, Brand Development, Social Media, Public Relations, Graphic and Web Design, and of course, Printing and Packaging. Radestock brings over 20 years of award-winning print and packaging expertise, and leads a team of the nation’s top brand builders, marketers and print production experts. Hippo works with businesses looking for a brand refresh or an entire brand development, and specializes in helping canna-business get their products to market in the most beautiful and affordable way possible. Radestock’s Creative Collective of talent and experts, allows her to offer world-class solutions to support the unique needs of the Cannabis Industry.
Member Blog: Legal Cannabis in Illinois – Expanded Possibilities For All
Today, Governor Jim Pritzker of Illinois signed the historicHouse Bill 1438, The Cannabis Regulation and Tax Act, into law, ending prohibition for recreational cannabis usage across the state, and making it the 11th state where cannabis is legal. I, along with so many others in Illinois, and around the United States, am just as excited as the Governor.
“The state of Illinois just made history, legalizing adult-use cannabis with the most equity-centric approach in the nation. This will have a transformational impact on our state, creating opportunity in the communities that need it most and giving so many a second chance.” – Governor Pritzker, IL
This is a game-changer for the state of Illinois and its constituents. Public health, education, and tourism are just a few of the areas that are expected to emerge victoriously by being some of the beneficiaries of the $170 million dollars in expected tax revenue in early years.
But to me, what’s even more extraordinary is the fact that within IL’s legalization law is a visionary plan that will serve as inspiration to advance the nation’s social equity movement in this industry.
With the end of cannabis prohibition, we see the beginning of the end to the “war on drugs” as we know it, one that shrouded lower-income and traditionally Latinx and African-American communities in an unjust and unfair light.
The ACLU states that people in the United States use and sell marijuana at roughly the same rate regardless of their race, yet a black person is almost four times more likely than a white person to be arrested for marijuana possession nationwide. In addition, roughly 13,000 people were deported or separated from their communities and families in 2013 alone for drug-related offenses.
Even the word marijuana itself can be considered negative and racist, based on a longstanding theory that narcotics agents in the 1930s chose a word of Mexican-Spanish origin over the more scientific word cannabis when crafting drug laws, making it sound more sinister and associated with a certain community.
The equitable measures put into place in Illinois’ cannabis legalization law are unprecedented when it comes to making sure the end of cannabis prohibition will result in brighter days for the masses, not just a select few.
A FAIR SHOT FOR ALL
New processing and cultivation licenses will be issued in mid-2020, with growers from communities negatively impacted the most by cannabis prohibition getting priority within the application process.
A SECOND CHANCE
Up to 770,000 people in Illinoisqualify to have their marijuana convictions expunged from their criminal record, healing past wounds and providing access to new opportunities that weren’t available in the past because of past marijuana laws.
OPPORTUNITY FOR GROWTH
One quarter of cannabis taxes collected willfund a grant program that will invest in minority communities impacted most negatively by cannabis prohibition, driving cannabis business opportunities, by offering assistance and mentorship.
Even 2020 candidate Senator Kirsten Gillibrand shared her comprehensiveplan to legalize marijuana on a Federal level immediately if she becomes president. In that plan, social equity is also the primary focus on the path to legalization.
“The unfair enforcement of our current marijuana laws is a continuation of the institutional racism that has defined our criminal justice system for decades… We’re talking about entire lives, families, and communities being derailed: felony convictions make it much harder to get and keep jobs, access financial loans, exercise the right to vote, travel abroad, and receive social and housing benefits.” – Senator Kirsten Gillibrand
And just recently, Chicago-based Cresco Labs launched its Social Equity & Educational Department (SEED), an initiative aimed at promoting inclusion, equality and community engagement, through community outreach, educational support and incubators for veteran, minority and women-owned businesses.
“Our SEED initiative is designed to ensure that all members of our society have the skills, knowledge and opportunity to work in and own businesses in this industry….the SEED initiative consists of impactful programs and actionable solutions-based approaches that we believe will help make the cannabis industry a highly inclusive force for job creation.” – Charlie Bachtell, CEO, Cresco Lab
I also believe in a fair and equitable cannabis industry that unites as one to fix the damage done within certain communities as a direct result of cannabis prohibition. The National Cannabis Industry Association, along with theMinority Cannabis Business Association, are helping to shape laws and create a roadmap for local governments to address social equity issues right from the start of legalization.
“It is fitting that the Land of Lincoln is moving forward with such extensive measures to reverse the damage done to people of color and low-income communities by the government’s senseless war on cannabis consumers. We cannot continue to pursue legalization without considering restorative justice, and Illinois is definitely starting on the right foot in this regard,” said Aaron Smith, executive director of the National Cannabis Industry Association (NCIA).
And as further fuel to ignite the social equity movement,with the end of prohibition in sight, we’re also seeing exponential growth in all sectors of cannabis business. And with that growth comes a highly qualified talent boom in cannabis, with executives from all industries making the move to join and imagine an exciting new space together, from all perspectives.One exciting space that cannabis businesses can look to Corporate America for inspiration is within Corporate Social Responsibility programs.
Corporate Social Responsibility programs, or CSR, is a way for companies to conduct their business in a manner that is ethical, while taking their social, economic and environmental impact, along with the consideration of human rights, into account. It can be a win-win situation for all parties involved – through CSR programs, businesses can benefit society while boosting their own brands. Most have probably heard of Tom’s Shoes, and their popular “One for One” CSR program, which donates a pair of shoes for every pair bought. General Electrics donated over $38 million to community and education programs in 2016. Disney has a “VoluntEARs” program, which allows all of their employees to use a portion of their hours towards volunteer efforts.
With so many new brands coming into the market following legalization, it’s important that they find a way to stand apart and above the competition, while delivering a relevant brand experience. In order to do that successfully, brands need to stand for something, something that matters to people. And what we’re hearing from legislators and constituents alike is that social equity in the cannabis industry matters a lot. It’s a space for us, as responsible cannabis business owners paving a path forward, to come together and share not only the secrets of their success, but also to share the gains with the entire cannabis community, in order to lift everyone up – to right the wrongs of the failed war on drugs.
The possibilities are limitless, just like the new frontier of cannabis. I look forward to seeing how we all grow together.
Payal Shah is founder and CEO of the Cannabis Insight Collective. She’s spent the last two decades in strategic planning, working in leadership roles within global advertising agencies, on blue-chip clients including Proctor & Gamble, Microsoft, Walmart, Kelloggs, and Porsche.
Her experience is focused on understanding how cultural paradigm shifts and trends impact and influence people, their behaviors and brand choices. Her knowledge is grounded in creating and cultivating online panels, or Collectives, of all sizes and shapes, to address a variety of challenges for various clients. This background, along with a compassion and conviction for the cannabis industry, inspire her to be an advocate to drive the cannabis industry forward.
Cannabis Insight Collective is aliving, breathing online community of people across the United States, brought together by their connection to the cannabis industry. We exist to uncover cultural, category and consumer trends and insights within the category by tapping into our proprietary Collective, and working with people directly to answer questions that brands are struggling to answer.
At Cannabis Insight Collective, we are committed to supporting social equity in the cannabis market, and treating everyone fairly and respectively, through a number of Corporate Social Responsibility business initiatives:
The Cannabis Insight Collective panel will be representative of the entire United States population to ensure a representative voice is heard.
A percentage of CIC’s revenue will be donated to the advancement and mentorship of minority-owned cannabis businesses.
CIC will continue to advocate to establish new and existing laws that make sure the cannabis industry is fair and equitable.
Member Blog: The Differences Between Strain Specific Terpenes, Terpene Enhanced Flavors, and E-Juice Flavoring
As the nation’s largest wholesale terpene provider, we spend a lot of time getting to know the needs and wants of our customers. One of the biggest questions our new clients have refers to the flavor profiles of our terpenes. More specifically, people are wondering why our strain-specific terpenes (like Banana Sherbet, Cherry Pie, and Cookies & Cream) don’t taste like the real sugary sweet confections that go by the same name.
There is a slight misconception when it comes to terpenes. Many people expect terpenes to work like e-juice in a vaporizer to make whatever you’re smoking taste like something else. While it isn’t uncommon for vape juice to taste like Skittles, cinnamon rolls, mojitos, and orange juice, terpenes don’t. There are no additional additives like sugar or artificial flavors in the terpenes that’ll make a hash pen or oil taste just like fruit, candy, and cake. It’s best to only use what nature gives us!
Here’s the difference between isolated terpenes and wholesale versus e-juice for vaporizers, as well as a quick rundown on flavor enhanced terpenes to help you or your customer make a more educated purchase:
What are terpenes?
Terpenes are organic compounds found in all plants that are responsible for giving the plant – from blueberry bushes to pine trees – its distinct smell. The unique smell helps plants existing in the wild to attract pollinators and ward off predators. Terpenes are the primary source of the resin and trichome production in cannabis, and they are created in the same glands that produce CBD and THC. That being said, marijuana can create its own combinations of terpenes. No two plants smell exactly the same.
Terpenes are also responsible for several medical benefits and adult uses. When they’re combined with some of the different cannabinoids found in cannabis, they can create what is known as the entourage effect. The entourage effect is what gives strains of cannabis a variety of different effects since the flavor profiles can come about from an almost infinite number of terpene combinations.
In layman’s terms, terpenes are so useful because they can be blended seamlessly with each other. This gives enthusiasts more control over what they taste and feel when they vape. Cannabis contains over 100 different terpenes that offer unique effects.
Liquid terpene products and extracts typically contain a combination of terpenes found in cannabis. Some products will have more of an indica profile (like Blackberry Kush) while others will have more of a Sativa (Clementine) or Hybrid (Banana Kush) profile. This helps to encourage the specific physical effects you’ve come to expect from cannabis.
What is e-juice?
The e-juice, vape juice, and e-liquids can be used in vapes and electronic cigarettes to create actual vapor. Most of the time, e-juice contains nicotine though many flavored e-juices don’t contain any. E-juices come in a ton of different flavors that cater to just about everyone, from people with intense tobacco cravings to people with a sweet tooth. E-juice is made with propylene glycol or vegetable glycerin, flavoring (often with terpenes, but usually artificial) and water. Vape juices that are made with propylene glycol are more likely to irritate your throat while you smoke it. On the other hand, e-juices made with vegetable glycerin are more likely to add a thick layer of sweetness to the vapor.
This is where a lot of the misconception kicks in. Since some vape juices made with vegetable glycerin are sugary sweet and taste like candy, many people assume that terpenes by themselves are responsible for the flavoring. By adding terpenes to e-juice, you can achieve a variety of different and new flavors. However, the terpenes won’t add anything artificial.
Natural terpenes vs. artificial flavors
E-juice, hash oil and CBD isolate can all benefit from adding terpenes and flavonoids to the mix. While marijuana has one of the most extensive ranges of flavor profiles in the plant kingdom, it will never naturally taste like cake, blue raspberry, or piña colada. Those are artificial flavors that have no natural terpene representation in the plant kingdom. Essentially, that just means that if you want blue raspberry vape cartridges, you’ll need to get artificial flavoring and avoid terpenes. Terpenes won’t be able to come close in taste and umami to that artificial flavor that doesn’t exist anywhere naturally.
Natural terpenes are becoming increasingly popular to add to cartridges, oils, and vaporizers. These are natural flavors that mimic the natural terpene profiles of cannabis strains. Natural terpenes are an excellent option if you’re trying to give your products an extra burst of flavor. For example, a processor wants to make the perfect Blue Dream cartridge, though the cannabis used for the extraction didn’t taste as vibrantly blueberry as the processor hoped. To achieve that ideal Blue Dream flavor profile, they could add a close match of terpenes found in the Blue Dream strain profile. The terpenes can add the sweet, summer-berry flavor the cannabis extract may be missing to the mix. That will allow the processor to create a tastier product with no side effects.
Overall, you should choose terpenes if you want to mimic natural flavors found in cannabis. You should select artificial flavors if you want something to taste like something unnatural or extra sweet.
What are flavor-enhanced terpenes?
Flavor-enhanced terpenes are the best of both worlds. While e-juice is more often artificially flavored, it often tastes better than terpenes alone. Flavor enhanced terpenes are terpenes extracted from cannabis with extra flavoring added in. Flavor enhanced terpenes offer the natural health benefits of natural terpenes but with the added benefit of tasting delicious. Our line of flavor enhanced terpenes includes fruit flavors like Ripe Strawberry and Berries and Cream as well as non-fruit flavors like breakfast cereals and pastries.
Do strain-specific terpene flavors really taste like the strain they’re based on?
Flavor is subjective and depends on things like classic tastes, aromatic chemicals, and the taster’s mood and physiology. Strain-specific terpenes are scientifically formulated to mimic the real strain’s natural terpene ratios.
To create strain specific terpene extracts, we primarily identify the terpene ratios commonly found in the strains and reverse engineer the process while removing the cannabinoids from the mix. It’s best to start by testing real cannabis at a certified lab. Then recreate that flower’s terpene profile in the lab and test the formula against real cannabis flowers. If the terpene profile doesn’t make the cut, it doesn’t get sold.
Our strain-specific terpenes are designed to match the terpene profiles of the flowers we extract these essential oils from. Just because they’re named Birthday Cake and Biscottidoesn’t mean they’ll taste like the real thing. However, they do taste like the real cannabis strain since their terpene profiles match.
Terpenes Vs. E-Juice: TL;DR
If you’re just here for a quick answer, here’s the difference between natural terpenes and vape juice.
All plants naturally produce terpenes.
E-juice or vape juice is often artificially flavored
Artificial flavors are not terpenes. They don’t exist anywhere naturally and are created synthetically.
Strain-specific terpenes are reverse engineered to mimic natural terpene profiles of cannabis strains
Strain-specific terpenes contain no artificial flavorings
Strain-specific terpenes will taste like the cannabis strain, not the food or fruit it’s named after. For example, Chocolate Cookies tastes like hash, spice, and coffee, just like the cannabis strain. It doesn’t taste sugary sweet and chocolatey.
If you want the best of both worlds, try flavor enhanced terpenes to get the benefit of terpenes and the flavor of e-juice.
Everyone has different taste and smell preferences, but now you should be able to find the best fit when looking for that perfect terpene blend.
Nicole Flanigan is one of the newest additions to the Peak Supply Co family. Her knowledge base on terpenes and cannabinoids has helped throughout the educational process. Nicole is a Colorado-based content marketing professional who has dedicated her life to cannabis awareness, advocation, and education. When she’s not writing or developing something groundbreaking for her clients, she enjoys growing cannabis organically and hiking all over Colorado with her two huskies. Peak Supply Co provides the first true all in one solution providing terpenes, vape cartridges, package design and production, helping clients progress from starting creative to finished product.
Member Blog: My Journey Through The Intersection of the LGBTQ Community and Cannabis Movement
By Erich Pearson, SPARC
NCIA Board and Founding Member
Reflecting on the decades-long fight to end prohibition of marijuana, one person comes to mind this month as we look at the similar and interconnected decades-long Gay Pride movement and what it means for the LGBTQ community today. One activist largely credited for legalizing medical cannabis in California is the original “cannabis influencer” Dennis Peron. We have much to be grateful for as we remember his legacy advocating for AIDS patients in California to have access to medical cannabis.
As for my role in both of these these important causes, I arrived in San Francisco in 2000 after graduating college in Indiana. I was happy to find San Francisco to be not only accepting of me as a gay man, but also accepting of me as someone interested in the cannabis movement. In the 1990s, there were a handful of medical cannabis dispensaries operating, un-permitted and un-regulated. It wasn’t until 2006 that Americans For Safe Access (ASA), Drug Policy Alliance (DPA), and Marijuana Policy Project (MPP) along with a handful of local advocates led the charge to regulate dispensaries.
A few of the most vocal advocates were veterans from the political days of Dennis Peron. Dennis was not involved in the regulatory process of 2006. It was widely known that Dennis didn’t like regulations (he repeated this during the Prop 64 campaign years later). Dennis thought cannabis should be grown and sold freely, outside of an alcohol-type regulatory environment. He was right, but unrealistic – hence his waning interest in the politics of it.
Dennis did have a few friends who wanted to see cannabis regulated in San Francisco, and one was Wayne Justmann, a gay man that used to work the door at Dennis’ cannabis club at 1444 Market Street. Wayne is a friend of mine today, and we worked closely together to advocate for a dispensary program that respected the existing operators, despite their “inappropriate” locations in many cases. We ultimately won this battle, as San Francisco has a healthy respect for social pioneers.
San Francisco was also the first city to regulate on-site consumption. This was allowed in order to provide AIDS patients a safe place to medicate, outside of government housing. This has proven to be a successful program, with little public resistance even today as we permit more of these lounges, primarily designed for adult-use consumption.
I started a free compassion program in San Francisco in the early 2000’s at Maitri AIDS Hospice. We still deliver twice a month to patients there. This has been an incredibly successful program and a very rewarding experience for myself and the staff who carry it out.
Today, I don’t see a lot of synergies anymore between gay progress and cannabis progress despite its intertwined history, but we at SPARC honor that history with a t-shirt claiming victory: “Legalized Gay Pot.” Of course, the fight for fair treatment and equality for both cannabis and LGBTQ right is far from over, but in San Francisco, I’d say we’ve come a long way on both fronts. And as cannabis legalization sweep through other states across the country, we can see studies that show gay, lesbian and bisexual people being the highest level of consumers among other select demographics, showing that our communities continue to overlap.
In looking back on all of this history and progress, I am thankful for all of the advocates who put themselves forward to fight for cannabis AND LGBTQ rights – we wouldn’t be here without their hard work, dedication, and selflessness. I now look forward to a future where everyone, in every state, can access the cannabis plant and be treated with respect and fairness.
Photo By CannabisCamera.com
Erich Pearson is a recognized leader in the cannabis industry – a long-time advocate, legislative consultant, dispensary operator, cultivation expert, and NCIA board member.
A proponent of medical cannabis regulation, cultivation, and best practices since 2000, Erich served on the San Francisco District Attorney’s Medical Marijuana Advisory Group and consults on state and local medical cannabis policy and legislation.
Erich was instrumental in the passage of both San Francisco’s Medical Cannabis Dispensary Act and the law enforcement “lowest priority” resolution of the San Francisco Board of Supervisors. As a result of Erich’s work he was appointed in 2007 by Supervisor David Campos to sit on San Francisco’s Medical Cannabis Working Group.
In 2010 Erich launched SPARC, a nonprofit medical cannabis dispensary providing safe, consistent and affordable medical cannabis to patients in San Francisco. SPARC provides high quality, lab-tested cannabis to qualified patients, and collaborates with local hospices, residential care facilities, and dispensaries to successfully supply medical marijuana at no cost to seriously ill patients.
How does SPARC do it? By growing cannabis more efficiently. Erich’s expertise is constructing and managing large indoor cultivation facilities. With a robust Research & Development team, Erich is meticulously focused on developing the optimal environmental recipe for high-yield cultivations using unique systems of lighting, ventilation and design.
SPARC is a Founding & Supporting Member of NCIA. Erich holds a BS in Construction and Project Management from Purdue University.
Committee Blog: The Hiring Process Checklist
by NCIA’s Human Resource Committee: Kara Bradford of Viridian Staffing, Kerry Arnold of Canndescent, Heidi Quan of Murchison & Cumming LLP, Nichole McIntyre of Urban-Gro, Michelle Whitmore of H2 Talent, and Mark Hackett of Emerge Law Group.
Maybe you’re just getting your business started. Perhaps you’ve already been rolling full steam ahead. Either way, people are crucial to your business. The NCIA Human Resource Committee formed this past year. The committee, headed by Kara Bradford of Viridian Staffing, includes experienced HR Practitioners, Recruiters and Employment Attorneys, who have all brought their collective “best practices” together in an effort to assist NCIA members to navigate the often complex world of employment.
The HR Committee is starting off by releasing a series of checklists to provide some essential guidelines for your firm during the hiring, on-boarding and termination phases of employment. Without further ado…
Welcome to the first installment of the NCIA Human Resources Committee Employer Checklist Series! Today, we begin where every employer begins – the hiring process – and present the Hiring Process Checklist. Although laws may vary from state to state and each employer’s approach to hiring may differ, the Hiring Process Checklist provides a framework to assure your hiring process includes basic best practices, so you can attract and hire the best candidates.
Why is it important to have a well thought out hiring process? In this era of full employment, you just need to hire warm bodies before your competitors, right? Wrong! There are at least three critical reasons to make sure you put a good hiring process in place.
First, your hiring process must comply with the law. Are your job postings nondiscriminatory? Does your job application request potentially illegal information, such as criminal background, salary history or prior workers’ compensation claims? Are interviewers only asking applicants appropriate questions? Are you storing applications and other information about applicants for the required length of time? A good hiring process greatly reduces your risk of legal problems.
Second, hiring the wrong applicant is expensive. According to a study by SHRM (The Society for Human Resource Management), the average cost of hiring an employee is just over $4,100. This does not include the cost of training a new employee, a new employee’s lower productivity and greater likelihood of making mistakes or the stress on your other employees who must pick up the slack while the new employee ramps up. A good hiring process can improve your bottom line by significantly increasing the likelihood that you hire the right employee the first time.
The third and perhaps most important reason to lock down your hiring process: you are introducing potential employees to your company for the very first time. From the time they read your job posting until you inform them of your hiring decision, the applicant is assessing and judging your company. In this competitive job market, you need to quickly give that applicant a reason to want to work for you, rather than all the other hungry employers vying for their services.
An unstructured, haphazard hiring process sends all the wrong messages. Right or wrong, it tells an applicant that the company is not serious about hiring the best employees. It tells the applicant that you don’t value their time. Would you want to work at that company?
You only get to make one first impression, so make it a good one! Be upfront and clear with the applicant about the hiring process and your timeline and stick to them. Keep the interview process on schedule and make sure interviewers are well-prepared. If you tell an applicant you will get back to them by a certain date, get back to them by that date. If the timeline changes, let the applicant know. Treat every applicant with respect at every stage of the hiring process.
Once you establish your hiring process, the hard part begins – putting the plan into action. Even the best hiring process is useless if your staff doesn’t understand it. Clearly explain the hiring process to staff who will implement or supervise it. Provide them with the training and tools they need. Finally, periodically review the success of the hiring process and make improvements, so you continue to attract high-quality job applicants.
We hope you find the Hiring Process Checklist a useful tool as you develop your company’s hiring process, but it is not the only tool available. Take advantage of the many resources available to you in books and magazines, on the internet, and through the services of an HR professional or attorney.
Happy hiring!
The HR Committee needs and values your feedback. We exist to serve NCIA members, so please tell us how we can serve your needs by emailing us at HRC@TheCannabisIndustry.org. Thank you.
Committee Blog: Social Justice in the Cannabis Industry – Your Answers Will Take Minutes, But The Impact Could Be Long-Lasting
By Rudy Schreier, MMLG
NCIA’s Marketing & Advertising Committee’s Social Justice Subcommittee
The cannabis industry is evolving at light speed. From nationwide legalization, to massive corporations developing green thumbs, cannabis culture is shifting daily. Exciting, yes, but this rapid cultural shift poses a threat to social justice by disregarding the harms caused by the war on drugs. Now, more than ever, the cannabis industry needs to come together and determine a course of action to ensure that social justice isn’t brushed aside.
Where should we start? And how can all of us in the industry handle something as daunting as social justice with the appropriate sensitivity? Let’s review some of the basics.
Cannabis has been aggressively policed since the mid-to-late twentieth century. Minorities from marginalized communities were disproportionately punished for cannabis crimes, contributing to the rise of mass incarceration. Those same communities punished for past involvement with cannabis face an extremely high barrier of entry in the newly legal industry. Many cities and states are adopting social equity programs to lower the barrier. For example, Los Angeles recently approved $10.5 million in funding over the next three years for its social equity program. Initiatives like Los Angeles’ are a step in the right direction; however, there’s still a lot more to be done.
While social justice in the cannabis industry is a new focus for some, others have been fighting for decades. Omar Figueroa, a cannabis lawyer and advocate located in Northern California, helped to convince the Sonoma County District Attorney to clear cannabis convictions and has defended numerous activists pro bono over the years. When asked how the cannabis industry should address social justice, Omar replied, “[We need to] provide grants and loans to address disparities in access to capital, continue to advocate against cannabis prohibition, and create a leadership institute to empower people directly affected by the war on cannabis.” Omar, like many other committed ‘canna-pros’, are constantly fighting for fair and equitable practices in our industry. With so much work to be done, it can be challenging figuring out where to start. This is where you come in.
As we build the new cannabis culture, we have the unique opportunity to do things differently, ethically, and better. NCIA’s Marketing & Advertising Committee’s Social Justice Subcommittee is developing an approach to social justice for the cannabis industry, and we need your help. Since we can’t tackle everything, we’re asking you to make your voice heard and help us navigate the difficult terrain ahead. Please take this 4-question survey about what social justice should mean in the cannabis industry. Your answers will take minutes, but the impact could be long-lasting. Feeling ambitious? Share this ‘gram-sized graphic’ in your own social channels to spread the ‘poll power’ far and wide!
Interested in learning more? NCIA’s Social Justice Subcommittee will be hosting a panel titled “Cannabis Reform Stops Short: Why We Can’t Let Social Justice Get Lost” at NCIA’s Cannabis Business Summit & Expo in San Jose on Tuesday, July 23, from 1:30 PM – 2:30 PM. Register for the conference today!
Marketing and Advertising Committee: (MAC) of National Cannabis Industry Association (NCIA) — develops best practices in cannabis industry marketing /education, opening dialogues with media outlets that ban cannabis-related advertising.
Social Justice Subcommittee: An arm of the MAC committee, the aim is to ensure that social justice issues are positively addressed via cannabis reform. Team Members: MMLG, Cannawise, Canna Advisors, Annabis.
The Author: From operations and marketing, to office and project management, Rudy Schreier wears many hats for the Los Angeles-based licensing and compliance consultancy MMLG. Schreier co-founded the #StartsAtThePolls campaign, which utilized social media platforms to inform voters on how to register to vote, how to get to the polls, and pro-cannabis candidates running for the 2018 elections. The Panel: Be sure to catch the Social Justice Subcommittee’s panel featuring Lisa Jordan (Canna Advisors), Omar Figueroa (Law Offices of Omar Figueroa), Shanita Penny (Minority Cannabis Business Association), and Felicia Carbajal (The Social Impact Center) at NCIA’s Cannabis Business Summit & Expo titled, “Cannabis Reform Stops Short: Why We Can’t Let Social Justice Get Lost.”
Member Blog: How To Build A Successful Hemp CBD Company
The legalization of industrial hemp in December, 2018, has opened the door to a host of new products and processes that have the potential to enhance health and technological innovation while being environmentally sustainable and most importantly, highly profitable.
Entrepreneurs who want to stake their claim in the hemp space face some of the same challenges as others starting a new business, but other challenges are unique. Like anyone starting a business, you must understand your market. Right now hemp’s “low hanging fruit,” cannabidiol (CBD), is gaining popularity. Established brands such as Bluebird Botanicals, Endoca, and CV Sciences – which recorded $48.2 million in revenue for 2018, an increase of 133 percent over the previous year – are taking off.
Growth like this explains why predictions for overall expansion in the CBD market are meteoric, with cannabis industry analysts The Brightfield Group predicting it could hit $22 billion by 2022. But in order to get on that ride you will need to understand CBD consumers, prepare to meet their needs, and plan to expand their awareness of ways your product or service can help them. You will also need capital.
Stand out to investors
Once you have a good idea of the market and demand, you will be ready to start thinking about funding your company. It used to be that a passionate founder with a good pitch deck could attract investors after one meeting, but times have changed. Investors want cold, hard data to back up your claims, and they will want better analysis than your gut feeling, and a larger sample size than your friends and family.
Your pitch needs to not only support your market analysis with data, but differentiate your brand from others competing for the same investor dollars. The business model and differentiation need to encompass:
Revenue source
Where will you sell your product? Options include wholesale, white label, and retail through either online, brick-and-mortar store or a third-party vendor, or a combination of those.
Product category
Will you market your product as a cosmetic, pet supplement, nutraceutical, specialty beverage, functional food or something else? You will need specific information about the market for that product category and what roles CBD can occupy in them.
Product quality
What extraction methods are you using? Is your product purity third-party verified?
Are you using the highest grade of CBD isolate or distillate in your product line?
Product sourcing
Where does your hemp and raw materials come from?
How hands-on are you with your suppliers?
How stringently do you track your product from farm to consumer?
Vertical integration is increasingly seen as the optimal approach to CBD supply chain management. Producers such as Shi Farms in Colorado specialize in vertical integration.
Cannabinoid science:
Are your product and marketing firmly grounded in the best available science supporting the uses of CBD and other cannabinoids?
Product story
Do you have a compelling narrative that explains your personal investment in making the product available to consumers?
Does your marketing comply with FDA standards?
Some things you should not DIY
The issue of FDA compliance deserves special attention and professional support for CBD businesses. It is one of a few areas where hiring a consultant can make the difference between success and failure.
Your outward-facing communications will have to walk a line between including all the required elements without making any claims that violate FDA regulations. Cosmetic and nutraceutical labeling must list all ingredients, while nutraceuticals also need to provide a dietary supplement facts panel. Structure and function claims can be particularly tricky. CBD is not classified as a drug and therefore verbs such as treat, diagnose, prevent and cure are absolutely off limits. The language has to convey that some consumers use CBD in certain ways without employing medical terms or guaranteeing any particular outcomes. You can do your own research on compliance but it is always wiser to hire a consultant who specializes in this area.
As you get past the initial planning and push to get your business started, you will find there’s no substitute for long-term planning. Collecting ongoing data on the purity and potency of your product, the costs of raw materials and effectiveness of your marketing will enable you to make mid-course corrections in your projections so that your business and revenue grow.
Long-term planning based on robust data will ultimately make a huge difference for your business. I predict a failure rate of about 70 percent for CBD companies over the next five years. Whether they are underfunded, lack an effective management structure or are out of compliance with FDA standards, many new businesses won’t be able to compete with major players like Kraft, P&G and Unilever as they enter and begin to dominate in the CBD space. But some of those starting a CBD business now will not only learn how to stay afloat, they will prosper to the point that those major players will come knocking at their doors with generous offers to buy. Build in a pathway for your desired exit strategy and have all of your operating agreements and documents at the ready. If this looks like a possibility, or you want it to become one, you will need top notch, cannabis-savvy representation like McAllister-Garfield in your corner.
Learning and networking
If you want to make a deeper dive into starting or building a CBD or hemp concern, The Hemp Biz Conference is here for you. During symposia around the country you can learn about industry trends in an interactive forum, and get access to experts in discussion and workshop sessions designed for everyone from beginners to established professionals. Scheduled tracks – agriculture, processing, manufacturing, extraction, textiles, biofuels and plastics – allow you to focus your time where it matters most to you and your business. The Hemp Biz symposia attract the hottest hemp companies, investors and entrepreneurs in the industry so you will leave with connections that will help you grow for years to come.
Christie Lunsford, CEO, leads The Hemp Biz Conference’s charge into creating a sustainable hemp industry by bringing together the best experts, entrepreneurs, farmers and scientists in the cannabis space in the Hemp Symposium Series.
Before launching The Hemp Biz Conference in 2018, Christie founded Endocannabinioidology, a consulting firm providing cannabis science, FDA compliance support, technology and education management to businesses and individuals in the cannabis and hemp communities, where she successfully wrote or advised on winning cannabis license applications in several states. She has also overseen operations for a producer of horticultural LED technology, helped formulate and launch the first retail channel of CBD nutraceutical products derived from industrial hemp in the U.S, and was named Cannabis Woman of the Year at the 2015 Cannabis Business Awards. In addition to producing The Hemp Biz Conference’s Hemp Symposium Series she is a regular contributor on the business of hemp for Green Entrepreneur.
Member Blog: A Summary Of Colorado’s Publicly Licensed Marijuana Companies Bill (HB19-1090)
On May 29, 2019, Governor Jared Polis signed HB 1090 into law, removing burdensome restrictions on who can own cannabis businesses in Colorado and permitting greater outside investment. The law, which goes into effect on November 1, 2019, drastically changes the regulations in Colorado by permitting public companies, currently prohibited from owning cannabis licenses, to own such a license in the state. Additionally, shareholders with equity interests below ten percent will largely be able to avoid the current extensive disclosure requirements.
Before industry participants rush to secure outside investments, there are important issues to be considered.
First, the rules and regulations promulgated pursuant to HB 1090 have yet to be drafted. While the new ownership framework is outlined in HB 1090, the actual rules that will govern Colorado businesses must still be written. Second, the law does not take effect until November 1, 2019. Regulators have previously penalized companies for hastily signing, or announcing transactions before a law takes effect or without first speaking with the regulators. This type of hasty action can put companies at risk of sanctions and hinder the application process. Lastly, this article is only a summary of HB 1090 and does not discuss the nuances of the law. Please consult a licensed attorney regarding specifics of any proposed transactions.
The signing of HB 1090 opens a new era for the Colorado cannabis industry. Where the old law prohibited public corporations from owning even indirect equity stakes, the new law allows certain publicly traded companies to own licensed cannabis businesses within Colorado. And where the old law required at least one owner to meet the one-year residency requirement, the new law only requires all individuals with day-to-day operational control to be Colorado residents. The new law also allows non-U.S. citizens to own equity in a licensed business.
What’s New
Many of the old categories of ownership have been scrapped. No longer are there Direct and Indirect Beneficial Interest Owners or Qualified Passive Investors. Where HB 1040 (the previous law that currently governs ownership) focused on any amount of control or ownership, HB 1090 generally requires more direct control or ownership to trigger disclosures and Marijuana Enforcement Division (MED) approval. HB 1090 creates three new types of ownership classifications and defines “Acquire” and “Control” more effectively. Control is the direct or indirect possession of the power to direct the management or policies of the cannabis business, whether through ownership of voting securities, by contract, or otherwise. This is important because the control requirement now specifically addresses management agreements within the industry. A person “Acquires” a cannabis business not only through the acquisition of ownership interest, but also through the acquisition of direct or indirect control, voting power, or through the sole power to dispose of the owner’s interest through transactions, subsidiaries, purchases, assignments, transfers, exchanges, successions, or other means.
There are three new types of ownership classifications within HB 1090.
First, a Controlling Beneficial Owner, which refers to (i) a natural person, entity, or affiliate (a person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with, the person specified) or a Qualified Private Fund, defined as a typical venture capital or private equity fund that, owns ten percent or more of a cannabis business, or a person who is otherwise in control of the cannabis business (including managers or others); or (ii) a Qualified Institutional Investor, which is defined as one of a list of entity types that largely reflect passive institutional investors, owning or acquiring at least thirty percent of the owners interest in the cannabis business.
Second, a Passive Beneficial Owner, which is any person holding any interest in a marijuana business who is not otherwise a Controlling Beneficial Owner or in control.
And, third, an Indirect Financial Interest Holder, which is a person that is not an affiliate, a Controlling Beneficial Owner or Passive Beneficial Owner, does not receive a percentage of the revenue or profits of the cannabis business as compensation and satisfies one of the following requirements: (a) holds a reasonable royalty in exchange for the cannabis business using its IP; (b) holds a permitted economic interest prior to January 1, 2020 in a cannabis business that has not been converted into an ownership interest; or (c) is a party to a contract with a cannabis business involving a direct nexus to cultivating, manufacturing, or the sale of cannabis. An Indirect Financial Interest Holder includes a person leasing equipment or real property for use in cannabis operations or cultivation; secured and unsecured financing agreements; security contracts; and management agreements.
Disclosure Requirements and Change of Ownership Process
Controlling Beneficial Owners and Passive Beneficial Owners each have their own separate disclosure requirements under the law. But with reasonable cause, the MED can require any person to report most of the same information as Controlling Beneficial Owners. All Controlling Beneficial Owners and, at the MED’s request and based on reasonable cause, any other person disclosed under the “business owner and financial interest disclosure requirements” provision must submit for a Suitability Judgment from the MED or apply for an exemption from such requirement prior to submitting a cannabis business application. “Reasonable cause” is defined as just or legitimate grounds (based in law and in fact) to believe that the requested action furthers the purpose of the law or protects public safety.
All Controlling Beneficial Owners must submit disclosure and fingerprint-based criminal history checks as required by the regulations. The MED will review the Controlling Beneficial Owner to see if it shows a history of good moral character. Currently, there is no test for what will justify denial based on the background check.
All applicants for the issuance of a state license must disclose a complete organizational chart reflecting the identity and ownership percentages of its Controlling Beneficial Owners. If the Controlling Beneficial Owner is a publicly traded company, the application must disclose the public companies’ managers and any beneficial owner that, directly or indirectly, owns at least ten percent of the Controlling Beneficial Owner. If the Controlling Beneficial Owner is a Qualified Private Fund, then an organizational chart must be disclosed that identifies the ownership percentages of the Qualified Private Fund’s managers, investment advisors, and anyone else that would control the manager or operations of the marijuana business (this means that, barring extenuating circumstances, funds will not need to disclose their Limited Partners). All applicants (including individuals) must take reasonable care to confirm that its Controlling Beneficial Owners, Passive Beneficial Owners, Indirect Financial Interest Holders, and Qualified Institutional Investors are not prohibited under the law, and failure to do such due diligence can lead to penalties.
For individual applicants, the natural person’s identification must be disclosed for persons that are both Passive Beneficial Owners and Indirect Financial Interest Holders in the cannabis business, any Indirect Financial Interest Holder that holds two or more indirect financial interests in the business or for persons that contribute over fifty percent of the operating capital of the business.
Despite specific disclosure requirements listed in HB 1090, the MED has discretion to mandate additional reporting. The MED may require an applicant or business to disclose each owner and affiliate and, with reasonable cause, may require a list of each non-objecting beneficial interest owner; business or Controlling Beneficial Owner that is publicly traded; Passive Beneficial Owners of the business; for any Passive Beneficial Owner that is not a natural person, the board members, directors, general partners, executive officers, and ten percent or more owners of the Passive Beneficial Owner; and all Indirect Financial Interest Holders of the cannabis business (including non-natural persons that own at least ten percent of the Indirect Financial Interest Holder).
The disclosure requirements primarily focus on individuals with ten percent or more interest in a cannabis business and those persons in control, but HB 1090 does include a strict prohibition on structuring any transaction with the intent to evade disclosure, reporting, record-keeping or suitability requirements, and any such action can lead to denial or revocation of an application.
Conclusion
Regulations for changes of ownership are still not known and will be clarified during the rule-making process. For most transactions, it appears that a new Controlling Beneficial Owner will need to be approved prior to submitting an application change of ownership for approval. HB 1090 will generate exciting opportunities for Colorado, but it is important to know the law, be patient while the MED promulgates regulations, wait until November 1, 2019 before initiating any outside investment transactions, and consult a licensed attorney regarding specifics of any proposed transactions.
Charlie Alovisetti, Vicente Sederberg LLC
Charles Alovisetti is a partner and chair of the corporate practice group at Vicente Sederberg LLP based in Denver. He assists licensed and ancillary cannabis businesses with corporate legal matters, and he has experience working with clients on a broad range of transactions.
Member Blog: Put Your Cannabis Products to the Test – How Companies Can Work Closely with Labs to Maximize Efficiency and Quality
Laboratory testing regulations for the cannabis industry have been consistently inconsistent, leaving companies struggling to adapt. In the early stages of California’s legal medical marijuana market, labs limited testing to potency, disregarding purity, which put patients at risk. When California legalized adult-use, regulators drastically and rapidly increased testing requirements and purity standards, leaving many producers struggling to adapt.
But despite the frustrations that may arise from convoluted cannabis testing requirements imposed in many states, it is essential that the growing adult-use and, of course, medical cannabis industries ensure that their products across the board are reliable, safe, and pure – free of contaminants such as heavy metals, mold, and synthetic pesticides – and that levels of THC and CBD are accurately labeled.
Companies can prepare for more stringent rules, while being confident in both the purity and potency of their products, by selecting a trustworthy lab to fit their needs, and by developing a lasting relationship with that lab. Once a brand has chosen a lab that they are comfortable with and whose results have proved to be credible, it’s important to stick with that lab rather than play the field.
The first step is to develop a thoughtful selection process to find a lab that best fits your company’s needs and goals. Take the time to meet with various lab teams and have in-depth conversations about their experience, equipment and technology, and operating strategies employed to test for product quality, purity, and safety. This is not the time to take shortcuts, nor should you base your lab choice solely on price and turnaround time. With regards to the latter, a great lab may need a week or more to thoroughly test a product and confirm its purity and potency. The lab is simply doing its due diligence to ensure a company can be fully confident in the products they put forth in the marketplace.
Once you’ve chosen a lab that will work best with and on behalf of your business, consistently stay in touch with the lab team. Build relationships with account representatives so they can fully understand your products, so you can understand the progress the lab is making throughout the testing process, and together be fully prepared to address any issues that may arise. For instance, if there is an expected delay, companies who have stayed in regular contact with their lab of choice can be ready to prevent problems relating to supply chain and inventory.
Fostering a strong relationship with a reputable, objective, third-party lab is another way for brands to distinguish themselves from the pack within the legal market, and to encourage consumers to forgo the illicit market and instead place their trust in high-quality, licensed products that have been properly tested. Companies can add test results to their product labels and their websites for full transparency.
By carefully selecting a lab and learning to seamlessly work together, brands can not only adapt to stricter testing requirements, but can potentially use the increased regulations to their advantage by establishing consumer confidence and by going above and beyond regulatory requirements.
Dr. John Oram, Ph.D., is CEO & Founder of NUG, an Oakland-based, vertically-integrated cannabis company with strong historical growth and performance. Founded in 2014, NUG continues to expand and diversify its portfolio, which includes world-class R&D, state-of-the-art cultivation, extraction, and distillation facilities, one of California’s largest wholesale cannabis distributors, and the new, unparalleled NUG retail store experience. Follow NUG on Facebook,Twitter, Instagram and YouTube.
Committee Blog: Cannabinoid Analogues Offer a Promising Future for Medical Cannabis
As outside industries fuse with the cannabis market, we will begin to see innovations that will flesh out our understanding of cannabinoids and how they interact with the human body. I had the opportunity to sit down with chemist Dr. Mark Scialdone and Chris Barone, founder and lead chemist at The Clear™ to discuss the introduction of semi-synthetic cannabis compounds to the market. We focused on hydrogenated cannabinoids; cannabis with a slight twist that could change everything about why and how we consume cannabis.
Hydrogenation is simply treating a compound with hydrogen, which causes a chemical reaction between hydrogen (H2) and another compound or element, usually in the presence of a catalyst such as nickel, palladium, or platinum. This is done in order to reduce or saturate organic compounds, imbuing them with properties the original compounds did not have. These cannabinoid analogues (or semi-synthetic compounds) have a number of applications in manufacturing and medicine.
Hydrogenation is a minor modification to the natural framework of the compounds the cannabis plant produces biologically. Barone describes the process as, “adding hydrogens across the double bonds, thus changing the molecular weight, the molecules geometry, and also its effects on the body.”
Benefits of Hydrogenated Cannabinoids
A major benefit to hydrogenation is that it offers stability at the molecular level, assisting with both shelf life, and resistance to heat. Scialdone explained, “hydrogenation is a chemical transformation on unsaturated compounds to improve their stability and resistance to thermo-oxidative breakdown,” – which occurs when these compounds are in the presence of air. This is the reason you cannot leave cooking oils on the counter exposed to sunlight, as eventually this reaction will cause them to go rancid. Hydrogenation improves the oxidative stability by removing the unsaturation.
Based on a study referenced in Scialdone’s patents (US10071127B2 & US9694040B2), the effects of cannabinoids and hydrogenated cannabinoids were examined, in reference to tumor growth in mice. In these cases, the hydrogenated cannabinoids showed significant improvement in the reduction of tumor sizes; with Hexahydrocannabinolic Acid (HHCA) at a 39.70% reduction, and HCBDA at 55.83% reduction (compared to the non-hydrogenated compounds THCA at 37.67% and CBDA at 47.02%) (source). It’s possible that hexahydrocannabinoid (HHC), being more stable than tetrahydrocannabinoid (THC), and less prone to dehydrogenation (converting to DHC and CBN), may have an impact on resistance towards oxidative metabolic breakdown in the liver, though there is no critical examination at this time. It has been observed in metabolic studies that hydrogenated compounds are resistant to this kind of breakdown, suggesting that hydrogenated cannabinoids may exhibit this trait as well.
Image: Cannabinoid Structures
Difference Between Natural and Semi-Synthetic Cannabinoids
There is still much research to be done to define the exact pharmacological differences between hydrogenated and their plant-derived cannabinoids, but the chemical differences are quite distinct. “Tetrahydrocannabinoids like THC are metabolized into the 11-Hydroxy-THC-metabolite and ultimately the nor-carboxy-THC-metabolite; because we’ve converted the THC to HHC, metabolites will differ from the ones derived from THC,” explained Scialdone. Thus, they will have a different pharmacokinetic profile because the metabolites are going to be different in hydrogenated compounds. Meaning, the hydrogenated compounds could have a longer half life and bind to different receptors within the ECS.
A study published in the Journal of Medicinal Chemistry evaluates the ability of various cannabinoid analogues to modulate the production of reactive oxygen intermediates (ROI) various metabolic functions as well as their binding capabilities to the cannabinoid receptor (CB1). It was found that hydrogenated CBD and Cannabidiol-dimethylheptyl (CBD-DMH) demonstrated bioactivities different from their original compounds (source). The study focused on the anti-inflammatory and immune responses that have been previously observed in the non-analogue compounds. To compare the hydrogenated cannabinoids, they observed the derivative compounds for their ability to suppress the production of ROI, nitric oxide (NO), and tumor necrosis factor (TNF-⍺) by activated macrophages in vitro. Some of the compounds (7 and 4) exhibited an increase in their suppressive effects of NO, TNF-⍺, and ROI. Compounds 7 and 8 are strongly bound to the central cannabinoid receptor (CB1), but with an opposite effect on their ability to modulate the release of inflammatory mediators. When compared to the effects of natural cannabinoids, it is noted that isolated cannabidiol (CBD) also has tumor growth suppressive qualities, with similar functions of hydrogenated CBD (source). The distinction between the two is the bioavailability and slow breakdown of the hydrogenated compounds, however more research is required.
Image: Chemical Structure of Cannabidiol Derivatives
The JMC study concluded, hydrogenated cannabinoids exhibited good binding to CB1, but have varying effects on inflammation – which could spring opportunities for anti-inflammatory and immunosuppressive properties in murine collagen-induced arthritis, as suggested by the Ben-Gurion University. This is because the hydrogenated cannabinoids seem to have a strong effect on hyper-inflammation, which would reduce pain and swelling of the joints.
Public Health and Safety
When dealing with new compounds, it is crucial that health and safety are considered. “We will want to look at what impacts the hydrogenation has on the metabolic profile, and whether or not the hydrogenation is having a beneficial impact on biological actions with the cannabinoids,” explained Scialdone.
It will still take a few years for a product like this to be available to the public. Although the market may see hydrogenated cannabinoids present in medical and recreational states sooner, extensive research on these compounds will remain difficult under current federal laws. The Federal Analog Act states any substance derived from a schedule I or II substance will be treated as the same schedule substance when its purpose is for human consumption. “Pseudo-synthetic cannabinoids should be allowed in my opinion,” Barone adds, “but only through close analysis of the SOPs and quality control conditions. In states where they do not have the resources, I believe manufacturers should be mandated to hire third-party chemical manufacturers to audit and approve the techniques being used.”
Image: Crystalized HHCA Captured by CM Botanical
Research in this arena will provide greater understanding as researchers gain further understanding about hydrogenated cannabinoids and their impact on the human body. Barone pointed out, “I’d like to emphasize that the human interaction with this molecule is the driving force of the progression. Without the idea and the human, the molecules sit untouched and unexplored.” Utilizing the unbound creativity of science, the cannabis plant has more to offer than we once knew.
Courtney Maltais is co-founder and lead biologist at The Clear; a California-based extract company that brought the first Cannabis distillate to market in 2013. Maltais works with industry leaders in cultivation, manufacturing, and product development to create efficient, safe, and standardized lab practices. Her passion for science and education has led her to expand into educational outreach for both business owners, employees, and consumers alike.
NCIA’s Scientific Advisory Committee is comprised of practicing chemists and other scientific field professionals to advise other NCIA committees as they work to develop standards and guidelines for the various sectors of our industry, ensuring that any formal recommendations produced by other NCIA committees are scientifically sound, sustainable, and legitimate.
Committee Blog: Accurate Pasteur Pipette or Grandma’s Turkey Baster – Cannabis Dosing
by NCIA’s Infused Products Committee; contributors Todd Winter, Ashley Hansen, Danielle Maybach, Lee Hilbert, Trevor Morones, and Greg Scher
Where is cannabis in the journey of dosing edibles?
Edibles are growing as a market share only behind concentrates. It is essential to have accuracy across the industry to protect human health and stabilize the consumer market. Potency, homogeneity, absorption rate, interpretation of dose (by State, County, International), percentage error/variance, labeling, and source of raw materials are just some of the items always questioned.
While we are discussing this issue, there will be no right answer for everybody. What is the dose? What is a serving? A check of an operator’s shelves will show chocolate bars with 800 mg of THC and a similar sized bar with 80 mg of THC. If you walked off the street and bought the 800 mg bar with only experiencing the 80 mg bar; you are in for a trip, and not a good one.
BDS Analytics’ GreenEdge Retail Tracking Platform as presented by Tamar Maritz in February had shown that when California consumers purchased cannabinoid products in 2018, they often want to know the CBD and THC content.
Label requirements vary state by state on the THC side and are often inaccurate both in the reporting of potency and the way they are displayed on CBD products. Extracts used as raw ingredients in product formulation come in various forms, it is important for the manufacturers to know the percent of actual CBD or THC when making purchase decisions. CBD extracts can be in the form of isolates with low bioavailability, or full spectrum which means the cannabinoid retains more of the plant’s original components.
Additionally, there are infused products, where the flower is extracted by an infusion into an oil, retaining even more of the original cannabinoid profile. All these extracts have specific formulation and labeling nuances that need standardization. The medical community wants even more specific terpene profile information as individual levels of Limonene, Myrcene, and other terpenes gain recognition for properties that have some additional benefit.
Do the terpenes solely earn the credit for their benefits or is it in combination with the other chemical compositions?
There are many ways to add cannabinoids into edibles; for example, when developing cannabis-infused products, are the manufactures using the “sprinkle” method to add the raw material/additive by literally sprinkling isolate? Are they using a pipette for exact measurement from a reputable supplier that is approved for food contact having been third-party audited, or a turkey baster from grandma’s kitchen utensil drawer which has seen some years? Methods abound!
Perhaps the most accurate method to create a homogenous product is to incorporate the raw material during the mixing step; before cooking, gassing (CO2), or pasteurization. Not everybody that starts an edible factory comes from the food or pharmaceutical industry. A standard serving size or dosage, whichever you prefer, could make life easier for all stakeholders with a few exceptions. As yield models mature for extraction, markets will adjust, and prices can stabilize based on real data.
In Iowa, they have just legalized for medical use, but the flower is not legal. It is 100% treated as a drug. Any product needs to have no more than 3% THC to be permitted. We can’t forget our colleagues dealing with burdensome regulation. I doubt they can measure with turkey baster there, and if we saw a manufacturer in Iowa, we would probably see a pipette. Consensus on a dose can help elected officials know more and lift heavy restrictions.
Caffeine, like cannabis, is a naturally occurring alkaloid in 60+ plants. Cannabis produces THC and CBD, which are cannabinoids. The next step for the industry in supporting cannabinoid dosing of THC and CBD or any other cannabinoid is to increase general public recognition, routine toxicology studies, and develop appropriate data and work methods to obtain public recognition or certification for food safety, public safety, and documentation.
In the United States caffeine, when in soda, is limited to 65 mg per 12 liquid ounces of beverage. In pill form, the FDA allows 200 mg of caffeine. While this is about THC/CBD, the parallels are plain. While the Cannabis industry addresses dosing challenges are many. Stakeholders composed of consumers, operators, manufacturers, laboratories, distributors, and regulators would like to see the order in the industry.
The Federal Government does not yet consider cannabis as a food additive that is “Generally Recognized as Safe (GRAS).” Caffeine, a GRAS substance under current regulation, attained status under industry practices over 60 years ago. Within our industry, GRAS is not a deeply-rooted measurement for quality or safety standards. Cannabis has no history of being hazardous when infused in products and defining a serving, or a dose should not impact the operations of notable brands that provide excellent food safety and quality.
Each consumer (patient or recreational user) has their personal approach to cannabis dosing based upon their due diligence. Manufacturers are producing THC and CBD products that range from “micro-dose” to “mega-dose” because they understand that no one standard dose is the right for every individual.
Consumers look at labels to determine which product to buy. Manufacturers rely on testing to confirm THC and CBD content. CBD and micro-dose product categories are trending; unfortunately, many laboratories are not equipped to test CBD products accurately and consistently. THC Micro-dose products have similar problems. Not all laboratories have equipment that can report trace amounts accurately. Homogeneity, labeling, and raw ingredient sourcing are opportunities for manufacturers to set themselves apart to the retail operators in a wide-open market. Let us collectively work together towards clarifying the issue and work with all the stakeholders to define for the public some language that can be understood by all, encourage federalization, and develop a standard of excellence.
NCIA’s Infused Products Committee (IPC) focuses on edible and topical products, reviewing existing business practices and state regulations. Regulation of these products is the IPC’s initial key focus, but the committee’s purpose is to ensure the infused product sector is helping shape its destiny, rather than being driven by differing jurisdictional regulations. The IPC is also working with the Policy Council and Council on Responsible Cannabis Regulation (CRCR) to develop standardized regulations for legislators and regulators to adopt as their states legalize the industry.
Member Blog: Weighing the Options for Cannabis Facility Construction
As more investors consider the cannabis industry as a growth market, the need for cannabis cultivation facilities, processing centers and dispensaries is projected to rise to keep pace with demand.
A report from New Frontier Data projects that by 2020 the legal cannabis market will create more than a quarter-of-a-million jobs. These are more than the jobs expected to be created from manufacturing, utilities or even the U.S. government, according to the Bureau of Labor Statistics.
Forbes magazine estimates that medical marijuana sales are projected to grow to $13.3 billion by 2020. With this growth will be the need for quicker, cost effective construction with investors likely to consider the remodeling option.
There is value in remodeling the interior design of existing abandoned or non-productive buildings into state-of-the-art cannabis facilities that can be brought to life quickly and on-budget so that the facility becomes a new source of jobs and tax revenue for the area. This is a popular option for investors looking to tap into the burgeoning cannabis market.
Cannabis businesses have to keep track of many moving pieces in the name of compliance, growth and sustainability. Industry experts are seeing value in integrating processing and cultivation at the same site, which can open the door for better quality control. A well-designed cannabis process goes far beyond just extraction; it overlaps heavily with cultivation on the front-end and product development on the back-end.
Security is a growing issue for cannabis dispensaries, cultivation and processing facilities. According to Security Sales & Integration magazine: “Once the products reach the warehouse or dispensary shelves cannabis companies rely on advanced security systems including visual and audio surveillance to protect their valuables and even their license. In order to prevent diversion of product, most state cannabis regulations require growers, storage facilities, processors and dispensaries to have advanced video security systems.”
Cannabis facility building contractors are charged with integrating top level security measures into their renovation. This is not only relevant to cultivation facilities, but also processing facilities and dispensaries. This builds confidence with clients and investors.
When building a cannabis cultivation facility, it is critical to understand that local codes are constantly changing as local building and fire departments try to keep pace with the rapid rate of changes in the industry. Rather than try to wade through these regulations, it is important to consult with a contractor who is experienced in the industry and is current with the latest changes.
Here are a few examples of buildings remodeled into high end cannabis facilities:
CFC renovated a 5,200 square-foot dispensary in Morris, Illinois that evokes old world charm, including a bar that originally was constructed in the Anheuser-Busch pavilion at the 1893 Chicago World’s Fair. The dispensary was originally the Rockwell Inn.
According to Mitch Kahn, CEO and founder of Grassroots, a national leader in medicinal cannabis, “It really is just a neat building with character that we wanted to keep, from the tin ceiling to the bar that’s over 100 years old, and retrofit it to our purposes. We saw the promise of remodeling an old building and turning it into a modern facility.”
A remodeled 40,000 square-foot cultivation facility in Illinois that was formerly a roller skate manufacturing facility. The facility was positioned in an Enterprise Zone that saved the dispensary owner more than $300,000.
Investors looking to build cultivation, processing and dispensary facilities, particularly in controlling construction costs, should:
Know there is an art and a science to converting raw materials of cannabis and finished products so any construction must meet all state regulations and local fire and safety codes.
Find a partner that can manage security infrastructure and planning as well as permitting and compliance support. It is critical to balance safety and customer-engagement.
Hire general contractors that will work on a fixed sum in lieu of a percentage of construction. This is especially important when it comes to a partner who will closely watch trade contractors to ensure they provide the best possible solutions, taking into account time and money.
Work with a partner that will watch their back from a relationship standpoint, not just the transaction.
Albert Marks is Client Relations Manager for Cannabis Facility Construction based in Northbrook, Illinois. Albert currently works with clients in three states, including Illinois, Wisconsin, and Massachusetts. Marks draws on his extensive knowledge of social media and digital marketing. He oversees the company’s blog, LinkedIn, Facebook, Instagram, and Twitter profiles. Marks is trained in using the SalesNexus CRM software, which he has used to make connections while working with clients, industry partners and trade partners in the residential, commercial, retail, restaurant, exterior and cannabis verticals.
Member Blog: Doing More With Less – Ways To Expand Yields, Save Money, And Keep Quality
As the cannabis industry continues to expand, commercial growers are looking for new and cost-effective ways to get a competitive edge in an increasingly crowded market.
The persistent and ever-growing demand for cannabis products has industry professionals wondering how they can increase their production levels and maintain quality while remaining profitable. Simultaneously, the price of cannabis continues to drop yet operational costs facing growers remain the same — this combination undoubtedly limits the ability to make much-needed investments or updates to their facilities. While the answer may be different for each grower, evaluating a few key areas may lead to increased production without the skyrocketing expenses.
What are some of the best ways to cut down on costs without inhibiting quality? Start by asking the right questions.
Which Lights Provide the Right Intensity, Spectrum, and Efficiency for Your Grow?
It can’t be emphasized enough that lighting plays an integral role in the success of any harvest. When growing indoors, agriculturalists lose exactly what plants need to survive: the sun. LED lights that produce the appropriate light spectrum and intensity can be a (sometimes superior) replacement for the sun.
When used effectively, LEDs can mimic the changing of the seasons — thereby allowing horticulturalists to hasten flowering or encourage dormancy. They’re able to change the appearance, potency and size of the plant. Spectral tuning gives cultivators control over the timing of the plant’s natural life cycle and the resulting harvest, supporting the conclusion that LEDs are the optimal lighting choice for growers seeking higher production levels in a shorter amount of time.
LEDs deliver numerous other time- and money-saving benefits to commercial growers, including:
Energy efficiency – LEDs are an environmentally friendly and sustainable choice for horticulturalists looking to cut down on energy costs — easily surpassing other lighting technologies in this realm.
Cooler running temperature – They runs at a much cooler temperatures than most other options. This means that, even with several LED fixtures delivering bright, intense light, horticulturalists don’t have to worry about burning their plants.
Durability – Lights need to survive a high-demand, busy and ever-changing commercial grow environment. Some lights include especially durable features, such as tempered glass LED chip covers and industrial-grade aluminum — they’ll last for years while also giving growers peace-of-mind.
What Can Be Vertically Accomplished?
Vertical farming has revolutionized the way we think about indoor agriculture. With the advancement of vertical racking, growers can amplify their harvests — sometimes multiplying their crops ten-fold — without having to invest in more square footage.
While this layout certainly isn’t a new idea in agriculture, it was more recently adopted by cannabis growers as some LED grow lights are now capable of being vertically racked. Many growers’ facilities have square footage limitations, whether due to budget or state law; building up, rather than out, offers the opportunity to drastically expand growing capabilities even in smaller spaces.
To keep your vertical cannabis garden in excellent condition:
Ensure your LED lighting fixture delivers uniform light intensity, so each plant gets the light it needs at every stage of growth to flourish.
Assess whether spectral tuning is appropriate. Some growers might opt for more adjustability so they have the greatest level of control when custom crafting their crop.
Make sure you have proper ventilation. This equalizes the environment of each tier and prevents the development of microclimates or condensation — which can lead to disease or rot.
Install moveable benches to easily rearrange and access each tier as needed.
This combination of technology and intelligent design expands the realm of possibility for cannabis cultivators who want to use their space more efficiently.
Which Cutting-Edge Growing Techniques Make a Difference?
It’s also important to explore what the individual cultivator can do to improve harvests and offset costs. After all, they’re the ones who handle the plants on a day-to-day basis, and best understand what they need to prosper. Their approach plays a central role in crop health.
Commercial cultivators are able to implement advanced growing strategies to produce healthier and more profitable plants:
Tissue culture cultivation – This innovative technique is relatively new to the cannabis industry, although it has been used since the 1950s to aid in orchid reproduction. The process involves immersing cuttings from a healthy, mature plant in different hormone solutions. Tissue culture cultivation allows growers to quickly develop several — up to hundreds — of genetically identical plants.
Consolidate veg and bloom rooms – Adjustable LEDs offer an easy solution for growers who want to use the time-saving “flower-in-place” approach.LEDs start by delivering gentle springtime light, and growers gradually ramp up the intensity to replicate the height of summer. This method prevents plants from being shocked when they’re moved from room to room, encouraging resiliency — and reducing the required square footage to get a healthy harvest.
The Bottom Line
Critics of indoor agriculture argue it’s too expensive. And in some cases, skeptics have a point — when approached incorrectly, indoor cultivators are indeed faced with expensive operational costs that may slash their profits. But this doesn’t always have to be the case. Advancements in technology and design, catalyzed by the creative minds leading the industry, are making indoor agriculture more realistic than ever — for any type of grower. Furthermore, indoor agriculture gives the individual grower ultimate control over the environment. One day, variables like unpredictable weather or changing seasons can be left behind. Traditional industrial agriculture results in soil degradation and pollution — moving indoors can help mitigate this negative impact on our environment. In addition, cultivators no longer have to use harmful pesticides, resulting in a healthier product for both the earth and the eventual consumer.
Andrew Myers is President and CEO of ProGrowTech, which helps commercial horticulture operations increase profitability, yield and energy efficiency with industry-leading LED lighting systems. For more information, visit progrowtech.com.
If increased consumer spending is any indication, April 20 has solidified itself as the ultimate cannabis holiday.
Average dispensary sales around last year’s high holiday experienced a 51% increase, beating 2017’s numbers by an impressive 30%. With more U.S. states having legalized cannabis since 2018, April 20 falling on a Saturday, and this year being Canada’s first as a legal nation, 420 is set to break even more records in 2019.
It’s not enough for cannabis retail owners to simply open the doors April 20 and wait for products to fly off the shelves. Everything from marketing and merchandising strategy, to ensuring your staff and operations are prepped, factor into how well your dispensary will perform. For cannabis retail owners wondering how to prepare for 420, Cova’s latest white-paper details 5 key ways to make April 20 your best business day all year:
Marketing Must-Haves: Customers expect dispensaries to offer deals and specials in celebration of the 420 holiday, but creative marketing is what helps bring the heat. For retail owners wondering how to boost sales on 420, learn how creative marketing initiatives can build early buzz, engage your customers, and take your sales from uptick to off-the-charts.
Prep Your Tech, Systems, and Processes: Is your POS ready for larger than usual weekend foot traffic? Find out which critical features your POS software should have to reliably and compliantly handle increased transactions, and how optimizing technology and store flow can help improve the customer shopping experience overall.
Square Away Inventory, Promotions, and Merchandising: On 420, dispensary owners have the opportunity to create an experience that’ll keep their customers coming back all year long. Discover how making key merchandising decisions on the sales floor and in the stockroom, and offering unique cannabis retail holiday promotions will make your 420 event unforgettable while also helping you move through inventory.
Empower Your Staff: Your dispensary team is invaluable, but especially so over the busy 420 weekend. Learn how communication, training, and the right technology can empower your employees, help them feel prepared, and set them up for success.
Review, Analyze, and Plan for Next Year: It’s never too early to start planning for next year. Discover why you shouldn’t procrastinate when it comes to reviewing and analyzing the 420 experience with your staff, how to make the conversation productive, and how to turn your findings into action items for next year’s 420.
Gary leads Cova’s charge into the legal cannabis space by guiding the vision, strategic development, ‘go to market’ plans and culture.
Before joining Cova, Gary was a principal in over a dozen tech start-ups in the mobile communications industry ranging from small VC funded companies to Fortune 100 firms, including Onavo, which was later acquired by Facebook. In those companies he led sales, marketing, business analytics and market expansions. He has also held a multitude of leadership roles with Verizon and AT&T.
Gary holds a degree in finance with a master’s in marketing from the University of Colorado.
Member Blog: Cannabis Industry Banking Predictions In The U.S.
There is little doubt that lack of access to banking is one of the most immense challenges facing cannabis retailers. Legally-operating cannabis businesses are at a significant disadvantage, as well as the communities they operate in. Luckily, there are positive signs that a new day is quickly approaching and cannabis banking laws in the United States are about to go through a major change.
What’s Going on with Cannabis Banking Laws?
Recently and for the first time, the U.S. Congress held hearings on the all-cash nature of the cannabis business. The bill at the center of these monumental hearings: the Secure and Fair Enforcement (SAFE) Banking Act, originally introduced in 2006 and has been stuck in a holding pattern, as have similar bills, ever since.
The committee heard testimony from cannabis industry stakeholders, police departments, and banking executives. These witnesses painted a robust picture of the cannabis banking problem, from the danger it poses to communities in the form of increased risk of armed robbery, to the burden it places on legal dispensary owners who have to find alternative cash management solutions, to the lack of accountability cash creates from a tax perspective.
The bill has yet to come up for a vote. While there are elected officials who reject the concept outright, there is an ever growing coalition in both houses of Congress pushing for a cannabis industry banking solution. More than ever, it seems the U.S. could finally see a loosening on federal restrictions to banking legal cannabis business.
4 Reasons why the U.S. will Loosen Cannabis Banking Regulations Soon
There is more political will for the legal cannabis industry than ever before.
While one hearing is far from passing the law, it is a sign that times are changing. Ten states have legalized recreational cannabis and 33 more have some form of medical cannabis laws in place; this is a drastic increase in the last decade. Shockingly in a time of so much partisan rancor, 62% of Americans favor legalizing marijuana. That is more than double the approval rating cannabis enjoyed in 2000 (31%).
The cannabis banking law being discussed is relatively innocuous. It does not legalize or reclassify cannabis at all, just allows banks to offer services to state-legal cannabis businesses. All in all, considering the strong support across party lines and the success of state industries, passing this law would be an easy win for Democrats, Republicans, and President Trump in a time when political wins are a rarity.
Current banking solutions are prohibitively expensive and states want to see their prosperous legal cannabis industry grow.
Credit unions and banks that currently offer cannabis industry banking charge prohibitively expensive fees, up to $2,000 a month for a simple business checking account. This is a problem for state elected officials.
Recreational and medicinal cannabis states seem, generally speaking, to enjoy the tax revenue they receive from this robust and rapidly growing industry. It is in the best interest of the state for legal cannabis businesses to thrive. If cannabis business owners can’t afford the currently available banking services, it hinders their ability to build upon their business. Even worse, these prohibitive fees keep dispensaries operating on an all cash basis, creating a much higher risk of robbery and violence in the community.
California’s behemoth market is drastically tipping the scales.
It is hard to overstate just how massive California’s legal cannabis market is. Expected to rake in over $50 billion by 2026, the influence this one state industry has is profound and its cash management problem will significantly magnify the problem.
The industry will continue to grow and mature, pushing out the gray market over time. As more cash comes flowing into the legal cannabis industry, it will begin to strain the cash supply and law enforcement to such a degree that action, more than it already is, will be imperative.
Money talks; state and federal governments want their tax revenue.
More than anything else, what will ultimately carry a cannabis banking law across the finish line is money. Cash-only businesses are fertile for tax fraud, simply pocket a little cash here and there and then never report it to the IRS. If there is one thing that can motivate an otherwise slow-moving government, it is tax revenue being left on the table. Allowing cannabis industry banking is a clear way to increases transparency and ensure the state and federal government get their share of the profits.
Access to banking will allow the rapidly growing cannabis industry to advance even faster. Will you be ready? Subscribe to our blog to stay up to date on the latest cannabis news, industry trends, and best practices for running your cannabis dispensary!
Gary Cohen leads Cova’s charge into the legal cannabis space by guiding the vision, strategic development, ‘go to market’ plans and culture.
Before joining Cova, Gary was a principal in over a dozen tech start-ups in the mobile communications industry ranging from small VC funded companies to Fortune 100 firms, including Onavo, which was later acquired by Facebook. In those companies he led sales, marketing, business analytics and market expansions. He has also held a multitude of leadership roles with Verizon and AT&T.
Gary holds a degree in finance with a master’s in marketing from the University of Colorado.
Committee Blog: Streamlining Your Cannabis Packaging Process – Four Steps For Success
The beginning of a new year brings an opportunity to take stock of your cannabis business and ensure you’re doing everything possible to succeed. And because packaging is such a critical piece to brand wins and losses in this market, now is an ideal time to evaluate your process. It’s absolutely possible for your cannabis packaging to stand out while staying operationally efficient, it just takes careful planning. Get started with these four steps to streamlining your cannabis packaging process.
Step 1: Look for Flexibility
Rules and regulations for the cannabis and hemp industries are continually evolving. Streamlined cannabis packaging and labeling should accommodate data that changes regularly—as well as any required content that may be revised in the future. Always leave space on your package for legibly printed variable data (state-mandated warnings, potency, testing results, etc.). Utilizing secondary labels are often an unfortunate necessity of cannabis packaging. However, if these additional labels are composed creatively, they can actually serve a functional purpose and enhance the package design. A great example of this is a well-designed label that offers messaging while making the package tamper-evident. If possible, consider using an on-demand printing system on pre-printed label stock to minimize material cost and waste.
Step 2: Confirm Compliance
Now that you’ve dialed in your packaging options and are confident you can be agile with information, it’s time to ensure your product is compliant with state regulations. Brands with non-compliant packages can have their products pulled from store shelves or even face fines from state regulators. Re-printing labels or packaging can be very costly in print, labor and time.
Confirm that your package or label includes correct warnings, universal symbols, and produced with the correct material thickness and opaqueness if necessary. Edible products may need to include allergen information and other FDA requirements. Many states require tamper-evident or child-resistant packaging. Verify that your packaging container is compliant by requesting child-resistant certification from your supplier, or check to see if it is already on your state’s pre-approved packaging list.
It is highly recommended that brands don’t rely on their own interpretation of the laws. Consulting legal counsel is well worth the investment of confirming your packaging meets all the necessary requirements.
Step 3: Efficient & Effective from Sale to Shelf
Key to streamlining the packaging process is making sure your packaging is efficient and effective from the time you sell it, to the moment it’s merchandised on shelf. This relates to both the process of packaging your product and protecting your profits. Being efficient and effective with packaging will have a significant impact on your bottom line.
We suggest brands design their packaging to fit the size of the item. Oversized packaging costs more and can be misleading to the customer. In addition to selecting an appropriately sized package, brands need to accurately determine the labor cost associated with packaging options. Adding a sealed pouch for a pre roll takes labor hours. Consider the amount of time it takes to package a single product in comparison to the wholesale unit price. It’s easy to overdo packaging for a small profit margin. Make sure to test prototypes or samples with your production team or partners before you order a large quantity of packaging or labels. It’s essential to understand what the package will be subjected to once it leaves your facility. If at all possible, consult with existing distribution associates or wholesale customers for their input before investing in packaging. For example, your retail clients may prefer to display their products utilizing slat wall, which means that peg holes would be a valuable consideration to your package design.
Another consistent issue is knowing how dispensaries store your product in the back of house. If you have big mylar packaging for a small item, organizing those in bins, drawers or big safes becomes a mess down the line. Wholesale cannabis producers can also benefit from a primary panel label paired with a child-resistant container or mylar bag to streamline their distribution or sales process.
Step Four: Timing is Everything!
Advice we consistently offer brands? Understand your production timeline before you place any packaging order.Think about the implications of ordering stock or custom containers, and your shipping options. While custom containers and labels ensure differentiation in retail stores, they may take longer to produce than ordering off the shelf solutions. Processing art, approving proofs, production and shipping will all impact how fast your product can get to market. Packaging shortages in the cannabis industry are widespread so if you do decide to use stock containers such as glass jars or child-resistant tubes, make sure to place an order far in advance or well before you run out of packaging. Having a plan B can also be helpful. Ordering custom packaging may take longer, so stock items (like a label on a pouch or pop-top) can be used in the interim and may also be used for samples.
One Last Tip
It’s always smart to network with other brands that have similar packaging challenges to you. If they are willing to share them, lessons learned in the market are invaluable to brands making packaging decisions. Doing your fair share of market research by seeing what’s working in retail can also guide you in the right direction.
Have any tips yourself? We’d love to hear them in the comments!
Member Blog: Four Reasons ERP Helps Growing Cannabis Companies
Owners, presidents, and CEOs understand that you have to spend money to make money but it’s often difficult to justify investing in Enterprise Resource Planning (ERP) software when you could spend that money on new equipment or other tangible assets. Implementing the right ERP software can dramatically improve every aspect of your business from employee retention to customer satisfaction with consider cost savings and increased profits. Further, ERP software can significantly increase the value of your business for owners and investors. ERP helps executive leaders to understand what’s happening throughout the business with alerts, dashboards, and tools to make strategic decisions when necessary.
With dispensary ERP, companies serving the legal marijuana supply chain finally have the tools they need to drive innovation and gain insights for expanding their operations. ERP software automates many cannabis accounting functions related to technology, services, and human resources, all while allowing cannabis businesses to organize and manage real-time data from various solutions into a single view.
It’s easy to see why businesses operating in the cannabis industry would have intricate inventory management needs, but there’s another business side to cannabis which many might not consider. The cannabis industry has complex accounting requirements that go hand-in-hand with their inventory and other business processes.
With cloud accounting software built specifically for cannabis companies, organizations within the cannabis supply chain finally have the advanced technologies to support their unique operational and accounting needs. Today’s growing cannabusinesses need to adapt in a rapidly changing environment and when they’re successful, it gets noticed. This often results in company leadership seeking investor funding or entertaining mergers and acquisitions talks. When companies operating in this space attempt to position themselves for growth, they need field-tested cloud accounting software to prove it.
In this rapidly changing industry, here are a few ways an effective, flexible, and secure cannabis ERP solution will allow you to adapt, positioning your cannabusiness for growth:
Know Your Customers – Data and Predictive Analytics
Dispensary ERP solutions allow you to compile and understand data about your cannabusiness and the marijuana industry as a whole. With a better understanding of supply and demand pattern, dispensaries can make informed strategic decisions about products and operations.
By capturing relevant data about your cannabis operation, you answer many efficiency and profitability questions. What are customers most interested in? Which products are they buying and in what quantities. How much are they spending? Are there patterns in accompanying purchases or complementing products? These insights and more help your cannabusiness to create customer personas allowing you to better service your clientele.
280E Tax Woes – Accounting
A fully integrated, purpose-built cannabis accounting software package which offers financial reporting, meets GAAP and auditing board compliance standards also needs to be robust enough to handle other complexities within the industry. Does your off-the-shelf solution ensure compliance with section 280E of the IRS guidelines which prohibits a cannabis operation from deducting certain business expenses? If you’re not sure, the answer is probably not.
With modern cannabis solutions available, your operation can fully organize financials by department across multiple locations as well. Dispensary ERP gives you all the financial reporting tools you need for journal postings, purchase orders, invoices and cash management by recording all transactional data in detail, by location.
Staying In Compliance
Regulation and managing regulatory compliance continues to be top priority for growing cannabis companies. As legislation changes, cannabis operators need varying levels of up-to-date reporting capabilities surrounding seed-to-sale traceability, product recall capability, and proper labeling among many other considerations.
Built to exceed compliance standards, your dispensary ERP delivers individual and aggregated reports, unalterable custody tracking with time stamps to provide the real-time data needed for compliance initiatives – as well as for auditors, CPAs and others who will need access to the books.
If you have multiple locations, you will need to monitor, track and record data from each of your locations, jurisdictions, or intra-industry verticals (growers, processors and dispensaries). With one centralized database and integrated reporting, individual factions of your business are no longer operating as silos and staff have access the real-time access to accurate data for regulators.
Growing Your Business – Scalability
Consider growth plans as you look for technology solutions. If your plans include multiple locations or jurisdictions, you will need cannabis-specific software to manage the complexities that arise as a result. If you decide to diversify your product line by vertically integrating other seed-to-sale products, you will need industry-specific solutions to address the inventory, accounting and compliance ramifications not offered by out-of-the-box technology.
Growing cannabusinesses need to work efficiently with suppliers and growers, accurately forecasting demand and staying abreast of current regulations. As a result, your growing company needs solutions which are flexible and customizable with built-in cannabis-specific features.
Like any other business, growing a successful cannabis business requires technology tools to readily handle its industry’s trends and business process complexities. A flexible, powerful and scalable dispensary ERP will help you address those challenges while you continue to expand your operations.
Vice President of ERP Sales, Frank Nisemboum,is a trusted advisor at e2b teknologies who has guided organizations of all sizes enabling them to establish a technology presence and expand their business through technology. His proven ability to analyze the current and future plans of a company and work with team members to subsequently bring technology solutions to the organization result in improved processes and controls that assure continued growth and profitability. Frank has worked in the ERP and CRM software selection, sales and consulting industry for almost 25 years. His strong ability to understand, interpret and match the needs of an organization to the right ERP and/or CRM solution make him an asset to all of his clients.
At e2b teknologies, our passion for solving problems drives us to deliver innovative solutions for everyone we work with. Visit e2btek.com for more information.
Member Blog: Cannabis Edibles – Preparing for Government Regulations & Inspections
by Martha Ostergar, Content Marketing Manager of RizePoint
Advice from RizePoint, a leader in the quality assurance and regulatory compliance space for over 20 years.
As more states legalize medicinal and recreational marijuana, more companies are getting into the business of cannabis infused food products (CIFPs), more commonly known as edibles. These food products can take many different forms such as baked goods, sweets, oils, capsules, and tablets. As an alternative to smoking or vaping, cannabis-infused products are already on track to become a 5.3 billion-dollar industry over the next five years.
But if cannabusinesses want to get into the edibles production industry, their products need to comply with new cannabis-related city, state, and federal regulations, as well as established regulations for food and pharmaceutical products. The cannabis edibles industry is still in its infancy, and many states are still deciding how to best regulate these new products for public health and safety. This means navigating regulations can be tricky, but there are a few things to keep in mind to stay above board in this developing market.
Evolving Cannabis Edibles Regulations
Cannabis is considered a Schedule 1 controlled substance according to the U.S. Drug Enforcement Administration (DEA), and an “adulterated food product” under the U.S. Food and Drug Administration (FDA). However, the cannabis edibles industry as a whole lacks systematic federal oversight. At this stage, this means that states must decide on how to best regulate these products once voters and legislators have agreed to legalize recreational or medicinal marijuana in each respective state.
This lack of federal oversight can lead to a great deal of confusion in the industry. Nearly 100,000 packages of CIFPs have been recalled over the last few years due to inaccurate labeling, the use of banned pesticides, and other regulatory hiccups. In fact, a recent study of edible label accuracy revealed that 83% of CIFP labels differed from the actual contents of the product by over 10%, and only 17% were labeled correctly.
Key Regulatory Concerns
If cannabusiness owners want to avoid similar quality and compliance issues, they need to make sure they are following their state’s laws and regulations regarding CIFPs. That being said, some states have yet to decide how they will regulate this industry, which can leave businesses on unsure footing or without a viable quality management plan. However, the cannabis industry isn’t totally in the dark — they can look to other industries and resources to create quality-related processes that will help them protect their products, their customers, and their bottom line.
For example, cannabusinesses can look to the National Environmental Health Association (NEHA) for guidance. The NEHA has established a list of regulatory guidelines that states and other regulatory bodies can use as a reference point when drafting legislation.
Here are some examples of regulatory guidelines from NEHA’s list:
All ingredients used in CIFPs should be from FDA-approved sources, including suppliers that maintain good agricultural, manufacturing, and processing practices.
All CIFPs should be safe for public consumption and should not exceed the Code of Federal Regulations tolerance levels for controlled substances such as THC.
CIFPs should be handled in a manner similar to the methods used by the pharmaceutical industry, including accurate product labeling, product homogeneity, and accurate information regarding dose concentration per serving and as a total.
CIFPs should comply with the food laws laid out by the regulatory body, including portions, labeling, processing, and packaging.
CIFPs should not be made to appeal to children or those under the age of 21, such as using words like “candy” on product labels and in product advertising.
Additionally, looking to established federal and state regulations in the food and pharmaceutical industries can help businesses proactively understand and set important quality standards until cannabis regulations become more consistent and clear.
CIFP Quality Assurance Management
With these regulatory concerns in mind, cannabis companies can start adjusting their business operations. Proactively creating a quality management plan with high standards and consumer safety in mind is the most important step businesses can take to prepare for official regulations.
The next step is to focus on the supplier quality management process. Whether suppliers or vendors are supplying cannabis ingredients or raw agricultural ingredients, suppliers also need to meet outside regulations as well as internal brand standards that reflect a company’s specific business goals. An edibles business will need to make a plan that includes auditing suppliers at least once a year, collecting relevant and current certifications, and tracking supplier performance.
After that, quality assurance falls to the production process. As mentioned above, government regulations are only part of the quality management process. Each company will have different internal standards they wish to meet that reflect their goals as a brand, including how to produce each product consistently for a better customer experience. This process involves collecting data from yearly or quarterly audits and daily checks as well as taking corrective action when those audit questions or daily checks fail. Best practice includes reviewing and analyzing quality data to proactively understand and improve any failings in the process.
Tools for Cannabis Quality Management
That brief overview may sound like a lot, and frankly, it is. The good news is there are already tools and resources available to help the cannabis industry create and manage quality and compliance processes.
Technology is key. It’s tempting for new CIFP companies to manage everything with pen and paper and spreadsheets as a cost-saving measure. But if you look at the food industry (among many others), it becomes quickly apparent that tech and software are needed to keep up with ever-changing regulations and to properly scale a growing business. Quality management software (QMS) helps businesses gather data efficiently to create a single source of truth. But the right QMS can also help you easily analyze that data so you can spot trends, gain actionable insights, and proactively fix issues before they become bigger problems.
These types of software have helped many other industries with regulatory compliance as well as quality consistency and brand standards. However, not every QMS is created equal, so it’s important to take your time in finding a digital solution that is right for your compliance and quality needs as well as your budget.
Consultants can help. Several cannabis consultancies already exist to help new and seasoned business owners set up and maintain internal programs for regulatory compliance and quality management. Most consultancies will be able to assess and advise cannabusinesses in cultivation, manufacturing, or dispensary management, and some have resources to do all three.
Consultants are not there to set goals for you, but the right consultant can help you achieve your goals. Before contacting a consultant, it’s crucial to think about your specific needs based on your business goals so each party can manage expectations about responsibilities and deliverables. Choose a consultant that gives you a plan upfront that includes a clear timeline as well as the detailed steps you will each take in your partnership to achieve success. It’s also a good idea to be wary of consultants in any industry that ask for payment with equity.
Takeaways
No matter how much rules and regulations change, you can keep a competitive edge with little disruption to you business. If you model your quality management system on other regulated industries — such as food safety and pharmaceuticals — you’ll proactively create a robust, government-friendly plan. Additionally, when you have a comprehensive plan in place, it’s easier to pivot when there are changes, to train new employees to meet the required standards, and to scale your efforts as your business grows.
Martha Ostergar is the marketing content manager at RizePoint, a quality management software company that has helped top brands to digitally manage compliance, quality assurance, corporate social responsibility, and supplier quality management for over 20 years. VisitRizePoint.com for more information.
Member Blog: Top 3 Reasons Cannabis Angels, VCs, & PEs Use Data To Analyze Deals
For cannabis investors focused on private companies, larger deal flow means better investments
Vetting cannabis companies is complex, time-consuming, and expensive
Using a data-driven deal analyzer automates top-level due diligence, resulting in more deals processed, better fits, and overall higher returns
The emerging cannabis industry is in a state of rapid growth – over 30% compound annual growth rate (CAGR) for the next 5 years – and investors are starting to really pay attention. Angel investors, venture capitalists, and private equity groups are raising funds dedicated to cannabis and they’re starting to grow their portfolios.
To make smart investments, investors of all shapes and sizes need to review a large volume of deals to find the best picks that fit their investment strategy, often referred to as their investor or portfolio “thesis.” But wading through all those decks and conversations can be very difficult and draining.
Investors (and businesses) lose time, energy, and money qualifying and chasing poor fit deals
Cannabis investors spend tremendous amounts of time and energy talking to and qualifying potential deals, only to realize much too late in the process that this company is not a good fit. Although every conversation yields an opportunity to learn, some conversations are much more interesting and productive than others. In the worst case scenario, investors don’t realize the deal is a dud until after deploying capital, resulting in direct portfolio losses.
No one, neither investors nor businesses, wants to waste their precious resources on deals and discussions that will go nowhere. More importantly, these wasted resources result in overall market friction that reduces the rate and acceleration of industry growth as well as investor return on investment (ROI). Double whammy!
So any investor that can review more deals faster, and quickly isolate the most relevant opportunities to pursue further, has a considerable advantage in snapping up the best investments before others get a chance.
Maximizing cannabis investment ROI requires a data-driven deal flow
From our first-hand experience raising capital, as well as second-hand experience talking to investors, one of the biggest challenges is quickly and efficiently identifying a good match on industry vertical, business focus, traction, and values. Beyond these foundational considerations, the next round of challenges revolves around product-market fit, growth potential, and deal terms.
Simply put, there is a standard list of 15-20 questions that every investor should ask a prospective investment (and every company should ask a prospective investor). But these questions can drag on for multiple discovery conversations or documents, ultimately wasting time and energy on both sides.
Some investor platforms, such as Leafwire or Arcview, ask a small set of these questions to help grease the wheels. Cannabis Big Datauses a deal analyzer that algorithmically matches investors & potential deals based on self-reported preferences. Think of the tool like Match.com for investor deal flow with a compatibility score based on profile overlap.
Regardless of the platform or format, investors that have an automated, dynamic way to speed up their deal flow will be able to review more deals faster and find the best companies that fit their thesis. It also means investors have more time for due diligence on the highest value deals, ultimately resulting in higher portfolio returns from investing in stronger, more aligned companies.
For entrepreneurs, a standardized set of investor questions means more time and mental space to focus on developing their product or service and growing their customer base. For the industry, accelerating investment due diligence means less friction in the capital markets and happier humans doing more meaningful work with more time to care for themselves, their customers and their families.
Beyond the immediate and impactful value of a data-driven investor thesis to save time, energy, and money for both investors and businesses, there is also a longer term impact and benefit to cannabis capital bearers.
Over time, cannabis investors can run historical correlative analyses identifying the core considerations that are most likely to impact success and, most importantly, returns on investment. Said in the lexicon of a data nerd, this is a machine learning protocol and predictive model with historical data-driven deal assessments as a training dataset. In plain English, this is a computer algorithm that looks back in time, figures out what worked and what didn’t work, and applies those lessons learned to the matching score for future potential deals.
Overall, what’s true for companies is true for their investors: those most adept at activating their data will quickly dominate the market. So investors need to consider an automated deal analyzer to save time, energy, and money in the short-term while also get smarter picking the best bets that yield the highest returns in the long-term.
Henry Finkelstein, CEO & Founder of Cannabis Big Data, empowers colleagues and clients by spinning data into gold with intuitive, actionable insights. After working in e-commerce, consulting, healthcare and government contracting, Henry saw the opportunity to create a modern-day data toolkit for cannabis businesses that connects the data dots with one-click reports & dashboards that help companies earn more and stress less.
Henry’s person-centric approach to the power of data is summed up as “Let’s count what counts & celebrate our successes because the only relevant data is actionable data.”
Member Blog: 7 Steps To Opening A Cannabis Dispensary
As cannabis reform barrels ahead like a freight train, entrepreneurs everywhere are eyeing ways to get in on the green rush. And for those without the background or interest in cultivation or manufacturing, cannabis retail can be a very alluring — and lucrative — prospect.
Of course, that’s not to say there won’t be work involved. Just like any other business, opening a cannabis dispensary requires a lot of planning, paperwork, and, of course, capital. It also requires a lot of additional compliance hurdles not often encountered in other industries.
Today, we’re looking at the seven essential steps you’ll need to address as you seek to launch your own cannabis retail venture.
Seven Essential Steps to Opening a Cannabis Dispensary
Find a suitable location.
While it might seem counterintuitive to talk about location before licensing, the fact is that in most jurisdictions, you’ll be required to have a prospective retail location identified before you can even begin filling out the licensing paperwork.
Naturally, your dispensary location will have to align with all applicable regulations, including local zoning ordinances and state-level mandates. Researching your state’s guidelines shouldn’t be too difficult, as most maintain a checklist on their official government websites.
Obtain a cannabis retail license.
This step is easier said than done — but in the end, no license means no dispensary. Each state has their own cannabis retail licensing and application structure, so once you’ve locked down a potential location, you’ll want to begin researching the requirements and getting all the paperwork in order.
Obtaining a license may take up to a few months, so you’ll be able to work on the other components of your dispensary as you work through the licensing process. But you definitely want to know exactly what you’re up against as early as possible.
Estimate your costs.
The total cost of opening a cannabis dispensary varies greatly by state and local jurisdiction. Application and licensing fees alone can range between a couple thousand dollars up to $20k. Again, you’ll need to research your state and local permitting guides to find out exactly what you’re looking at in terms of licensing fees.
Other major cost considerations will include:
Physical location (real estate rental/purchase as well as renovation, furnishing, and finishing costs)
Professional fees (insurance, legal, financial, etc.)
Payroll
Capital investments (security/surveillance system, dispensary technology, etc.)
Write your business plan.
No serious investor is going to consider bankrolling your operation without seeing a solid cannabis retail business plan. Financiers want to know that you’ve covered all your bases, and your plan should address the following key areas:
Finances
Compliance
Dispensary staff
Sales and marketing
Logistics/operations
Security
Of course, detailed information about your planned location will need to be addressed as well.
Secure your capital.
As quickly as the industry is progressing, federal cannabis banking reform could be here sooner than later. But until then, cannabis-friendly financial services are still very hard to come by. That means your primary source of funding will likely be private investors, friends, family, or yourself. There are also some well-established cannabis-specific investment groups out there that are worth looking into.
Consider your dispensary technology needs.
As a cannabis dispensary owner, you’re going to need a technology solution that not only keeps up with the typical retail performance burdens but also satisfies your state’s compliance requirements — in other words, seed-to-sale reporting.
Compliance reporting (a platform that can tie in directly to the state’s system and automatically report all necessary data can save you untold time and labor costs)
Reliability
Ease of use
Determine your product sourcing procedures.
Finally, you’ll need to determine how you’ll source your products. This is another area that you’ll need to reference your particular state’s rules and regulations on; some states prohibit dispensaries from being involved in cultivation, and others highly encourage it. Either way, you’ll likely have to obtain a separate license if you want to get into cultivation.
Start by identifying and interviewing local cannabis producers. This is also a good opportunity to determine the types of products you’ll want to offer and ways you can incorporate them into your marketing.
Want to Learn More about Opening Your Dispensary?
Get a more in-depth look at everything involved with launching your own cannabis dispensary by downloading our How To Open A Cannabis Dispensary e-book — it’s absolutely free.
Gary leads Cova’s charge into the legal cannabis space by guiding the vision, strategic development, ‘go to market’ plans and culture.
Before joining Cova, Gary was a principal in over a dozen tech start-ups in the mobile communications industry ranging from small VC funded companies to Fortune 100 firms, including Onavo, which was later acquired by Facebook. In those companies he led sales, marketing, business analytics and market expansions. He has also held a multitude of leadership roles with Verizon and AT&T.
Gary holds a degree in finance with a master’s in marketing from the University of Colorado.
Member Blog: The Explosive Growth of California Cannabis Licenses and What Comes Next
We’re more than one year into California’s legal cannabis industry and license growth continued on a fast-rising upward trajectory through the end of 2018. In fact, between November 1, 2018 and December 31, 2018, California issued a total of 6,855 new cannabis licenses according to the Cannabiz Media License Database as people worked extended hours to process the remaining temporary license applications.
To put that number into perspective, California had 4,085 active licenses as of October 31, 2018. During the next 61 days, the state more than doubled that number to 10,940 active licenses on December 31st. You can see the data visually in the chart below.
Majority of Licenses Granted Went to Cultivators
Of the 6,855 licenses granted in California during November and December 2018, 65% were issued to cultivators by the California Department of Agriculture.
Distributor licenses accounted for 14% of the licenses granted during that two month period, followed by manufacturer licenses at 12%, retailers/dispensaries at 3%, microbusinesses at 3%, delivery businesses at 3%, and testing labs at less than 1%.
Cultivators Continue Stacking Licenses
During the final two months of 2018, 45 license holders gained double digit licenses, which accounted for 24% (1,665) of the 6,855 new licenses issued. One reason for this is because cultivator licenses are skyrocketing as more growers secure multiple small licenses to create large cultivation facilities.
Between November and December 2018, five companies received 729 cultivator licenses, which equates to more than 16% of cultivator licenses granted during that time and nearly 11% of all licenses awarded during that time.
Those five companies are Coyote Hills Agricultural Enterprises (210 new licenses), White Light Farms (173 new licenses), BDZ, Inc. (134 new licenses), Iron Angel II, LLC (133 new licenses), and Busy Bee’s Organics (79 new licenses).
Distributor Licenses Saw the Most Growth in Late 2018
While new cultivator licenses grew by the largest quantity during November and December 2018, new distributor licenses saw the largest growth jump over the previous 10 months of the year.
The number of new distributor licenses issued in December and November 2018 was nearly double the amount granted in the previous 10 months. Manufacturer licenses issued increased by 188%, cultivator licenses by 178%, testing licenses by 68%, and retailer/dispensary licenses by 58%.
What’s Next for California’s Cannabis License Holders?
California has stopped issuing temporary cannabis licenses, and throughout 2019, many of the temporary licenses awarded during 2018 will expire. Each of these temporary licenses will need to become provisional and/or annual licenses in order for the license holders to stay active in California’s cannabis industry.
A few months in 2019 stand out as ones to watch because a large number of temporary licenses will expire. In March, 1,559 licenses will expire. In April, the number of expiring licenses jumps to 4,731, and in July, another 2,453 temporary licenses will expire. During other nine months of 2019, the number of licenses that will expire ranges from three licenses in October to 682 licenses in May.
Clearly, the story of cannabis licensing in California is far from over, and the Cannabiz Media team will be watching closely and tracking all of it in the Cannabiz Media License Database. Follow the link to see more data and insights related to license growth in California during the last two months of 2018.
Ed Keating is a co-founder of Cannabiz Media and oversees our data research and government relations efforts. He has spent his whole career working with and advising information companies in the compliance space. Ed has overseen complex multijurisdictional product lines in the securities, corporate, UCC, safety, environmental and human resource markets and focuses on workflow products. Ed has spent the last twenty five years in the information industry. During that time he has worked for both startup and established information companies where he has led marketing, product management and sales organizations. These companies include Wolters Kluwer/Commerce Clearing House, CT Corporation, EDGAR Online and Business & Legal Reports. At Cannabiz Media Ed enjoys the challenge of working with regulators across the country as he and his team gather corporate, financial, and license information to track the people, products and businesses in the cannabis economy. Ed graduated from Hamilton College and received his MBA from the Kellogg School at Northwestern University. He has been active with the Software & Information Industry Association for his whole career and managed the Content Division for six years. He’s was recently a Trustee at the Country School in Madison CT and a Little League Coach for seven years.
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Jessica Billingsley is a technology pioneer, solutions creator and industry leader, providing proven compliance software solutions to the cannabis market. She is the Chief Executive Officer of Akerna—the first cannabis compliance technology company to be traded on Nasdaq—making her the first CEO from this market space to bring a company to a major U.S. exchange. Jessica is also the CEO of Akerna’s flagship subsidiary—MJ Freeway. She established MJ Freeway in 2010 and it is the leading seed-to-sale regulatory compliance technology provider and developer of the cannabis industry’s first enterprise resource planning (ERP) platform. Akerna also offers Leaf Data Systems as a government resource for public sector compliance. Combined entities tracked more than $16 billion in world-wide, client cannabis sales to date. She is the first woman ever from the cannabis industry to receive the prestigious Fortune’s “Most Promising Women Entrepreneur Award” and is also recognized as one of Inc.’s “Female Founders 100.” Jessica received a degree in Communications and Computer Science from the University of Georgia and lives with her daughter in Denver.
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Martha Ostergar is the marketing content manager at RizePoint, a quality management software company that has helped top brands to digitally manage compliance, quality assurance, corporate social responsibility, and supplier quality management for over 20 years. Visit
Henry Finkelstein
