Register today! NCIA’s Cannabis Industry Lobby Days – May 16-17, 2017
Eager to get more involved in cannabis politics and make your voice heard? Wondering how you can help secure the future of our industry in a time of uncertainty? Good news! NCIA’s annual Cannabis Industry Lobby Days in Washington, D.C. are coming in May.
It’s one of the most important ways you can stand up for cannabis reform and your business, and we don’t want you to miss it.
So CLICK HERE TO REGISTER TODAY and join us on May 16 and 17 for NCIA’s 2017 Cannabis Industry Lobby Days. NCIA’s Lobby Days provide the best opportunity to show our nation’s decision-makers what a responsible and legitimate cannabis industry looks like.
NCIA’s 2016 Cannabis Industry Lobby Days. Photo: Kim Sidwell, Cannabis Camera
NCIA members from across the country descend on Capitol Hill to tell their stories and urge their representatives to fix the unfair tax and banking policies crippling our industry.
With victories in eight states across the country during the 2016 presidential election, as well as the challenges ahead of us as we see a new administration come in to the White House, fixing federal policies is more critical than ever. Our team in Washington, D.C., works every day to make the industry’s voice heard, but nothing matches the power of a personal story personally told.
We’re excited that this year’s Lobby Days are being held in conjunction with the Spring 2017 Marijuana Business Conference & Expo, May 17-19 in Washington, D.C. MJBizCon is generously extending a $100 discount on full conference registration for Lobby Days attendees so be sure to register for Lobby Days and we’ll send the discount code in your confirmation e-mail.
We look forward to seeing you in D.C.!
Thank you to the co-chairs of NCIA’s Policy Council for their premier sponsorship of our 2017 Cannabis Industry Lobby Days:
Are you interested in sponsorship opportunities for your company at NCIA’s most important policy event of the year? Contact us at sponsorship@thecannabisindustry.org to find out more!
Member Post: Raising Money 101 – Introduction to U.S. Public Cannabis Stocks
Most readers are familiar with the two major U.S. stock exchanges – the New York Stock Exchange (NYSE) and NASDAQ. But in the world of cannabis, almost all publicly traded companies are not listed on a stock exchange. Instead they trade over-the-counter (OTC). In fact, as of the date of publication, only a handful of cannabis companies (or at least cannabis-touching companies, as for most of these companies, cannabis is only a small part of their overall business) are traded on a U.S. stock exchange. There are publicly traded cannabis companies outside of the U.S., but those are beyond the scope of this article.
These companies primarily trade on NASDAQ: GW Pharmaceuticals (GWPH), a UK-based pharmaceutical company best known for its drug Sativex, a cannabinoid-based treatment for multiple sclerosis spasticity; Insys Therapeutics (INSY), an Arizona-based pharmaceutical company that has a number of cannabinoid-based drugs in development; Cara Therapeutics (CARA), a Connecticut-based pharmaceutical company that has a cannabinoid product in preclinical development; Zynerba Pharmaceuticals (ZYNE), a Pennsylvania-based pharmaceutical company that has synthetic cannabinoids for transdermal delivery under development; and Arena Pharmaceuticals (ARNA), a California-based pharmaceutical company that has a pain relief cannabinoid drug in development. There is also a largely non-cannabis company, 22nd Century Group, Inc. (XXII), with a cannabis-focused subsidiary called Botanical Genetics, LLC, that trades on NYSE MKT, the NYSE’s emerging company marketplace for smaller-cap companies. NYSE MKT has lower listing requirements than the NYSE.
MassRoots (MSRT), a Denver-based social networking company for cannabis users, made headlines when it was denied approval to be listed on NASDAQ. According to MassRoots, the stock exchange justified the decision by claiming that the company was aiding and abetting the distribution of an illegal substance. Some speculate, however, that the decision considered the company’s low share price, although MassRoots stated it did meet the listing requirements with a market capitalization in excess of $40 million and more than 300 shareholders. NASDAQ did not publicly provide the grounds for its rejection.
As of the date of publication, the New York Stock Exchange has approved the listing of Innovative Industrial Properties, Inc. (IIPR), a newly-formed real estate investment trust focusing on the cannabis industry, though the SEC has not yet approved the offering prospectus of the company and no shares of Innovative Industrial Properties currently trade publicly. This seems to indicate that NASDAQ’s rejection of MassRoots may not have been entirely based on its alleged aiding and abetting.
The language of publicly traded cannabis companies
If these companies aren’t on stock exchanges but still trade publicly, where and how do they trade? It’s best to start with an introduction to the vocabulary of publicly traded cannabis companies. Here are several terms you will see discussed frequently in this area:
OTC: An acronym for “over-the-counter” and refers to securities (both debt and equity) that are traded in a context other than a formal exchange. It may refer to stocks, debt securities, or other financial instruments such as derivatives. In general, the reason why a stock is traded over-the-counter as opposed to on a stock exchange is because the company is too small to meet exchange requirements. The overwhelming majority of publicly traded cannabis companies trade OTC.
Pink Sheets: The National Quotation Bureau (now the OTC Markets Group) formerly published price quotations for stocks on pink-colored paper called the Pink Sheets. The National Quotation Bureau renamed itself Pink Sheets LLC in 2000 and subsequently Pink OTC Markets in 2008. In 2010, the name was again changed to its current one, OTC Markets Group. Because of this historical background, people will often refer to OTC stocks generally as trading on the Pink Sheets. Another synonym is Penny Stocks, based on the low price of some OTC stocks. There remains an official reference to the color pink – the OTC Pink® Open Market.
SEC: Shorthand for the Securities Enforcement Commission, a government commission created by Congress to regulate the securities markets and protect investors. Any public offering of stock is subject to review by the SEC.
Stock Exchange: A marketplace (which could be a physical location or an electronic platform) in which securities are traded. The core function of a stock exchange is to ensure fair and orderly trading, as well as efficient dissemination of price information for any securities trading on that exchange. Exchanges give companies, governments, and other groups a platform to sell securities to the investing public. Each stock exchange will have certain listing requirements – such as regular financial reports and audited earnings reports. The New York Stock Exchange (NYSE) is an example of a stock exchange.
OTC Markets Group (formerly known as the National Quotation Bureau, Pink Sheets LLC, and Pink OTC Markets): Operates an electronic quotation system called OTC Link that displays pricing for many over-the-counter securities not listed on a national stock exchange. All transactions are carried out between dealers. The companies listed on the OTC Market are broken into three tiers based on the quality and quantity of information the companies have made available. These tiers, starting with the designation for the most established companies, are as follows: OTCQX® The Best Market, OTCQB® The Venture Market, and OTC Pink® The Open Market.
OTC Bulletin Board or OTCBB: A system run by FINRA (Financial Industry Regulatory Authority). Broker-dealers who subscribe to the non-electronic system can buy and sell OTC stocks. Companies on the OTCBB must make all required SEC filings, but there are no other size or corporate governance requirements. Most OTCBB companies are quoted on both the OTCBB and one of the OTC Markets Group marketplaces.
Gray Market: Refers to securities that are not listed on any stock exchange or on the OTCQX, OTCQB or OTC Pink marketplaces. There is likely little investor interest in or information available about such securities.
Liquidity: Refers to how easy it is to buy or sell a security. This is a function both of the market for the security and of the legal restrictions on resale.
Bid-Ask Spread: The difference between the highest price that a buyer is willing to pay for a share of stock or another asset (the highest bid price) and the lowest price that a seller is willing to accept to sell it (the lowest ask price).
Broker-Dealer: An individual or firm who is engaged in the business of buying and selling securities. When the individual or firm is executing orders on behalf of clients (i.e., acting as an agent), it is acting as a broker. And when the person or firm is acting as a principal (i.e., trading for its own account) it is acting as a dealer.
Reverse Merger: In the OTC context, this refers to a transaction whereby the stockholders of a private company acquire the majority of the shares of a public shell company, which is then merged into the purchasing entity. As a result of the merger, the private company exchanges shares with the public entity, making the purchaser a public company. Reverse mergers allow the private company to become public without raising capital, as opposed to a traditional initial public offering (or IPO) which combines going public via an S-1 and undertaking fundraising. A reverse merger is also quicker than a full-blown IPO or an S-1 filing. The full legal ramifications of a reverse merger versus an IPO or direct S-1 filing are beyond the scope of this article.
S-1: The traditional method for taking a company public is by filing an S-1, which is an offering prospectus for the shares to be listed publicly. This can be accomplished as part of an IPO, which also involves a fundraising process typically run by an investment bank, or it can be done by a company directly without the involvement of a bank. A company wishing to become publicly traded will file an S-1 with the SEC. Once filed, the company and the SEC will then go through a process of comments and revisions. When the SEC is satisfied with the revised S-1, it will declare the offering prospectus effective and the company can sell shares to the public.
Why cannabis companies trade OTC
Why would a company want to trade OTC? The simple fact is that it’s very difficult to trade on the NYSE or NASDAQ. In addition to limitations that apply specifically to cannabis companies, as may have been the case with MassRoots, though not with Innovative Industrial Properties, both NASDAQ and NYSE have high financial standards that most cannabis companies are too small or too unprofitable to meet. It’s also not free to list on these exchanges; while both exchanges have multiple revenue streams, one way they make money is by charging fees to the listed companies. There are other, smaller stock exchanges (note that NASDAQ, for example, has three different tiers domestically: The Nasdaq Global Select Market®, The Nasdaq Global Market®, and The Nasdaq Capital Market®, with different standards for each tier, and has other international markets beyond the scope of this article), but each will have requirements that companies need to meet to be listed. That leaves the OTC markets as the main alternative to a company that wants to be publicly listed, but has not yet achieved the size necessary to be listed on a stock exchange.
But why would a company want to be publicly listed in the first place? There are several reasons, most of which only apply to a company that is listed on a major stock exchange (e.g., the prestige of being a public company or additional liquidity), but the primary reason offered for becoming an OTC-traded company is that it allows the company a way to increase the amount of capital it can raise and offers existing equity-holders greater liquidity. With limited exceptions, a private company can only freely sell its securities to accredited investors (i.e., institutions or people who meet certain income or asset thresholds). And, prior to the JOBS Act, private companies were prevented from any kind of widespread public advertising (which they can now engage in, but only if they take steps to ensure only accredited investors purchase the equity for sale). A publicly registered company, in contrast, is largely free to offer and sell its stock to all interested parties, regardless of whether they are accredited. It is also far less restricted in its ability to advertise the fact that its stock is for sale.
Buying publicly traded stock is also far easier – investors don’t need to know anyone at the company in question. If a potential investor has access to a computer or phone, buying OTC stock is straightforward. In theory, this opens a far larger marketplace for a company’s stock, providing liquidity and allowing it to sell additional equity to finance growth and operations.
The risks of OTC cannabis stocks
There are other, less honorable reasons why a company might want to trade OTC. When a public stock is widely traded, it’s difficult to influence the price of the stock. Imagine trying to materially change the price of Google’s stock – it would require a vast sum of money. But when a company’s stock is infrequently traded and information about that stock is limited, it’s much easier for an individual or group to influence a stock’s price. And information does tend to be quite limited when it comes to OTC stocks. In contrast to stocks listed on the major exchanges, not all stocks that trade on the OTC Link are required to be registered with the SEC. As a result, the overall level of information available for OTC stocks is both less detailed and less up-to-date than that of stocks traded on the NYSE or NASDAQ. It is also not uncommon for an OTC stock to be deficient in providing the limited information that is required.
Several government agencies have sought to warn the public about the risks inherent in cannabis OTC stocks. On May 16, 2014, the SEC’s Office of Investor Education and Advocacy published a press release that specifically warned investors about the risks of cannabis-related stocks. The SEC highlighted the fact that five cannabis OTC stocks had recently been suspended from trading due to concerns about the accuracy of publicly available information about their operations. Two of these companies were also implicated in potentially illegal activity involving the sale of securities and market manipulation. And on November 12, 2015, the Colorado Division of Securities issued a warning to investors to be cautious when considering investments in marijuana-related companies, binary options, and digital currency. The Colorado Division of Securities noted that marijuana-related investments “could be particularly susceptible to scams, such as ‘pump-and-dump.’” A “pump-and-dump” scheme is an illegal scam where people holding equity in a company convince the market that the shares are worth far more than they are by spreading false or misleading information, a process made easier by the thinly traded nature of OTC stocks and the lack of good information about them. Before the public catches on, they sell all or a portion of their shares for a significant profit.
With some exceptions, most cannabis OTC stocks have minimal analyst coverage, if any coverage at all. Most major companies that are publicly traded, in contrast, are studied regularly by analysts, who frequently publish reports about the status and direction of the companies they cover. Academic literature has shown that analyst coverage can decrease informational gaps between investors and management of companies. But if no one is covering an OTC stock, then shareholders must either study the company themselves or risk being left in the dark about the condition of the company. In addition, many institutional investors do not invest in OTC stocks, so the investor base of an OTC company will have far fewer, if any, institutional investors, and more retail (i.e., ordinary individual) investors. This means that holders of OTC stocks, absent the benefits of analyst coverage, cannot count on their fellow shareholders to be sophisticated or committed to monitoring the company either. OTC investors must often do their own due diligence on the companies in question.
Finally, it is important to understand the liquidity issues of OTC stocks. To return to the example of Google mentioned earlier, it is very easy to dispose of Google stock (or to be more accurate, Alphabet Inc. Class A stock) since there is a very active trading market for those securities. It would not be difficult to sell all the Google stock you hold at, or very close to, the current publicly listed price – unless the stock was currently reacting to major news or you were trying to sell a material number of shares. For an OTC stock, however, an investor should not take any of these advantages for granted. OTC stocks typically have significant bid-ask spreads since they are typically far less liquid than stocks traded on public exchanges – meaning that they are not as actively traded. That means in the event you decide to sell your stock there may not be a buyer readily available. And even if you could find a buyer for your stock, there is also the risk that your sale of stock could impact the quoted price, forcing you to sell at a lower price. This is why, unless there is an active market for an OTC stock, the quoted price may not be the price at which you can liquidate your position.
This is not to suggest that all OTC stocks are scams or even poor investments. But investors need to be particularly careful when evaluating these types of stocks and should be aware that not all publicly traded stocks are the same.
Key takeaways
In short, when it comes to OTC stocks:
A publicly traded stock by any other name: Any investment in an OTC stock is inherently riskier than an investment in a blue-chip stock trading on a public stock exchange. If you want to sell an OTC stock, it may not be possible to find a buyer. And OTC stocks can be subject to high volatility and at greater risk of fraud. This doesn’t mean that buying stock in a cannabis company trading OTC is necessarily a bad idea. But these kinds of investments demand an understanding of the risks involved.
OTC company beware: Any company considering listing as an OTC stock, whether by way of a reverse merger or otherwise, should carefully evaluate the costs and benefits of being publicly registered. Consider drawing on the private equity markets instead of the public markets. Please bear in mind that as a cannabis company, you will likely face heighten scrutiny by the SEC.
Know your terms: Not all OTC stocks are alike. The OTC Link has three marketplaces which are tiered based on the quantity and quality of information provided by the companies:
OTCQX® The Best Market: This is the marketplace with the most stringent requirements. To qualify, companies must meet financial standards, demonstrate compliance with US securities laws, be current in their disclosure, and be sponsored by a third-party professional advisor.
OTCQB® The Venture Market: Entrepreneurial and development-stage companies that are unable to qualify for OTCQX trade on this marketplace. Companies must undergo an annual verification and management certification process and be current in their reporting to be eligible.
OTC Pink® The Open Market: Defaulting or distressed companies trade on this marketplace, although some companies trade on The Open Market by design. Companies are further sub-categorized into one of three tiers by the level of information they provide: Current Information, Limited Information, and No Information.
Other Designations: Caveat Emptor: A concern exists about the stock, company, or person(s) controlling the company. The quotes will be blocked on OTCBB while a stock is labeled Caveat Emptor. OTC, Other OTC or Grey Market: Securities not traded on the three OTC Link exchanges. Public quotes are not provided by Broker-Dealers.
This information is educational only and shall not be construed as legal advice. Please consult your attorney prior to relying on any information in this article.
Charlie Alovisetti, Vicente Sederberg LLC
Charles Alovisetti is a senior associate and co-chair of the corporate department at Vicente Sederberg LLC. Prior to joining Vicente Sederberg, Mr. Alovisetti worked as an associate in the New York offices of Latham & Watkins and Goodwin where his practice focused on representing private equity sponsors and their portfolio companies, as well as public companies, in a range of corporate transactions, including mergers, stock and asset acquisitions and divestitures, growth equity investments, venture capital investments, and debt financings. In addition, Mr. Alovisetti has experience counseling portfolio and emerging growth companies with respect to general corporate and commercial matters and all aspects of compensation arrangements, including executive employment and consulting agreements, stock option plans, restricted stock plans, bonus plans, and other management incentive arrangements. Mr. Alovisetti has experience in both U.S. and cross-border transactions, and has advised clients across a range of industries including cannabis, technology, manufacturing, software, digital media, energy and clean tech, healthcare, and biotech. He holds a Bachelor of Arts, with honors, from McGill University and a law degree from Columbia Law School, where he was a Harlan Fiske Stone Scholar. Mr. Alovisetti is admitted to practice in both Colorado and New York and is a Level One Interprener.
Guest Post: Top 5 HR Mistakes that Cannabis Companies Make
It’s no secret that employment demands for the legal cannabis industry have soared in recent years. According to Marijuana Business Daily’s 2016 Marijuana Business Factbook, cannabis-related companies in the U.S. are now employing between 100,000 and 150,000 workers.
That data, if correct, means that legal marijuana companies in the United States are currently employing around the same number of people as there are librarians, web developers, data administrators, or flight attendants.
But the dramatic need to fill cannabis-related positions has also created some major issues for legal cannabis companies when it comes to their hiring practices. A lot of these mistakes can be found in any start-up company – but given the “Wild West” nature of the legal marijuana industry and its outlaw roots, there are also some unique HR issues.
We’ve boiled these issues down into a list: The Top 5 HR Mistakes that Cannabis Companies Make.
Poor Job Descriptions by Employers
As mentioned, many of the people now running cannabis companies don’t come from a traditional corporate background, so they’re not aware of how important a thorough and detailed job description can be.
A lot of these employers are also stuck in a start-up mentality, and haven’t yet made the mental leap when it comes to thinking long-term about who their employees are. And while these bosses are very knowledgeable by necessity when it comes to cannabis compliance and regulations, they’re still not used to explaining their company vision and mission to potential hires.
Verifying Employee Eligibility Federal law requires that every employer recruiting an individual for employment in the U.S. must have those employees complete an I-9 Employment Eligibility Verification form. The I-9 form helps companies ensure their employees’ identity and their authorization to work in the country.
But while cannabis companies are focused on legal marijuana compliance and regulations issues, this crucial piece of the employment puzzle often falls by the wayside – and that can be disastrous.
Most cannabis companies don’t realize that a missing or improperly filled-out I-9 form can lead to potentially ruinous government penalties if your business comes under a federal audit. We recently saved one of our clients close to $100,000 in fines by doing our own, internal audit of their paperwork and correcting their I-9s.
Fair Labor Standards Act (FLSA) Classifications
The FLSA are the minimum wage, overtime pay, record-keeping and youth employment standards established for employees in both the private and government sectors.
In most mainstream companies FLSA classifications help to establish which jobs should be considered exempt or non-exempt, or whether some positions are eligible for overtime.
These classifications are another important but overlooked issue for cannabis businesses. Part of the problem is because some of the jobs in the legal cannabis sector are still new and employers remain ignorant or uncertain as to how they should be classified.
For example, should the growers who daily tend the cannabis plants be considered exempt, or should that classification be reserved only for the geneticists who develop a company’s unique strains? And who gets overtime?
High Turnover
Part of this issue comes back to the dilemma of poor job descriptions. Employers in the legal cannabis sector might begin by hiring friends they can trust, but soon discover those friends don’t have the skills or commitment needed to stay with their jobs.
As a new industry, cannabis also attracts a lot of millennials – young workers for whom this might be their first “real” job, and who statistically are notorious job-hoppers. Once the novelty of working with marijuana wears off, and if they don’t feel invested in their work and their company, they often get bored and move on – taking their newly acquired skills with them.
Another important issue: hiring people who are comfortable with the rough-and-tumble cannabis culture. Most legal cannabis companies don’t want to have a rigid work environment, but they need to be concerned about potentially litigious issues that could lead to claims of harassment.
Recruiting
As these companies struggle to find the right employees, they’re often not thinking of the best methods to attract and engage potential workers, especially for the long haul. Most cannabis business employers aren’t aware they can offer their employees things like health benefits, direct deposit, and other perks that works at mainstream companies take for granted.
Admittedly the legal cannabis industry faces some very unique challenges as it grows and develops. When you’re working with an all-cash business model, it’s hard to get into the habit of keeping good records and an accurate paper trail. And the current federal prohibitions can put any legal cannabis industry high on the government’s radar when it comes to scrutiny for any possible regulatory slip-ups.
All these issues underscore why it’s very important that legal marijuana companies realize the importance of outsourcing or hiring in-house HR professionals – the people who can ensure their operations run smoothly and remain complaint across a wide variety of everyday workplace issues.
Caela Bintner, Faces Human Capital Management
Caela Bintner is Co-Founder and Managing Director of Faces Human Capital Management, based in Denver, Colorado. With over 25 years of sales, Caela has acquired a unique skill set including public relations and marketing experience.
She started her first public relations company in 1996 after she worked for The Bush Administration. She is also a member of Women Grow, the organization created to help women leverage their influence and succeed in the legal cannabis industry.
Over 2,100 businesses, organizations, election officials, schools and civic groups are joining together to celebrate National Voter Registration Day across America, and the GREEN TEAM is excited to be an official 2016 partner for the event. In part, the GREEN TEAM is asking all sponsor businesses and volunteers to participate by signing up as a participating voter registration location or as an individual volunteer. Over 600 voter registration events will be hosted nationwide as part of this year’s National Voter Registration Day, and we would like to increase that number significantly by signing up additional cannabis dispensaries.
The GREEN TEAM and New Era Colorado will provide the volunteers and materials needed for the voter registration drive. This nonpartisan event is an easy way for your business to support civic engagement. Simply sign up your business’s location, and let us know which dates/times work for you, and we will take it from there!
CLICK HERE to sign up as a participating voter registration location!
Participating Locations Details:
The GREEN TEAM and New Era Colorado are searching for more locations for the 2016 voter registration drive volunteers. We are not asking your staff to take on any of the responsibilities, as we will supply the volunteers and materials needed as long you can provide us with access to your waiting room or front doorway area. The form above allows you to select the dates and times that work best for your business.
Our volunteers will hit the streets beginning Tuesday, September 27th, to register new voters, help current voters update their addresses, and provide information about mail-in ballot deadlines and polling locations.
(Volunteer training is provided)
We are beginning the voter registration drive on National Voter Registration Day, Tuesday, September 27th, and continuing the drive until Tuesday, October 11th.
National Voter Registration Day Details:
The day was founded in 2012 in response to over six million Americans reporting that they didn’t vote as a result of missing the registration deadline or not knowing how to register. On August 6, 2016, President Obama announced the White House’s official support of NVRD during a speech marking the 50th Anniversary of the Voting Rights Act, joining with state election officials of the nonpartisan National Association of Secretaries of State (NASS) that has been championing the holiday since 2012.
NVRD is led by a diverse, non-partisan group including the Bipartisan Policy Center, League of Women Voters, Bus Federation, Rock the Vote, Vote Latino, Asian Pacific American Labor Alliance (APALA), Fair Elections Legal Network, Nonprofit VOTE, and National Association of Secretaries of State represented by Secretary of State John Merrill (R- AL) and Secretary of State Steve Simon (D -MN). Also lending their support of the day include iHeartRadio, Tumblr, Univision Contigo, Pandora, Americans for Tax Reform, Headcount, and The Skimm. The National Voter Registration Day is a nonpartisan event.
Since 2013, I have provided professional commercial real estate and business brokerage services to the licensed cannabis industry. Over the years, I have had the pleasure of working with some of the most outstanding cannabis business owners on dozens of projects throughout the United States. However, despite one’s cannabis business experience, acumen, and industry understanding, real estate issues come up that can make or break your business. Whether you’re a business owner, real estate investor, or other cannabis business that is real estate reliant, considering these simple dynamics should save you money, time, and effort.
Municipalities
Selecting the right municipality is of utmost importance and the first factor to consider. Does the municipality you are considering allow cannabis business and issue licenses? If not, what is the prospect of them changing their position in the future? What is the cultural and political climate? If the political and/or social climate are closed to the industry, then consider saving yourself an uphill battle with opposing groups and look for a different jurisdiction.
Zoning and Setbacks
Is the property correctly zoned? Most cultivation facilities are relegated to light and heavy industrial manufacturing and agricultural zoned properties instead of in more retail locations, which makes sense since it’s a manufacturing/production facility. Dispensary/retail stores, extraction/infusion and testing facilities generally have a wider zoning criteria and are typically located in commercial, retail, industrial and/or mixed-use zone districts. Without the correct zoning, your facility will not be licensable.
In the municipality you’re considering, what are the setbacks between the property and nearby sensitive uses such as schools, parks, hospitals, day care and drug rehab centers? Based on the licensing jurisdiction, required setbacks and sensitive uses will vary, but typically one thousand feet in a direct measurement between property lines is the longest setback distance that is required. Depending on the municipality’s regulations, if the property is too close to nearby sensitive uses and within the setbacks then the property may be disallowed to be licensed.
Available Capital
How much capital do you have to invest in the property (regardless of leasing or owning)? Many of our clients and customers aren’t prepared for the time, cost, and effort of getting a property licensed and up and running. In my experience, tenant finish and equipment costs for indoor grows are generally around $120 to $150 per square foot and up. On a per light basis, build-out costs are in the range of $8,000 to $12,000 per flowering light fixture installed. Greenhouse and other types of cultivation facilities are generally less costly to fit up and provide for a lower cost of production over indoor grows, but there are tradeoffs between property types and growing methods.
Buy vs. Lease
Whether to buy or lease is really a matter of available capital and your business plan. Buying your own real estate will provide you with total control of your facility and you will not be subject to rent increases or other items as you are when leasing. On the other hand, leasing may be less costly upfront, but subjects your business to real estate swings, dynamics within your lease, and your relationship with the landlord. If you do lease, negotiate a purchase option for the property to secure the ability to buy it at some future point in time.
Exit Strategy
Lastly, what is your exit strategy for the property? If you expect to grow out of the facility in the near-to-mid-term, consider its viability at that time with the technology and innovations being applied today. Will it be outdated and inefficient in when it no longer suits your business, or will it be functional and effectively produce the product desired at the time you exit? If you spend too much on your facility, can you recapitalize out of it by selling the property and/or business?
While these are only five areas to consider when pursuing licensable marijuana real estate, there are many others that have been proven to be issues and others that are yet to be discovered. Consider each step along the way and how it impacts the vision for your company to set yourself up for long-term success.
Jason Thomas is the CEO and Managing Broker of Avalon Realty Advisors, Inc., a commercial real estate and business brokerage company based in Denver, Colorado. Avalon exclusively serves the licensed cannabis industry through providing brokerage services for buying/selling/leasing properties, buying/selling cannabis businesses and licenses, property and business valuations, expert witness testimony and consulting. With over 25 years of combined real estate and over 10 years of cannabis business experience, Avalon’s advisors are uniquely qualified to provide best in class real estate and business services to the licensed cannabis industry throughout the US.
Guest Post: Changes to Colorado Residency Requirements
By Charles Alovisetti, Senior Associate at Vicente Sederberg, LLC.
This is article is the second in a series, which will provide a general overview of the laws that impact raising money in the cannabis industry.
Introduction
Colorado currently has the strictest residency requirements for ownership of marijuana establishments in the United States, imposing a two-year residency requirement for any owner of a licensed business. In addition to the constraints imposed by such a lengthy residency requirement, the Colorado Marijuana Enforcement Division (the “MED”), which is the regulatory body concerned with the marijuana industry, takes a broad view of what constitutes ownership (e.g., guarantying the debt of a licensed entity can constitute ownership). Earlier this year, on May 11, 2016, in order to address the funding difficulties created by the strict residency requirements (note that because the changes to the residency requirements apply to both medical and retail marijuana businesses, this article will not distinguish between the two when discussing the legislative changes and will simply refer to licensed entities, which shall mean both medical and retail licensed entities), the Colorado Senate passed Senate Bill 16-040, as amended by the House, commonly referred to as the “Residency Bill” (the “Bill”). The Bill was subsequently signed into law by Governor Hickenlooper on June 10, 2016. The Bill, which goes into effect on January 1, 2017, will radically change the residency requirements imposed on licensed businesses. These changes are addressed in detail below. This article, with limited exceptions, only addresses the changes explicitly described in the Bill and does not address the further complexities raised by draft rules promulgated by the MED regarding the Bill since these rules are not yet final.
Current State of Colorado Law
As noted above, in addition to requiring that all owners of a licensed business be at least two-year Colorado residents (and must also meet certain background requirements), Colorado takes the view that a person or entity that has a beneficial interest in a marijuana business and/or substantial control over a marijuana business is considered an “owner.” A beneficial interest has been informally defined as being paid based on profits (whether gross or net). In determining if a person or entity has an ownership interest in a marijuana business, the state considers a non-exhaustive list of factors, including whether a person or entity 1) bears risk of loss and opportunity for profit; 2) is entitled to possession of the licensed premises; 3) has final operational decision-making authority over business; 4) guarantees the businesses’ debts or production levels; 5) is a beneficiary of the business’s insurance policies; 6) acknowledges tax liability for the business; 7) acts as an officer or director of the business; 8) is contracted to manage the overall operation of the business; 9) has a licensing agreement with the business (note that it is possible to structure licensing agreements so as to avoid triggering the determination of ownership, but this can be complicated); 10) has ownership of shares or other equity interests of the licensed business; 11) has a secured interest in furniture or fixtures directly used in the manufacture or cultivation of marijuana; or 12) has a secured loan with the business. In addition, any security interest in the furniture, equipment, or fixtures used directly in the manufacture or cultivation of marijuana or marijuana product may be considered ownership depending on the circumstances. Given the thoroughness of the foregoing list, it’s not difficult to understand why licensed entities have had difficulty raising capital from out-of-state investors.
However, Colorado laws do allow for out-of-state residents to invest in marijuana businesses through a permitted economic interest (“PEI”). A PEI is a financial interest in the form of an unsecured debt instrument, option agreement, warrant, or any other right to obtain ownership interest in a marijuana business, provided the conversion or transfer right is contingent on the holder qualifying as an owner and obtaining licensure as an owner by the MED – this could be upon the occurrence of either the holder meeting the two-year residency requirement or a change in law (which the Bill represents). A PEI may only be held by a natural person who is a U.S. resident. Holders of PEIs are subject to fingerprinting and criminal history background checks and must disclose financial and personal information with the MED in their applications. As of today, PEIs remain useful to licensed businesses since they allow them to accept out-of-state investment in advance of the Bill going into effect. On January 1, 2017, PEI holders will become eligible to have their interests converted into equity holdings in licensed businesses. After the Bill goes into effect, any kind of option, warrant, or similar convertible instrument will still be required to take the form of a PEI.
New Residency Bill
Before delving into the specifics of the Bill, it is worth noting that the summary attached to the Bill contradicts the actual law, as it was written prior to the passage of the final version of the Bill, and it should be ignored.
The Bill adds a number of new defined terms. Understanding these new terms is the key to understanding the Bill:
Direct Beneficial Interest Owner: Prior to the Bill, there was only a defined term for “Owner”; that concept has now been split in two – Direct Beneficial Interest Owner and Indirect Beneficial Interest Owner. Under the existing system, any level of control that the MED, using the 12-factor test outlined above, determined rose to the level of ownership resulted in the entity or individual being listed as a zero percent Owner (e.g., an individual who guaranteed the debts of a licensed entity might be considered as a zero percent Owner of that business, despite owning no equity in that entity). The term Direct Beneficial Interest Owner is meant to cover existing Owners who directly hold equity in a licensed entity. Direct Beneficial Interest Owners are subject to residency requirements and full background checks (except for Qualified Limited Passive Investors, a type of Direct Beneficial Interest Owner described in detail below). A Direct Beneficial Interest Owner must be either a resident of Colorado for at least one year or a US citizen. Publicly traded companies are explicitly barred from holding licenses.
Indirect Beneficial Interest Owner: The second new category that was previously included in Owner is Indirect Beneficial Interest Owner. No residency requirement exists for an Indirect Beneficial Owner. An Indirect Beneficial Interest Owner includes the following individuals and entities: (a) a holder of a PEI, (b) a recipient of a commercially reasonable royalty associated with the use of intellectual property by a licensee, (c) a licensed employee who receives a share of the profits from an employee benefit plan, (d) a qualified Institutional Investor (defined below), or another similarly situated person or entity as determined by the state licensing authority. The Bill does not explicitly state what kind of background check will be required for an Indirect Beneficial Interest Owner. Currently, the draft rules set forth an identical set of criteria to determine suitability to those for Direct Beneficial Interest Owners, but this may change in the final rules.
Institutional Investor: Up to 30% of a licensed business can be held by an Institutional Investor, and the Bill does not contemplate any residency requirement for an Institutional Investor since an Institutional Investor will be considered an Indirect Beneficial Interest Owner and residency requirements only apply to Direct Beneficial Interest Owners. The Bill sets out a list of entities that meet the definition: banks, registered investment companies, ERISA funds, and any other entities to be identified during the rule-making process. The current draft rules do not list any types of entities not specifically identified in the Bill. While not discussed in the Bill, the draft rules and legislative history make it clear that an Institutional Investor must be passive and may not have any control over a licensed company beyond voting its shares (meaning that the minority protections present in a typical non-control transaction cannot be present).
Qualified Limited Passive Investor: This is defined as a natural person who is a U.S. citizen and is a passive investor owning five percent or less of the equity of a licensed business.
New Residency Rule
In place of the existing rule that requires all Owners to be at least two-year residents of Colorado, the Bill now allows an entity to be either (i) held by an unlimited number of Direct Beneficial Interest Owners, each of whom must meet the one-year Colorado residency requirement, or (ii) if one or more Direct Beneficial Interest Owners do not meet the one-year residency, then the following conditions must be observed: (a) At least one officer of the licensed entity must be a Colorado resident of at least one year, (b) all officers with day-to-day operational control over the business must be Colorado residents of at least one year, and (c) there must be no more than 15 Direct Beneficial Interest Owners (this limitation is measured by natural persons on a look-through basis). A licensed business, whether wholly held by Coloradoans meeting the residency requirement or held by one or more Direct Beneficial Interest Owners who do not meet the residency requirement, may also have up to 30% of its equity held by qualified Institutional Investors.
Reasonable Royalties Now Allowed
One additional major change in the Bill is the allowance for commercially reasonable royalties to be paid to Indirect Beneficial Interest Owners. As the law currently stands, a royalty would be considered a form of ownership by the MED (as the royalty would likely be based on the profit of the licensed entity) and would thus make the recipient of the royalty subject to residency and other ownership requirements. In addition, the current system requires all of the Owners to be present at MED meetings—which presents a major obstacle to the operator of a licensed business who wants to enter into multiple licensing agreements since any licensor could potentially put a license at risk by refusing to attend a meeting or by committing a bad act. However, Indirect Beneficial Interest Owners, while still subject to background checks, are not subject to residency requirements or the limitation of 15 natural persons (as is the case for Direct Beneficial Interest Owners when one or more equity holders does not meet the one-year Colorado residency requirement). It may also be the case, though we will need to wait for the final rules, that removing an Indirect Beneficial Interest Owner is easier than removing a Direct Beneficial Interest Owner from a license.
Conclusion
As noted above, the MED is granted authority to promulgate rules pursuant to the Bill, and final analysis of the Bill will require careful study of these new rules. The MED is currently accepting written comments to the draft-proposed rules in advance of a formal, public hearing regarding the permanent rules on Friday, September 2, 2016. In addition, as with any other change in a regulatory regime, we will need to pay close attention to how the Bill plays out when actually put into practice.
This information is educational only and shall not be construed as legal advice. Please consult your attorney prior to relying on any information in this article.
Charlie Alovisetti, Vicente Sederberg LLC
Charlie Alovisetti is a senior associate and co-chair of the corporate department at Vicente Sederberg LLC. Prior to joining Vicente Sederberg, Charlie worked as an associate in the New York offices of Latham & Watkins and Goodwin where his practice focused on representing private equity sponsors and their portfolio companies, as well as public companies, in a range of corporate transactions, including mergers, stock and asset acquisitions and divestitures, growth equity investments, venture capital investments, and debt financings. In addition, Charlie has experience counseling portfolio and emerging growth companies with respect to general corporate and commercial matters and all aspects of compensation arrangements, including executive employment and consulting agreements, stock option plans, restricted stock plans, bonus plans, and other management incentive arrangements. Charlie has experience in both U.S. and cross-border transactions, and has advised clients across a range of industries including cannabis, technology, manufacturing, software, digital media, energy and clean tech, healthcare, and biotech. He holds a Bachelor of Arts, with honors, from McGill University and a law degree from Columbia Law School, where he was a Harlan Fiske Stone Scholar. Charlie is admitted to practice in both Colorado and New York.
Colorado Cannabis Cultivators: Participate in an Energy Use Case Study
The Cannabis Conservancy (TCC) is inviting all types of growers (indoor, greenhouse, and outdoor) in Colorado to participate in an Energy Use Case Study for the Colorado Energy Office (CEO). Growers can choose to be named and celebrated for their participation or remain absolutely anonymous. Participation is requested as soon as possible, and no later than July 31, 2016. If you are interested, contact Jacob Policzer, President of TCC, today.
The Study TCC has been contracted by the Colorado Energy Office to conduct a research report on energy use in the marijuana cultivation industry. The purpose of the report is to understand where the industry is developing in Colorado, how energy (and water use) by the industry is impacting our grid (and water supplies), what is feasible and available to the industry in terms of operational and technological efficiencies and funding, and to create a baseline for the industry with accurate data. As part of this study, TCC is required to conduct case studies and work with growers of varying operational types (outdoor, indoor, and combination) in the state to track interval load data to create a baseline for the industry.
Grower Involvement Growers will be required to have smart meters and sub meters installed at their operations and participate in an individualized on-site participant energy workshop. TCC will pay for the installation and maintenance of the meters as well as compensate growers for workshop participation. The choice to participate anonymously or publicly is absolutely at the discretion of the participant.
The individualized participant energy workshop will include: document reviews, building envelope analysis, grow system analysis (based on TCC Sustainability Standards), interviews, and meter installation.
What are the Benefits to Growers? By participating in the case study, growers will learn very detailed information about their energy consumption, which is the first step in system optimization, leading to higher yields and cost savings. Growers will also receive energy and water use consultation services from TCC for system optimization and are one step closer to Sustainability Certification. If growers choose to be named in the case study they are demonstrating their industry leadership and commitment to sustainability.
What is the Colorado Energy Office (CEO)? The CEO’s mission is to improve the effective use of all of Colorado’s energy resources and the efficient consumption of energy in all economic sectors, through providing technical guidance, financial support, policy advocacy, and public communications.
What is The Cannabis Conservancy (TCC)? TCC’s mission is to empower and assure that the regulated cannabis industry achieves environmental, economic, and social sustainability.
Guest Post: Waiver Program Could Clear Path for State Legalization
(AS WITH ALL GUEST POSTS ON NCIA’S WEBSITE, THIS POST SOLELY REPRESENTS THE VIEWS AND OPINIONS OF ITS AUTHOR AND DOES NOT REPRESENT AN NCIA ENDORSEMENT OR OFFICIAL POSITION. ~ EDS.)
Congress is considering a potential waiver program where states will be given an exemption to federal prohibition of cannabis.
On April 17 and 18, NYU hosted the Cannabis Science & Policy Summit where a panel discussion took place titled “Federalism & Cannabis Policy: What Can & Should Washington Do?” The panel consisted of experts in law and drug policy, including Congressman Earl Blumenauer (D-OR) and Sarah Trumble, senior policy counsel at Third Way, a public policy think tank based in Washington, D.C. The panel discussion delved into the restrictions of the DEA’s power to reschedule cannabis by Congress and appropriate policy alternatives to clearing the path for state-by-state cannabis legalization.
According to Cody Stiffler, vice president of Government Affairs at BioTrackTHC, who was also present at the panel discussion, Congress has placed so many restrictions on the ability and powers of the DEA, that they can only reschedule cannabis to a Schedule II status. He believes there is almost no possible way that the DEA can de-schedule cannabis. The panel discussed Congress’s consideration of a waiver program for states with legalized cannabis in some form or another. “They [Congress] plan to give the U.S. Attorney General powers to offer waivers to state governments, exempting that state from federal law regarding cannabis, allowing banks and other institutions to take part in the industry without fear of federal backlash under the Controlled Substances Act,” says Stiffler. The waivers would have a duration of a number of years and a reporting and review process would follow the expiration of each waiver. “If the Attorney General decides that states are following the directives of the Cole Memo, then they will be able to continue, but if the data collected proves otherwise, those waivers would then be suspended or revoked,” adds Stiffler. It is important to note that the bill gives states the opportunity to correct any failures before those waivers are revoked.
According to Sarah Trumble, public opinion favors a policy move towards allowing states with cannabis legislation to operate freely. A poll conducted by Third Way found that 67% of voters would support Congress passing a bill giving states freedom from federal intervention with respect to cannabis policy as long as there is a robust regulatory framework in place. In October of last year, Congresswoman Suzan DelBene (D-WA) introduced the bill, H.R. 3746, The State Marihuana [sic] And Regulatory Tolerance (SMART) Enforcement Act. The bill outlines the waiver plan and would exempt states from the prohibition of cannabis as a result of The Controlled Substances Act. It also has measures in place to help prevent diversion of cannabis into the black market, protecting consumer safety and public health, eliminating criminal enterprise involvement and more.
According to Trumble, the SMART Enforcement Act would resolve many of the conflicts between federal law and state legalization measures. “It is the bridge that gets us from the broken system we have now to a future date when public opinion and Members’ positions may have shifted, while in the meantime fixing the problems people are experiencing on the ground,” says Trumble. She believes the bill provides for the protection of consumer safety through logical regulatory systems while eliminating federal prohibition of cannabis. “Every three years, a state will have to re-apply for the waiver and submit data showing that their regulations are working to keep Americans safe.” This would allow states to have the space they need to implement a sound regulatory framework.
One can speculate on a broad range of possible effects this bill could have. “It would allow banks to open accounts for and offer services to legal cannabis businesses so they no longer have to operate on an all-cash basis,” adds Trumble. Perhaps the most significant effect this bill could have on the cannabis industry is knocking down the burden of the 280E tax code on cannabis businesses primarily because it would exempt states from The Controlled Substances Act. “It would protect businesses owners and employees—as well as customers and patients—from federal prosecution and arbitrary DEA crackdowns, now or in the future,” says Trumble. This bill has the potential to be a panacea for so many ailments facing the cannabis industry. Participants in the cannabis marketplace should let their representatives know that they support this bill and show up at the polls in November to elect representatives that support this piece of legislation.
Aaron G. Biros is the editor-in-chief of CannabisIndustryjournal.com, an online trade journal focused on regulatory compliance, quality and safety in the cannabis industry. Hejoined Innovative Publishing, LLC full-time after graduating from Tulane University. Graduating with a B.A. in Environmental Studies, his coursework involved environmental sustainability, conservation policy, design thinking in collaboration, social innovation & entrepreneurship, food production & health, and environmental & health risk assessments. He has two years of experience working on staff as an associate editor for FoodSafetyTech.com, writing a series of articles focused on the intersection of food safety and environmental sustainability. Aaron is now the editor and publisher of CannabisIndustryJournal.com, a B2B digital trade publication that seeks to educate the global cannabis industry on everything seed-to-sale in both recreational and medical markets. CannabisIndustryJournal.com covers news, business trends, technology, regulatory compliance and other important areas, aiding in the advancement of a well-informed and safe market. Cannabis Industry Journal became a member of NCIA in May 2016.
Guest Post: 4 Easy Ways To Make Social Media Work For Your Cannabusiness
Hopefully by now you know the importance of building your brand’s presence on social media. However, there may be days when you ask yourself, “WTF am I doing?”
Oftentimes social can seem overwhelming and confusing. For example, you may log onto Pinterest to try to figure it out and three hours later all you’ve found is an amazing recipe for brownies (marijuana optional).
Most cannabis business owners have got the “weed porn” portion of social down – meaning they know how to post pictures of weed on Instagram and Facebook but don’t worry about much else.
Well, I’m here to tell you that there is a lot more to social than weed porn.
And… weed porn is one of the big red flags for Facebook and Instagram and is a great way to get your account shut down.
If you are ignoring a larger content marketing strategy and only posting content that is full of hype and sales, you are not only likely to get your account shut down, but you are also very likely to turn off your prospective customers.
Thanks in part to an over-saturation of weed porn and of course constantly changing algorithms (Facebook, Instagram… who’s next?), there is a need for a robust strategy that can evolve.
Like most marketing strategies, this can seem like a ton of work and may not have your full attention.
So on that note, here are four easy ways to maximize your social presence and make social media marketing work for you (beyond weed porn and pot brownies).
Choose your platform(s).
You don’t need to be an expert at every channel. Pick the two or three channels where you know your audience hangs out and master them.
Facebook, Instagram, and Twitter are the big three that you should know how to use strategically. There are other cannabis social channels such as MassRoots but they don’t have the impact and reach that the big three have, at least not yet.
Make sure your imagery matches your brand’s promise and is consistent.
From your logo to your profile name and picture, everything across your social channels should be instantly recognizable and represent your brand’s promise. Make sure you are following your branding guidelines and using the correct fonts and colors to design your pages and establish your brand.
Create engagement with valuable and shareable content.
It’s easy to fall into the trap of posting things that you and your employees like without really knowing if your audience feels the same way. Make sure you are creating content that your audience is excited about and eager to share. One of the easiest ways to determine what content your audience likes is by tracking the likes, comments, and shares on your posts and by watching what other successful brands within your niche are doing.
Engage with your followers by taking part in the discussion.
One of the quickest ways to create your tribe is to socialize your content. The easiest way to do this is to reach out to industry influencers and mention their names in your posts. Once you do that you can start to create a relationship with the key players in the industry and inspire them to connect with you and share your content.
Again, the content needs to be fresh, relevant and exciting.
Weed porn alone won’t cut it.
As a successful entrepreneur, longtime marijuana advocate and medical grower, Alexa Divett understands the unique needs of the cannabis industry. Alexa is the founder of Alexa Divett LLC, a business coaching and consulting company helping cannabis business owners achieve success through the implementation of sound business practices and time-tested marketing techniques.
Alexa’s achievements include co-founding Maya Media Collective, a Portland, Oregon-based creative firm that specializes in the cannabis industry, and writing the “Marijuana Millions” Ebook series, which The Weedblog called the best marijuana-branding book to date. Additionally, Alexa speaks about marketing and branding cannabis businesses at local and national events. Alexa’s products and presentations on starting and running successful cannabis businesses have made her an in-demand and innovative expert in the cannabis business world.
I began my career as a professional chef at high-end, Michelin Star restaurants in San Francisco. I worked with phenomenal chefs, and I always had the goal of being a James Beard award-winning chef. Cooking was my passion, and I learned from the best about sourcing ingredients and creativity in the kitchen.
When I was cooking, the Bay Area was home to a new sustainability movement that focused on local ingredients. Pioneering chefs like food activist Alice Waters led a sustainable revolution that spread across the country. Local, seasonal cooking has replaced elaborate neo-classical cuisine. Diners want to know where their ingredients are from, and why the chef has chosen a specific preparation. Our cooking at home is more aware too.
I was thinking about ingredients and recipes a decade ago, when I got involved with cannabis edible products. A friend approached me about making edibles when his father, a cannabis patient living with HIV/AIDS, could no longer smoke. Pharmaceutical medications prescribed to patients for wasting syndrome and other complications from HIV/AIDS caused nausea, and cannabis proved an effective counterbalance.
I started getting positive feedback on my edibles’ effectiveness for pain, nausea, sleep problems, stress, depression, and end-of-life transitions for those in hospice. I remember a call from a patient who was on the edge of tears because cannabis allowed them to enjoy breakfast. I saw what a beautiful thing it is to ease people’s suffering, and I was all in from that point on.
At a recent event, I spoke with a woman about her catering services, a service that pairs fine dining with smoked flower. When I asked about using cannabis as an ingredient, psychoactive or not, she said it was “too dangerous.”
I realized that even though Colorado has had adult-use cannabis for more than two years, and medical cannabis for longer, there’s still so much fear about edibles. Media attention on a few bad actors is keeping consumers away from a cannabis product with incredible potential for good.
Edibles producers are waging a constant battle against misinformation. Legislators react to perceived public concern by over-regulating our sector. Regulation is relentless: new measures take shape before we have time to measure existing rules’ effectiveness. Edibles companies struggle for survival as new, hastily crafted, fear-based regulations are enacted.
Over-regulation has become counter-productive. Our concerns about restrictive standards for marking, stamping, and packaging limit our ability to be creative with ingredients and presentation. As a chef, it’s disheartening.
Mountain Medicine recently became the first edibles company to co-brand with a mainstream (non-cannabis) food manufacturer. On my constant hunt for the best local ingredients, I discovered Highland Honey, a beautiful, locally sourced raw honey from Boulder. I was lucky that the owner aligns with my values and beliefs about local ingredients and cannabis as medicine. Sadly, regulatory hurdles, liability, and image concerns keep exciting partnerships out of reach for edibles producers and the industry as a whole.
It’s frustrating to create a great product and make it bend to regulations that prioritize fear over food quality. As legislators attempt to protect consumers, edibles are treated more like poison than food, and patients lose access to quality products.
As I expand my business, I’m often advised not to mention edibles. Cannabis is normalizing, but there’s still a huge stigma attached to edibles. Irrational fear keeps consumers away from the healthiest, most controlled way to consume cannabis. I’ve seen first-hand the incredible impact edibles can have on quality of life, but I worry that patients won’t have the chance to experience it themselves.
Activists have endured a difficult, decades-long battle for any access to cannabis. The fight we are facing now for access to edibles will be just as difficult.
As cannabis enters the mainstream, our entire society is beginning to understand the many positive effects of cannabis. We fought for decades to bring the truth about this amazing plant to light, but current perceptions about edibles make it clear that it’s not over yet. Our challenge now is to shape the conversation about these products and the relief they bring. The freedom to consume cannabis is critical, but the fight for access to quality products will shape this industry’s future for many decades to come.
Jaime Lewis has more than nine years of experience managing the production of medical marijuana-infused products (MIP), as well as all facets of managing and operating a medical and recreational marijuana dispensary. A California Culinary Academy graduate, she’s worked in many highly acclaimed kitchens, including serving as the executive chef of a Michelin-rated three-star restaurant in San Francisco. She began creating medical marijuana edibles for HIV/AIDS patients in California in 2006 as part of a Compassion Co-op.
In 2009, Jaime moved to Colorado and founded Mountain Medicine, a medical marijuana-infused product manufacturer. Mountain Medicine supplies high-quality medical and recreational marijuana edibles and products to a number of dispensaries throughout the state. As the founder and executive chef, Jaime designed the commercial kitchen and supervised its start-to-finish construction. She developed recipes leading to a variety of product lines to meet patients’ individual needs and developed product packaging that favors discreet design on behalf of patient confidentiality and safety.
Jaime is responsible for strategic planning and business development, policy development and governmental affairs, marketing and serves as the community liaison to demonstrate good corporate citizenship.
Jaime is an active member of the cannabis community. She is one of the founders and serves as the Chair of the Cannabis Business Alliance, as well as chairing the board of the National Cannabis Industry Association. Jaime takes great pride in changing the conversation around safe and responsible cannabis use both in the state of Colorado and on the national level.
The Life of a Cannabis Grower – 10 years from the first plant
When asked to write for the NCIA blog, I first thought I’m not sure if anyone really wants to read my ramblings via an open blog format. So I thought about where most of my cannabis conversations start and end. More often than not, I am asked how I started out, what it has been like, and where I think the industry, Solstice, and myself are headed. Recently I celebrated 10 years cultivating the cannabis plant and I figured this format is as good as any to rehash (pun intended) the last decade of my life.
In 2006 at the ripe age of 21, I took my first step into the cannabis cultivation world for two reasons; an act of civil disobedience, and so that my friends and I could have the best cannabis around. I was given a few seeds and a light from a close friend and in a rather paranoid fashion I began my journey in a small closet in my one-bedroom apartment in Seattle. I read everything I could get my hands on and constantly experimented with the plant. Faster than I had imagined, I was through several harvests and quickly converting my bedroom into a grow room. As the size of my grow increased, so grew my paranoia and I determined I could no longer risk my future by illegally growing cannabis.
Within days of deciding to stop growing I was introduced to the realities of medical cannabis and that I could cultivate legally with a doctor’s recommendation. Receiving my first recommendation was a massive catalyst of learning and consciousness. As a person who dealt with chronic pain for most of his life and as a respite care provider, my world was forever improved. I realized that I personally could massively benefit from the medical values of the plant and as a care provider I could help to provide these values to others. Upon that realization I jumped head first into the pool and rented my first grow house.
All the while I was growing medical cannabis for others and myself, I never planned on doing it forever. During this time I was going to college to obtain degrees in education and I never saw “Elementary Teacher’s Marijuana Grow House Discovered by Seattle Police Department” as being a good headline or one that would help me further my career as an educator. It was planned that I would stop growing at the scale I was when I finished college, but it turned out that the universe had different plans for me. My world changed forever when Seattle Public Schools went on a hiring freeze and I was told it would be years before I could get a job in Seattle.
At that point I was lost and if it were not for a good friend, Trek Hollnagel, who I had taught to grow, opened my eyes to the reality of a career in the new world of the cannabis industry. To say the least in those early days we had little to no clue what we were doing. We went from moving to California, to deciding to “revolutionize” medical cannabis in Washington by starting four companies from dispensaries to merchant services. Of course we attempted to do all of these at once. After a few years of being pulled in 1,000 directions I decided to bow out and begin a new adventure. It was then in early 2011 I founded Solstice with Will Denman and hoped to only be pulled in 100 directions by focusing on cultivation.
Will and I started Solstice with the goal of helping to legitimize and normalize medical cannabis by being a public cannabis cultivator that was transparent about what we did and why, with everyone from law enforcement to patients. Simply put, we wanted to take the plant from what marijuana was to what cannabis can be. This was a rather crazy concept at that point in Washington’s history, but we took Steve DeAngelo’s charge of “out of the shadows and into the light” to heart. When the first Times article came out about how we were building the state’s first fully permitted cultivation facility, my paranoia was elevated to say the least.
Fortunately, instead of being cast out of society and thrown in prison we were embraced and celebrated. This gave us a platform to further our goal of helping to legitimize/normalize and we were welcomed in by legislators and regulators to craft what the world of regulated cannabis was going to look like. It was then that we successfully helped to write and pass our first ordinance for cannabis at the city level. From there under the Solstice flag we have helped to craft countless pieces of legislation and regulation from the neighborhood micro level in the SoDo District to the international stage at the United Nations and everything in between. Though we spend a lot of our time working on policy (I’m currently on a plane to DC to lobby Congress with NCIA!) we actually grow a good amount of cannabis.
At Solstice we have done so much with the plant and a have stellar team that has grown the business beyond my wildest dreams. It’s crazy, we’ve gone from starting the company in the downstairs of my house to building multiple state of the art facilities and working with sun-grown partner farms with canopy exceeding acres and acres of cultivation in both the medical and adult uses systems. We are also very proud to have the distinction of being the first cannabis brand in the first fully legal state. Along the way, we have grown cannabis that has won countless awards, stopped children from having seizures, at a high point employing 75 people, and had a lot of fun along the way.
Looking back ten years to that day I propagated those first seeds in my closet, I am overwhelmed with gratitude. I have been so incredibly fortunate to get to learn so much, grow a business, manage to succeed while failing a lot, make life-long friends, and some say, change the world. Going from not planning to do this for that long to not even being able to comprehend doing something else with my life; it’s been quite a ride. In truth for me, cannabis is my life’s work.
For more information about my story, please check out the Solstice Company Story video:
In order to cast a vote, you will need to log into NCIA’s secure member ballot using your member company login. Only ONE ballot can be submitted per member company.
Please be sure to download and review our complete Voter Guide (PDF) before casting your vote.
Board of Directors Candidate – Etienne Fontan
by Etienne Fontan, Director of Berkeley Patients Group
In the early days of Berkeley Patients Group (BPG), we had visions of a mature, responsible industry that would provide affordable, high quality medicine to everyone who needs access. We envisioned a future where truth and science trumped fear and lies. We dreamed of an industry with quality and testing standards and favorable banking regulations. And we did everything in our power to push this agenda forward with courage, integrity, and the patients at the center of everything we do.
Look how far we have come.
Today, many of our early visions have come to fruition. Through our hard work and relentless drive, we live in world that is far more tolerant to cannabis than ever. We live in world where more than half of America lives in a state with some form of legal cannabis. But there is still an incredible amount of difficult work to be done.
Throughout my tenure at BPG, I have worked tirelessly to innovate and question our own thinking and overall direction. I have been instrumental in constantly redefining (and occasionally disrupting) the industry. These efforts have driven positive change for our business and our industry alike.
“Change is the law of life. And those who look only to the past or present are certain to miss the future.”
— President John F. Kennedy
After 23 years in this industry, my focus continues to be on our very bright future. We are in a time of great progress and rapid development; visionary leadership at the helm of the NCIA is integral to further legitimizing and solidifying our nascent industry.
When you cast your vote by May 16th, please cast your vote for innovation, progress, and integrity. I look forward to continuing to serve all of you.
In order to cast a vote, you will need to log into NCIA’s secure member ballot using your member company login. Only ONE ballot can be submitted per member company.
Please be sure to download and review our complete Voter Guide (PDF) before casting your vote.
Board of Directors Candidate – Aaron Justis
As someone who’s been active in the cannabis movement for nearly two decades, and a member of the NCIA board of directors since 2014, I’m thrilled by the progress we’ve made in the last two years towards ending cannabis prohibition and creating a properly regulated economy around this most beneficial plant. But it’s not enough. My driving motivation, now as when I first became a member of this culture, remains helping to create a world where no adult faces punishment for cannabis, and the plant is safely and readily accessible to all who want or need it.
In my role as president of Buds & Roses, a vertically integrated medical cannabis dispensary in Los Angeles, I’ve experienced firsthand the political, legal, and commercial challenges facing cannabis growers, product manufacturers, and retailers, while navigating one of the most difficult and shifting regulatory environments in the country. Despite these and other business challenges, I’ve nonetheless made a personal commitment to devote at least half of my working life to supporting cannabis as a political cause, including by attending NCIA board meetings and working directly with our members, tirelessly lobbying public officials, speaking at events and conferences, serving as a trusted source for the media, and holding leadership positions in local, state, and national organizations that promote sensible industry regulation. including the Greater Los Angeles Collective Alliance (GLACA), and the California Cannabis Industry Association (CCIA).
Looking forward to the next two years, my main focus will be working to shape inclusive and effective cannabis regulations in Los Angeles and the rest of Southern California, as this is not only my home base, but also the largest legal market in the country. I’ll also strive to ensure that The Medical Marijuana Regulation and Safety Act—California’s new set of “seed-to-sale” regulations—is implemented in a way that supports a robust and broad-based industry that actively serves the needs of patients.
Also, this November, it’s likely that California voters will have a chance to approve full legalization of cannabis, assuming the Adult Use of Marijuana Act makes the ballot. As in many other areas of public policy—from automobile emission standards to consumer protection laws—the massive size and influence of California as the nation’s largest state and the world’s eighth largest economy ensures that the system implemented here will serve as a starting point for many future legalization/regulation efforts across the country, so it’s vital that any system we create and implement here works for growers, manufacturers, and retailers of all sizes, as well as consumers and patients.
While more broadly, with the presidential election rapidly approaching, the future of federal cannabis policy—as it relates to everything from enforcement to scheduling to tax reform (including 280E and banking)—looms large as both an exciting opportunity for progress and a potentially serious challenge, depending on who wins the presidency, and how our industry responds.
To continue our incredible progress, and not suffer a setback, I believe it’s vital that we’re represented by leadership with a long track record of promoting cannabis legalization as a public policy issue, or we risk coming across as just another industry lobbying in its own financial self-interest.
If I win re-election to the NCIA board, I promise to use all of my experience and resources to continue our breathtaking progress, and that I won’t stop advocating for this cause until all 50 states (and the rest of the planet) have ended their unconscionable War on Cannabis. If you have any questions or concerns, or just want to hear more about my goals and strategies, please contact me via budsandrosesla.com.
In order to cast a vote, you will need to log into NCIA’s secure member ballot using your member company login. Only ONE ballot can be submitted per member company.
On April 4th, Senator Schatz of Hawaii became the 12th Senate co-sponsor of the Marijuana Business Access to Banking Act (S 1726).
Ean’s overall sentiment about the experience? Hard work pays off.
Ean Seeb, Denver Relief Consulting:
It was a sense of accomplishment in that when you’re working with Congress, things are very slow-moving and we have been dealing with the banking and tax issues repeatedly since my first NCIA Lobby Days in 2013.
As far as the experience of going into a congressional office and telling them you’re working with cannabis and asking them to back or co-sponsor some legislation, back then, it was a foreign thought. Contrast that with now – to walk in and have the recognition, know what we’re doing, and three months later to see a Senator actually fulfilling the only request that we made to him, specifically, to co-sponsor this bill.
All of our efforts are not for naught. If you put your mind to it, you go to work, and you extend some effort on behalf of the industry, you can make powerful, meaningful change here. Having another Senate supporter, even harder to come by than on the House side – it’s an incredible accomplishment.
I was delighted. It’s not due to any one person individually. NCIA’s Michael Correia, Director of Government Relations, set up the meeting and put it all together. It made me feel better about working hard and diligently with a team and getting to the solution to the challenge we’re facing. Sen. Schatz can’t himself enact the banking bill, but this is one more step toward chipping away at cannabis prohibition as we know it.
Tae Darnell and Ean Seeb stand outside of Senator Schatz’s congressional office in D.C.
It was really helpful to have my fellow NCIA member Tae Darnell there. I didn’t know it at the time, but Tae wrote the draft legislation for Hawaii, so he was really well-informed on the issues we were discussing and was able to provide some good examples as to why it was important to get behind the bill.
Tae Darnell, Sensi Media:
I’ve been deeply involved with Hawaii since 2010, when I drafted the first version of the medical marijuana bill that just passed. Although much has shifted since the original version, I’ve developed close connections at the state level and have a particular affinity for Hawaii’s role in the advancement of cannabis regulation because of those relationships.
When Ean approached me about lobbying with Michael and speaking with the federal arm of Hawaii (one of those being Senator Schatz’s office), I jumped at the opportunity. I think it’s incredibly helpful to be able to share direct experience and engage conversation that personalizes the story at a federal level. I also think it helps to be able to diversify perspective. In that regard, Ean was able to share his NCIA experience as well as Denver Relief’s experience both as a dispensary and consultant. I was able to share my experience as an (almost) 10-year cannabis lawyer who assisted Colorado with HB 1284, SB 109, and A64, and also as a drafter of Hawaii’s legislation. As a co-founder of Surna and Sensi Media, I was also able to share my experience as an entrepreneur on the ancillary side.
In the end, and based on my experience as a cannabis lawyer and entrepreneur, I’m incredibly excited that the work of NCIA is able to facilitate such incredible accomplishments. The countless hours of effort, put in by so many, are rewarded when we, as an industry, are able to accomplish goals like gaining sponsorship for critical banking legislation. I think successes like these are further validation of how critical it is that we continue to aggressively support the work of NCIA. The time is now to effect change, and the nearly 1,000 member businesses of NCIA are a major catalyst for why it’s happening.
Want your voice heard in our nation’s capitol on issues affecting the cannabis industry? Join us for our 6th Annual NCIA Member Lobby Days in Washington, D.C., on May 12 & 13, 2016.
To make the most out of the Lobby Days experience, register early so that we can begin the process of setting up meetings for you on the Hill. Members who register before April 30th will be entered to win admission and travel expenses for two at NCIA’s Cannabis Business Summit & Expo, including airfare and lodging.
Guest Post: If I use marijuana, will you hold it against me?
Someone, someday is going to demonstrate their disapproval of you by choosing a distinguishing characteristic and labeling you with it. Like horse face. Or eagle beak. Or pothead stoner.
It’s called stigma, and it’s a form of prejudice that is especially fascinating to me because I’m one of the cadre of professionals who wants to bring cannabis out of the alley and onto Wall Street.
I am the founder of AnnaBís, a company making fashionable, functional and odor-controlled accessories to carry cannabis. We’re dedicated to helping women feel free and sophisticated when carrying their medicine, recreational supplies, or both.
So we asked Penn Schoen Berland (PSB) to ask a nationally representative sample of 800 Americans, 18+, about their attitudes toward people who consume marijuana, alcohol, and cigarettes. We wanted to know: Who is most judgmental? Against whom? For what?
Here’s what we learned:
More than half of people surveyed either don’t care or are favorably disposed about marijuana usage among their friends, co-workers and family members.
Nearly 50% are neutral or favorably disposed about the marijuana usage of teachers, elected officials, doctors and police officers. Though all respondents were most judgmental of police officers who consume cannabis, even in this group more than 4 in 10 either don’t care, or are favorably disposed.
Alcohol remains less of a stigma, but cigarettes are pretty close to cannabis when you consider they’re a legal product.
The overarching question we asked was:
“How would your opinion of each of the following people change if you knew they were a responsible consumer of marijuana / alcohol / cigarettes? (Much more favorable, somewhat more favorable, no more or less favorable, somewhat less favorable, much less favorable.)
We also learned that Republicans are the most judgmental about marijuana consumption, particularly when it involves police officers, doctors, and elected officials. And the majority of Democrats say they are either more favorable or no more or less favorable towards people who are responsible consumers of marijuana across the board:
Based on 61 percent of Americans being in favor of marijuana legalization (according to AP-NORC Center for Public Affairs Research) and our data reflecting positive or neutral attitudes about responsible consumption among key community members, we think we’re experiencing a tipping point in favor of tolerance and choice. Additional findings are coming soon, and this will serve as a benchmark to see how things have changed in a few months. We’ll keep you posted!
Jeanine Moss is the Founder of Annabis, LLC, a member of NCIA since November 2015. She grew up in Venice, California, so she is no stranger to cannabis. The daughter of an artist and a rocket scientist, she loves doing things that have never been done before and also owns Turning Point Solutions, a marketing firm established 13 years ago to help companies capitalize on change. She created the first computerized horse buying and breeding registry, the first newsletter for women business travelers, the first New York City Fun Pass, the first Bring Your Parents to Work Day, the first luxury accessories for women who consume cannabis, and is especially proud of her work as communications chief for The September 11th Fund.
Guest Post: Cash Management in the Cannabis Industry
Jeff Foster, Co-Founder, Jane, LLC
Interviewed by Vinnie Fiordelisi, Sr. Director of Corporate Communications, Jane, LLC
Jeff Foster, co-founder of Jane
For nearly two decades, Jeff Foster has worked with some of the world’s largest retailers and financial institutions to define, design, and implement e-commerce and retail payment processing and risk management solutions. Here he shares some advice and insights on cash management and financial services in the cannabis industry.
What is the state of cash management in the cannabis industry?
It’s a real mess. Employee theft is even higher than in bars and restaurants. Many of the dispensary owners we talk to say it’s as high as 10-15% of sales. Robberies are a real threat. The cash reconciliation process is time-consuming, costly, and susceptible to human error. But the biggest issue is it’s almost impossible to run a multi-million dollar business with all cash.
What are the common problems you hear from dispensary owners when it comes to them doing business effectively and simply?
The cannabis business has the most complicated legal and regulatory framework in the history of retail and many of the dispensary owners are first-time entrepreneurs. Combine these two things, further complicate it by a lack of banking and a business that is bustling seven days a week, and you find it extremely difficult to navigate this constantly evolving landscape.
What challenges do dispensaries face as it relates to financial services?
What challenges don’t they have? Very few have access even to depository banking, much less checking. Most cannot process credit or debit cards legitimately so they are on a strictly cash basis. So imagine having to make payroll, pay rent, or buy hundreds of thousands of dollars worth of product without the ability to write a check or send a wire. Most of the dispensary owners we talk to spend as much as 25% of their time simply managing this process. With full access to banking and financial services those same tasks would take almost no time at all.
Where do the federally regulated banks stand on working with cannabis businesses?
Marijuana is still a Schedule I drug, selling it is a felony, and the Bank Secrecy Act prevents banks from taking deposits known to be a result of a crime. This obviously makes the landscape particularly treacherous for a federally chartered bank.
I do believe more and more banks will get involved in the marijuana business. We are seeing it with the financial institutions we are working with in Colorado for our Triple Play program. There is too much momentum and popular acceptance to put the genie back in the bottle. So it is important for marijuana retailers to be prepared. Banks that do accept cannabis businesses are going to be very cautious and only accept clients that are unquestionably above board and fully transparent.
Any final advice for dispensary owners?
Yes, for dispensaries accepting Visa and MasterCard, my advice is to stop unless and until you have signed a contract that includes the name of the bank. I’ve been in payment processing for almost 20 years and our other company currently processes over $3 billion annually in Visa/MasterCard for some of the largest retailers in the world, so I have some knowledge on the subject. There are very few sponsor banks in the U.S. who will knowingly accept a merchant in the cannabis business and both Visa and MasterCard strictly prohibit utilizing a bank outside of the U.S. for domestic transactions.
Unfortunately some dispensary owners have been led to believe that if they have a terminal and their deposits show up in the bank that “it’s working.” Well that may be true, but I can nearly guarantee there is a break in the chain somewhere and that broken link can lead to fines in the hundreds of thousands of dollars and expulsion from the Visa/MasterCard network for life…just for a start.
Banking is coming. Credit card processing is coming. Dispensary owners need to focus on running their businesses within the framework established by the Department of Justice, the Financial Crimes Enforcement Network and their state and local laws regarding the sale of marijuana. If they do that, and remain patient, they will be first in line as legitimate financial services finally arrive.
Jeff Foster is co-founder of Jane, LLC, a Sponsoring level member of NCIA since July 2014. For nearly two decades, Jeff has worked with some of the world’s largest retailers and financial institutions to define, design and implement e-commerce and retail payment processing and risk management solutions. Jeff co-founded Jane after recognizing the overwhelming need for cash management and financial services solutions in the legal cannabis industry. As an innovator in financial services, Jeff is a sought-after expert and speaker. He has been quoted in numerous publications including; The Wall Street Journal, Business Week, The Financial Times, The Washington Post and The Washington Business Journal and has appeared on Bloomberg Television and ABC News. Jeff also speaks at countless financial services and cannabis trade shows globally, where he advocates and educates on everything from strategy and trends to best practices.
Guest Post: 2015 Cannabis Industry Market Analysis
2015 was a very exciting time in the cannabis industry. According to public opinion polls conducted in the U.S., between 51% and 58% of respondents were in support of legalization. The highest level of support comes from the age range of 18-34, showing a staggering 71% supporting full legalization.
In 2015, several states voted for some form of cannabis proliferation, and many more have taken decriminalization measures. With a year of adult-use retail cannabis now completed in Colorado and Washington, and the start of full legalization in Oregon, the tide seems to be slowly but steadily shifting.
Reflecting back on 2015, here were a few of the notable developments that resonated throughout the cannabis industry.
Emerging Markets
Currently there are twenty-three states and the District of Columbia that have laws legalizing cannabis usage in some form. Four states have completely legalized cannabis use for adults 21 and older.
On the medical side, several states opened their first cannabis dispensaries to the public in 2015. Nevada, Massachusetts, Minnesota, Delaware, and Illinois were among these states. Though sales have been slow going for various reasons, 2016 should be a landmark year for legalization in many of these newly developing cannabis markets.
Adult-Use Cannabis Boom
Colorado, Washington, Oregon, and Alaska have all completely legalized the possession of cannabis. On January 1, 2014, Colorado opened its first adult-use cannabis stores, which effectively combined their medical and retail markets. Their combined medical and adult-use system generated more than $699 million in gross revenue in 2014, with approximately $76 million in tax revenue collected. Washington, by comparison, opened its adult-use market in July of 2014 and finished the year with $64 million in total sales and $16 million in tax revenue collected.
The revenue figures for 2015 have eclipsed the previous year’s marks substantially. Colorado gross sales came in just over $996 million for 2015, with $135 million in tax revenue collected from close to 800 stores, servicing about 5.5 million residents.
Washington, by comparison, generated more than $357 million in retail sales, with more than $115 million going to the state as an excise tax. This revenue was generated at approximately 205 licensed stores, servicing 7 million residents.
Meanwhile, Oregon started a partial foray into adult-use cannabis sales by utilizing the existing network of medical dispensaries selectively approved for retail sales of cannabis flowers to anyone 21 and older. In July of 2016, Oregon will completely open its adult-use market. Alaska, with no medical dispensaries or infrastructure, will likely take much longer to develop as a viable market.
This chart references data from the Washington Liquor Control Board as well as The Cannabist website.
2016: Legalization Abounds
With the level of success, both fiscally and socially, that was achieved in relatively small states, it should be expected that 2016 will be a big year for ballot measures legalizing cannabis. There are several states that are gearing up for potential 2016 ballot initiatives. Massachusetts, Maine, Missouri, Ohio, Nevada, California, and Hawaii are the states that seem likely to make it to a vote.
Northeast
In the Northeast, there have been several developments causing optimism throughout the region. New England has taken a very progressive path to legalization. Every state has a medical cannabis market and has decriminalized possession of small amounts of cannabis with the exception of New Hampshire. New Hampshire has made at least six attempts to get decriminalization measures passed, but so far these initiatives have been unsuccessful getting past the State Senate. Ironically, four dispensaries are set to open in 2016 for medical patients that meet the qualifying conditions.
Midwest
Ohio had a ballot measure to legalize cannabis late in 2015. The legislation featured a basic monopoly on production being designated to 10 predetermined groups comprising wealthy residents. Unsurprisingly, there was overwhelming opposition, with the proposed legislation getting shot down by a margin of almost 2:1 against. We’ll likely see a second attempt to pass a legalization measure in 2016.
West Coast
With Washington and Oregon taking legalization measures, California is the next in line. At the end of the session in 2015, Californians passed the Medical Marijuana Regulation and Safety Act. This piece of legislation sets up the regulatory framework for a state-recognized medical marijuana industry. California, being one of the largest states, with a population of over 38 million residents, has had a vibrant quasi-grey market with an estimated 2,000 stores operating within the state. Despite the lack of reported sales figures, estimates of the California market are conservatively $3 billion to $5 billion annually. Should this market be legalized and regulated at some level, this could generate an estimated $450 million to $750 million in tax revenue, should the state impose a 15% tax rate.
2016 should be another historic year for the cannabis industry. With public opinion steadily growing in support of legalization, and the hysteria of an election year, it would not be surprising to see cannabis proliferation take the forefront in the national conversation.
Jim Makoso, Vice President of Lucid Oils
Jim Makoso is an entrepreneur in the cannabis industry. He joined Vuber Technologies as one of the original investors in February 2014. He is currently an Advisory Board Member and shareholder responsible for guiding strategic development. January 2015, Mr. Makoso founded Lucid Labs and Lucid Oils. He currently holds the position of Vice President and is responsible for strategic partnerships and business development.
Editor’s Note: In January, Ean Seeb, who serves on the Board of Directors for NCIA and is co-founder of Denver Relief and Denver Relief Consulting, coordinated with NCIA’s Director of Government Relations Michael Correia to arrange personal meetings with congressional offices in Washington, D.C.
Ean Seeb speaks at NCIA’s Policy Symposium in 2015
In December, while planning for a January business trip to Washington, D.C., I realized that I should take the opportunity to use some downtime to lobby Capitol Hill offices on issues affecting the cannabis industry. I reached out to NCIA’s Executive Director Aaron Smith and Director of Government Relations Michael Correia and announced my intention. I was amazed at their responsiveness and support for my idea.
The whole planning process was quite easy. I let them know the date I was available and the focus of my trip and let the D.C. office coordinate logistics. Denver Relief Consulting has business interests in Hawaii and I wanted to focus on that state’s Congressional delegation. My goals were to update offices on medical marijuana implementation in Hawaii and ask these offices to co-sponsor The Small Business Tax Equity Act of 2015 (S. 987 & H.R. 1855), which amends Internal Revenue Code Section 280E to allow cannabis businesses in compliance with state law to take standard tax deductions and credits relating to business expenses.
The trip went very smoothly. I met up with Michael the evening before our meetings to discuss issues and logistics. Although I am well-versed on issues affecting our industry, it was really informative for me to sit down with him and discuss our focus, strategy, and talking points. We were joined by NCIA Member Tae Darnell, CEO of Sensi Media, whose background on cannabis reform in Hawaii goes back many years and was a great asset to our meetings.
We visited offices in both the Senate and House of Representatives, and each office was very informed about cannabis issues, was responsive to our concerns, and asked insightful questions. I remember back in 2013 when NCIA held its 3rd annual member lobby days. During those meetings, staffers would drop their jaws and say “You’re here to talk about what?” It was almost humorous because, back then, staffers were still in shock that cannabis issues were being brought to them. This time, one of our meetings lasted a full hour! The reception from congressional offices has evolved significantly over the past five years, and that can be attributed to the work NCIA has done on the ground.
The National Cannabis Industry Association’s 5th Annual Lobby Days in Washington, D.C.
Although our meetings were with Democratic offices, who tend to be supportive of our issues, they were still not co-sponsors of legislation that would solve our 280E tax problems. The offices really appreciated tying the issue to Hawaii and answering questions specifically related to the state and how 280E will negatively affect their constituents. Each of the offices will discuss co-sponsoring legislation in the future, and our D.C. office will continue working with them to gain their support.
I did my homework with information provided by NCIA through newsletters, packets, and the website. An hour’s worth of studying on the front end made for some really powerful and effective meetings. As an NCIA member, it was personally and professionally fulfilling to be able to leave the Capitol thinking, “Today, I made some good progress on our issues, and for our industry, through the work done with these folks.”
We love nothing more than getting our members in front of lawmakers. That’s where change happens. https://t.co/kcdYFf6oJT
I wholeheartedly encourage other NCIA members not only to go to NCIA’s 6th annual Member Lobby Days in May — but also to go to D.C. on your own. The NCIA Government Relations team will be there with you every step of the way.
As I was leaving, Michael said, “Please tell other members who happen to be traveling to D.C. that we are available for any NCIA member, at any time, who wants us to coordinate personal meetings with congressional offices.”
If you are interested in contacting NCIA’s Government Relations department to schedule meetings with Members of Congress in Washington, D.C., please email Government Relations Coordinator Michelle Rutter at michelle@thecannabisindustry for more information.
Guest Post: Supplementing Greenhouse Lighting in Winter Months
As the seasons change, so does the amount of light that enters into your greenhouse. Summer months may offer an abundance of natural light; however, the longer nights of winter require supplemental lighting for growers to achieve the best yield possible from their crop. Some greenhouse facilities shut down during the winter months due to natural lighting restraints, but there are easy solutions that can mean more harvests and bigger profits for growers. The first step is to target a daily light interval (DLI) number for each facility and design the supplemental light accordingly. This ensures optimal light intensity and uniformity in the facility year-round.
On Site
Recently, Colorado marijuana cultivators have begun to move into more efficient greenhouse structures. With proper planning and execution, these growers are experiencing as much or more success as indoor gardeners. It does take proper planning to get through the short days of the winter, and owners are turning towards horticulture companies to help them succeed. Based on the sun’s position in the geographical region, high tech control systems with DLI sensors can be installed to measure when the natural light falls below a certain level and the supplemental light is needed to optimize growth.
For example, at urban-gro, once we know the facility’s DLI and obstructions within the greenhouse structure, we begin the planning process and consider technical factors for the layout of the lighting system. Ensuring optimal lighting layout for the grow facility is the top priority. Incorporating lights into the structure so they create minimal shadowing is critical; this ensures that the crops are getting the optimal amount of natural light when the sun is shining.
Today, most grow facilities use 1,000-watt DE HPS light fixture, which is the most efficient light source on the market for the plant canopy. Once the lighting system is installed, it is essential that the correct intensity is aligned with the crops’ growth stage, which ranges from veg to bloom. We schedule a gradual increase of light intensity so yield is maximized and never harmed.
End Result
With supplemental lighting, cultivators can guarantee the correct amount of lighting and environmental controls for the winter months to ensure yields and profits.
Shelly Peterson serves as Vice President of Sales for urban-gro for the last three years. Shelly manages the company’s sales force located across the country. Her passion for eco-friendly solutions and creating a sustainable environment ensures that the commercial cultivator is provided with a lighting plan that utilizes the least amount of equipment. Further, her skills learned in the commercial lighting industry have enabled her to work with regional electrical providers to maximize available utility rebates for urban-gro’s customers. Urban-gro is a Sustaining level member of NCIA since November 2014.
Help NCIA’s Inclusion Initiative Expand in 2016
Congratulations and thank you for a great 2015.
NCIA’s Inclusion Initiative, headed up by our Minority Business Council (NCIA-MBC), had a good start this year, and we were able to make a difference for dozens of people in the cannabis industry or working to enter the industry. Considering the Council had its first formal meeting only seven months ago, we have achieved a great deal in raising awareness and beginning to take on the mandate of creating a more inclusive industry.
We also have a good start to 2016. We’ve added an Inclusion Initiative contribution option to the registration forms for the 2016 Cannabis Business Summit and have already begun building up the scholarship fund.
But we can never rest on our laurels, and the expectations of the industry are great. There is talk about what else we can do to help promote inclusion in this industry, and now is the time to start the discussion.
The next meeting of the NCIA-MBC will be a planning meeting at 2pm MT on Tuesday, January 19th. To join the meeting, simply call in to the conference call line at (303) 416-5167. (No PIN is necessary.)
With this meeting, we’ll seek to get a little more formal in our efforts. The goal is to establish a representative committee and meeting structure to ensure we are at the forward edge of our work and that what needs to be done is getting done.
In an effort to continue the development of this initiative and grow the opportunities for those who face barriers within the industry, we are putting forward the notion of creating a more formal structure – guiding the development of the NCIA Inclusion Initiative by expanding the Minority Business Council and establishing a less formal advisory committee as well.
Therefore, we seek your input into two areas:
Please review the proposed rules for serving on the NCIA Minority Business Council. Then let us know if you would like to serve on the Council under these rules or would like to stay or become involved with the Inclusion Initiative through the less formal advisory committee.
Proposed Requirements for NCIA Minority Business Council (MBC) Members
Council members must be employees of NCIA member-businesses
Council chair must be a member of the NCIA Board of Directors and thus report to and from MBC
Chair and Vice chair are elected by the Council members
Secretary is appointed from NCIA staff
Only one person from any given member-business can serve on the Council (but there is no limit to how many people from a business can serve on the advisory committee)
Council members must be able to attend at least 3 in-person meetings and 3 telephone meetings during a calendar year
Council members must commit to a minimum financial contribution to MBC activities (examples: scholarship pledges, in-kind donations, etc.), exact amount to be determined by the Council at an affordable level to all
We believe the optimal number of people on the Council would be about 12, so we are looking for 12 strong volunteers who have a point-of-view and are eager to contribute on these critical issues.
If you own or are employed at an NCIA member-business, please feel free to nominate yourself for the Council. We also welcome your recommendations for others for us to follow through on and ensure we have the best recruits we can get.
Even if you are not part of an NCIA member-business, we invite you to join the advisory committee for NCIA’s Inclusion Initiative. On this advisory committee, you will be invited to every meeting and kept fully informed of action and activities, as well as have direct input into the Council and the Inclusion Initiative.
Please let us know of your involvement and interest before January 11th, so we can schedule a meeting and put structure in place for fuller development.
And as we head into 2016, we invite you to suggest and share resources for the Inclusion Initiative page on NCIA’s website, so that we can build it into a helpful presence for those looking for industry support and knowledge.
Thank you for your interest in the Minority Business Council and NCIA’s Inclusion Initiative. We look forward to expanding and building upon the success of 2015!
NCIA’s Minority Business Council: Robert Van Roo, Palm Springs Safe Access Joshua Littlejohn, Accannadations LLC Dr. Lakisha Jenkins, Kiona T. Jenkins Foundation for Natural Health Luke Ramirez, Walking Raven LLC
Member Spotlight: Cannabis Basics
To kick off 2016, we speak with Ah Warner of Cannabis Basics, whose company saw a landmark year in cannabis policies in her state of Washington. She also recently won ‘Best Topical Brand’ at the 2015 Dope Industry Awards in Washington. Many in the industry and movement look up to her involvement in both her community and her direct activism, setting a tone for others looking to create a successful and responsible business in the cannabis industry.
Cannabis Industry Sector:
Cannabis-Infused Products
NCIA Member Since:
February 2013
How do you uniquely serve the cannabis industry?
We are dedicated to true whole genus cannabis topical therapy.
Cannabis Creations, now Cannabis Basics, was founded in 1995. Back in those days, there were many hemp body care manufacturers working with hempseed oil because of its amazing nutritive value for skin care. Today there are a host of cannabis topical producers that focus on cannabinoids from the plant and also CBD-derivatives from hemp that speak to our CB2 receptors. Cannabis Basics is this rare and beautiful place where the essential fatty acids and anti-inflammatory properties of hempseed oil and the multiple cannabinoids and terpenoids from cannabis are blended together with an arsenal of other botanical constituents to provide natural localized therapy for symptoms brought on by a myriad of conditions.
Why should customers seeking cannabis-infused topical products use Cannabis Basics?
We never use animal products, man-made fragrance oils, or chemical preservatives. We buy locally and organically whenever possible. Supporting Cannabis Basics is also activism because it enables us to continue to work for the betterment of our industry and community as a whole.
On August 25th, 2015, the USPTO awarded Cannabis Basics the first federal registration to a brand/logo displaying both the leaf and the word “cannabis” representing an actual product that contains cannabis, not a service or institution. Cannabis Basics has two distinct lines, one that contains cannabis (industrial hempseed oil) that can be sold anywhere in the world, and the other that contains cannabis (I.H. and multiple cannabinoids including THC) sold only in the state of Washington.
It is important to note that the USPTO did not award federal registration based on my cannabinoid line of products. Federal protection was awarded for my cannabis industrial hemp products however, and due to same branding, will by default provide protection to the entire Cannabis Basics family of products.
What started out as stand-alone sister bills with bipartisan support actually passed on June 30th as Section 7 of HB 2136, an I-502 tax fixer bill, and was signed into law by Governor Enslee. This law was enacted on July 1st, 2015, and is the first of its kind in the country. The CHABA law defines Cannabis Health and Beauty Aids for the first time in our legal lexicon as “cannabis products for topical use only, non-intoxicating and contains less than .3% THC.” It defines these products as not marijuana and allows for them to be sold to any mainstream retailer in the state of Washington, i.e., any health food stores, salons, or spas. The much larger significance of this new law is that it is the first removal of anything cannabis from the Washington State Controlled Substances Act.
I would be remiss if I did not take this platform to thank all the legislators who played a part in moving CHABA through Olympia, especially Washington State’s Cannabis Champion Senator Jeanne Kohl-Welles and my co-author/policy advisor Kari Boiter. The state of Washington and anyone who uses or produces CHABA are forever in your debt.
Why did you join NCIA?
Our goal at Cannabis Basics is to make Cannabis Health and Beauty Aids accessible to all health-conscious consumers everywhere in the U.S. and to be able to export to any country that is interested in importing these types of products. Being a member of NCIA has given me access to the movers, shakers, and policy-makers so that I may work efficiently at this ultimate goal.
Announcing the Quarterly Cannabis Caucus Event Series
Wow, where does the time go? The end of 2015 is in sight and 2016 is fast approaching! As per usual, these past 12 months made for another landmark year for our industry where we saw enormous growth across all sectors, as well as witnessed notable legislative victories in the House and the historic first-time introduction of cannabis-specific legislation in the Senate. We continue to see increased activity and support for our issues in D.C., due in no small part to our increasingly prominent voice within the halls of Congress, spearheaded by the work NCIA is doing with your support.
Now, we are excited to announce that starting in January, we’ll be debuting a new nationwide event series! NCIA’s Quarterly Cannabis Caucuses will be held in the cannabis industry’s 12 most active regions, on Tuesdays and Thursdays in the first month of each new quarter. The exact date will vary depending on your region, and you can view the full list of dates and locations here. The schedule for the first quarter will be:
Oregon Cannabis Caucus – Portland, OR – Tuesday, January 12 – REGISTER NOW
Mid-Atlantic Cannabis Caucus – Washington, D.C. – Tuesday, January 12 – REGISTER NOW
Northeast Cannabis Caucus – Boston, MA – Thursday, January 14 – REGISTER NOW
FloridaCannabis Caucus – Orlando, FL – Thursday, January 14 – REGISTER NOW
MidwestCannabis Caucus – Chicago, IL – Tuesday, January 19 – REGISTER NOW
Tri-StateCannabis Caucus – New York, NY – Tuesday, January 19 – REGISTER NOW
ColoradoCannabis Caucus – Denver, CO – Thursday, January 21 – REGISTER NOW
SouthwestCannabis Caucus – Phoenix, AZ – Thursday, January 21 – REGISTER NOW
NevadaCannabis Caucus – Las Vegas, NV – Tuesday, January 26 – REGISTER NOW
So. California CannabisCaucus – Los Angeles, CA – Tuesday, January 26 – REGISTER NOW
No. CaliforniaCannabis Caucus – San Francisco, CA – Thursday, January 28 – REGISTER NOW
WashingtonCannabis Caucus – Seattle, WA – Thursday, January 28 – REGISTER NOW
As NCIA heads into our sixth year of operation, we’re committed to growing and evolving our work to provide increased value to our members and reflect our unique position with the industry. The Quarterly Cannabis Caucuses have been designed to provide the quality and consistent programming you’ve come to expect from NCIA events, while also preparing you and your business to contribute to our legislative efforts on the national level.
You and your team will leave each Cannabis Caucus equipped with the tools to affect positive change on cannabis issues while making meaningful connections with vested industry players. Each Caucus will be free of charge for current NCIA members and include an in-depth federal policy update from senior NCIA staff or staff from a district congressional office, a comprehensive state and local policy update from a local elected official or a member of NCIA, an informational packet filled with detailed legislative analysis and recent federal policy developments, and an organizational update so you can keep up to date with what NCIA is doing for you. All of this will be offered as well as the opportunity to network with the leaders in the cannabis industry.
The Caucus also serves as an opportunity for our members to share their ideas and concerns with NCIA, which is committed to serving the industry in the best way possible
As the only national trade association representing cannabis business owners on Capitol Hill, we are your voice within the halls of Congress on a daily basis. We take this responsibilityseriously and by holding these quarterly member meetings, we hope you’ll take advantage of this opportunity to make your own voice heard within our ranks as well.
Every day it seems a new event is popping up, vying for your time, money, and focus. We here at NCIA know that our members’ time is one of their most valued assets, so we’ve created this event series to pack maximum information, value, and member benefit into a regular quarterly meet-up.
Do you have questions regarding the upcoming Quarterly Cannabis Caucus in your area or others across the country? Reach out to events@thecannabisindustry.org any time with your questions, comments, or concerns.
Interested in sponsoring one or a series of events in a particular region throughout the year in order to gain valuable exposure for your company to our nationwide network of established business owners? Please contact Brian Gilbert at brian@thecannabisindustry.org for more information on series rates and associated discounts for packages including NCIA’s Cannabis Business Summit 2016, taking place in Oakland, CA, June 20-22.
Video Newsletter: Why NCIA’s Cannabis Business Summit is 2016’s Can’t-Miss Event
Then purchase your Members-Only Early Bird tickets by December 18 to save $380 off the regular price!
Not yet an NCIA member? Add a one-year membership to your ticket purchase to get the early bird discount AND $50 off your member dues!
Register today and we’ll see you in Oakland, June 20-22, 2016!
Timeline: 2015 Legislative Year in Review
by Michelle Rutter, Government Relations Coordinator
As we look forward to 2016, there’s much on the horizon for the cannabis industry. NCIA remains dedicated in its effort to pass banking and tax legislation through Congress that would provide immediate relief to cannabis-related businesses all over the country.
In addition to the federal advocacy that NCIA engages in every day, there will be at least five states seeking to legalize and regulate adult-use cannabis via the ballot initiative process: Arizona, California, Maine, Massachusetts, and Nevada. It’s also likely that Florida will have another ballot initiative relating to medical cannabis, and it’s possible that other states will move forward with cannabis reform through ballot initiatives or legislative processes. What happens over the next twelve months will be crucial in shaping the future of the legitimate and responsible cannabis industry.
While 2015 was a milestone year for cannabis reform, that same momentum will be necessary in order to continue moving the conversation forward with Congress in Washington, D.C. The Rohrabacher-Farr medical cannabis amendment earned more that 60 Republicans votes. For the first time ever, there are multiple pro-cannabis bills that have been introduced in the U.S. Senate. Continued progress is vital in garnering more national support for cannabis reform, so make sure your interests are heard through national advocacy, education, and community with NCIA.
The timeline below lays out some of the highlights from a busy year in cannabis industry advocacy. We look forward to more exciting milestones with your help in 2016!
*Click on the “Full Screen” button (with the four arrows) at the bottom of the image to expand its size.
Happy Thanksgiving! Bountiful Benefits for NCIA Members
by Laurence Gration, Director of Development
As we head into this weekend of giving thanks, we here at NCIA are grateful for five years of advocacy, education, and community with our members. With a diverse set of services and an increasing influence on industry, legislators, and regulators across the nation, the cornerstone of our success together is firmly in place.
As the cannabis industry’s only non-profit trade association with full-time professional lobbyists working for your interests in Washington, D.C., NCIA is focused on advocacy for your business. With the strength in numbers that our nearly 1,000 member-businesses provide, we have become an influential force on Capitol Hill, with direct access to legislators and regulators.
No other business organization has done (and is doing) more for 280E reform or to fix the dangerous banking crisis than NCIA.
As a unifying voice in the industry, we are also focused on educational programming and community-building, bringing together advocates, business leaders, and policy makers to shape the industry in positive ways. NCIA also leads a Diversity and Inclusion committee, representing the interests of all under-represented groups within the industry.
But in addition to our core mission, NCIA is doing so much more for its members and the industry:
Keeping you informed: sign up for our newsletter, get video updates, and read the NCIA blog
On top of all that, NCIA members have access to a large and growing list of Member-to-Member Discounts, covering virtually every aspect of your business needs, including:
Accounting
Advertising & Marketing
Analytical Lab Testing
Infused Products
Cultivation Supply
HR & Recruiting
Software Technology
Insurance
Legal Services
Packaging
Photography
Real Estate Advising
Security
Training and Education
Travel
Wellness Products
With these discounts alone, many of our members find their NCIA membership pays for itself.
Finally, one more way we say “thanks” to our members is with gifts that let you show your pride in being part of our fast-growing community. Member pins, decals for your business window, and member certificates tell the world that you’ve invested in the long-term future of our industry.
At this time when we count our blessings, we’re grateful to you, and we hope you’ll enjoy the bounty of benefits your NCIA membership brings. With our influence in D.C. on the rise, and new programs and benefits being added all the time, it’s never been a better time to be a part of the NCIA community.
Not yet an NCIA member? Invest in your business and the future of your industry – join today!
Video Newsletter: 5 Years of Advocacy, Education, and Community
Even if you couldn’t attend NCIA’s 5th Anniversary Banquet held in Las Vegas on November 11th, you can still reflect on five years of industry advocacy, education, and community with a few of our founding members in this video presentation.
We are proud of the nearly 1,000 member-businesses that have come together as the unified voice of the cannabis industry.
Not yet a member of NCIA? It’s never too late to get involved in paving a prosperous future for the cannabis industry — join today!
Special Thanks to: Christie Lunsford, Jay and Diane Czarkowski, Brian Vicente, Ean Seeb, Erich Pearson, Étienne Fontán, Julianna Carella, Jill Lamoureux, Rob Kampia, and Steve DeAngelo.
Looking Back, Moving Forward: NCIA Honors Legislative Leader Rep. Barbara Lee
by Michelle Rutter, Government Relations Coordinator
As the year draws to a close, many of us in the cannabis industry are heading to Las Vegas for our annual trip to talk all things cannabis.
On November 11th, NCIA will be celebrating our fifth anniversary as the national voice for responsible cannabis businesses at a luxe banquet at the LiNQ Hotel + Casino, aptly themed “Looking Back, Moving Forward.” We’ll be taking a look back at how far we’ve come together in preparation for the hard work still ahead, while honoring some of the industry’s greatest champions on Capitol Hill. Las Vegas representative Dina Titus (D-NV) will give welcoming remarks to our guests.
To celebrate the progress that the cannabis industry has made, NCIA annually names a member of Congress as the recipient of our 2015 Cannabis Industry Legislative Leadership Award. Winners in prior years include true visionaries and cannabis champions Earl Blumenauer (D-OR) and Dana Rohrabacher (R-CA). Runners-up and “Honorary Legislative Leaders” of 2015 for the award this year included Sen. Ron Wyden (D-OR), Sen. Jeff Merkley (D-OR), Rep. Jared Polis (D-CO), and Rep. Tom McClintock (R-CA). This year, NCIA has chosen to name Rep. Barbara Lee of California as the recipient of the 2015 Legislator of the Year Award.
Congresswoman Barbara Lee
Representative Barbara Lee is currently serving her ninth term in Congress as the representative for California’s 13th district. The district consists of the east San Francisco Bay Area, including Alameda, Albany, Berkeley, Oakland, Piedmont, and San Leandro. The Congresswoman is a member of the Democratic Party and is the first woman to represent her district. She currently serves on the Appropriations Committee and on the Budget Committee in the House of Representatives, in addition to being the former chair of the Congressional Black Caucus.
As a leader on issues that span both the social and economic spectrum, Representative Lee has long been a vocal supporter of the cannabis movement. In the 113th Congress, Rep. Lee sponsored the States’ Medical Marijuana Property Rights Protection Act, which would have exempted real property from civil forfeiture under the Controlled Substances Act due to medical marijuana-related conduct that is authorized by state law.
Currently, during the 114th Congress, Representative Lee has continued to be a champion for the cannabis industry on Capitol Hill. She is a co-sponsor of the Marijuana Businesses Access to Banking Act of 2015 — NCIA’s priority legislation that would end our industry’s banking crisis and provide financial services for the state-legal cannabis businesses. In addition to reintroducing her property rights protection legislation, H.R. 262, Rep. Lee is a co-sponsor of the Regulate Marijuana Like Alcohol Act and the Respect State Marijuana Laws Act.
Representative Lee is very familiar with the cannabis industry in her own backyard: her district is home to many NCIA members, including the nation’s longest continuously operating medical cannabis collective, Berkeley Patients Group, the internationally-recognized Oaksterdam University, and the country’s largest medical cannabis collective, Harborside Health Center.
We hope you’ll be able to join us at this historic event in Las Vegas on Wednesday, November 11th. Much has changed since NCIA formed back in 2010, and there can be no denying the monumental strides achieved since then by the cannabis industry.
Guest Post: NCIA Board Chair Reflects on the Past Five Years
by Jaime Lewis, Mountain Medicine
Dear cannabis colleagues,
I don’t know about you, but I cannot believe that it has been five years since Aaron Smith approached me with the idea of building a national trade association for the cannabis industry. Now, five years later, the National Cannabis Industry Association has become just that for us, and then some.
I’ve been witness to some incredible growth within the cannabis industry since NCIA was established in 2010. With the passage of full adult-use measures in four states and the continual growth of support within the halls of Congress, we have effectively been noticed as a legitimate industry that is gaining respect and recognition across the country.
It’s an amazing honor to have been involved from the very beginning – from attending the very first NCIA Lobby Day in Washington, D.C., to now serving as the chair of NCIA’s Board of Directors. All of us cannabis business leaders should be so proud to have effectively changed the conversation around our work, proving that we are a responsible and politically engaged industry. And we certainly have NCIA to thank for building a community of respected business owners and for fighting for this industry on the federal level for these past five years.
I invite you to come celebrate with me, share some laughs, and reflect on the last half-decade at Looking Back, Moving Forward – NCIA’s 5th Anniversary Celebration. Taking place on November 11 at the LiNQ Hotel & Casino in Las Vegas, the night will be be an unforgettable celebration of where we’ve been and what we have to look forward to in the years ahead. I am excited to celebrate with you! Sincerely, Jaime Lewis Owner, Mountain Medicine Chair, National Cannabis Industry Association Board of Directors
Jaime Lewis, Owner of Mountain Medicine & Chair of NCIA’s Board of Directors
Jaime Lewis is the founder and owner of Mountain Medicine, a leading marijuana provider in Colorado renowned for its quality products, patient services, community engagement, and philanthropic efforts.
Since 2010, she has applied industry best practices to advance the company’s mission to provide safe and legal access to marijuana infused products and improves patient quality of life through the therapeutic benefits of marijuana. Jaime’s business management and entrepreneurial skills have contributed to Mountain Medicine success. In addition she has experience in retail and Medical marijuana dispensary in Denver, with a background in culinary arts, Jaime’s career trajectory into the medical marijuana industry began by creating compassion edibles for HIV/AIDs patients in San Francisco. In 2009, she moved to Colorado and founded Mountain Medicine, a marijuana-infused product manufacturer. She continues to oversee product development, quality control, and product consistency – the main tenants of the philosophy behind the company she founded.
Jaime is founder and Chair of the Cannabis Business Alliance (CBA), which serves as the policy voice for the cannabis industry in Colorado. CBA reflects her priority to develop sound policies and respect for the industry as it grows. She is a current board member of the National Cannabis Industry Association and has been active in campaigns to advance the interest of the industry. As a business woman and industry advocate, her participation in these organizations reflects her passion and commitment to support responsible industry policies, promote patient access, and enhance the emerging industry’s role in the economy.
Guest Post: Raising Money 101 – What’s an Offer and Why Does it Matter?
This is article is the first in a series, which will provide a general overview of the laws that impact raising money in the cannabis industry.
Any business owner planning to raise capital should consider the federal Securities Act of 1933, commonly referred to as the “Securities Act.” In addition to federal law, each state has its own set of laws that regulate securities sales, commonly referred to as the “Blue Sky Laws.” Both the Securities Act and any applicable Blue Sky Laws must be complied with in connection with the sale of securities – a security being proof of ownership or debt that has been assigned a value and may be sold (stocks and bonds are examples). Both the Securities Act and the Blue Sky Laws regulate the sale of securities by prohibiting the offer and sale of unregistered securities (other than pursuant to specified exceptions) and requiring companies to provide investors disclosure of all material facts concerning the securities for sale.
Crucially for business owners, it’s not only the actual documents to raise money that are governed by the Securities Act: so are those initial business plans and executive summaries that might be circulated to gauge interest. Ensuring that your business plans are not violating any securities laws is the focus of this article.
In analyzing whether a transaction or communication is in compliance with the Securities Act and Blue Sky Laws, it’s helpful to think through the following questions:
Does the transaction or communication constitute an offer or sale?
Is the offer or sale of a security (as defined in the Securities Act and the Blue Sky Laws)?
If there is an offer or sale of a security, is the security properly registered with federal and state authorities?
If there is an offer or sale of a security and the security is not registered, does the transaction fall within one or more of the specified exemptions to registration?
As you assess your materials for compliance, begin by asking whether an offer has been made. If a transaction or communication does not constitute an offer, then compliance with state and federal securities law is not a concern. However, if an offer is unintentionally made – a common mistake – it may trigger a violation of securities law since it is unlikely that the unintentional issuer will have taken into account the necessary disclosure items and determined the relevant exemption to registration. Note that in the context of securities law, “issuer” means any company that issues or proposes to issue a security.
What, then, is an offer, from the federal standpoint and from that of the state of Colorado? Section 2(a)(3) of the federal Securities Act defines “offer” as “every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value.” Under the Colorado Securities Act, “offer to sell” includes any attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security for value and “offer” means an offer to sell or an offer to purchase. What constitutes an offer, furthermore, may be a matter of perceived intent rather than explicit proposal: the SEC has noted that “[t]he publication of information and statements, and publicity efforts, generally, made in advance of a proposed financing, although not couched in terms of an express offer, may in fact contribute to conditioning the public mind or arousing public interest in the issuer or in the securities of an issuer in a manner which raises a serious question whether the publicity is not in fact part of the selling effort.” As a practical matter, these definitions, as well as the SEC’s guidance, mean that many communications that would not be considered offers under contract law may well be considered offers for purposes of state and federal securities law.
From a practical point of view, then, how should an entrepreneur approach an action that might be considered an offer – distributing information about a new company, for example? To mitigate risk of a securities violation, consider the following factors before circulating information about your business:
Include Appropriate Disclaimers: If you do proceed with distribution, any documentation provided to potential investors should contain disclaimers that clearly indicate that the provided information is not an offer or a solicitation of an offer to buy securities. Note that such disclaimers do not necessarily mean the document will not be considered an offer.
Require Further Information: Any documentation should also state explicitly that further information about a purchaser will be required before an offer can be made.
Minimize Details: Generally speaking, the fewer details provided about a potential security, the better. Even high-level details can result in a document being considered an offer.
Ensure Accuracy: Make absolutely sure that any information provided is correct and not misleading (i.e., do not claim that cannabis is legal in the United States, note that it remains illegal at the federal level). Avoid selective disclosure and be prepared to stand behind any claims made.
Follow Best Practices: Every communication should adhere to best practices regarding offerings in general (e.g., avoiding general solicitations, keeping track of distributed documents, etc.)
Seek Legal Counsel: When in doubt, speak to a qualified securities attorney. It’s always easier to do things right the first time, whereas it may not be possible to fix certain mistakes.
This information is educational only and shall not be construed as legal advice. Please consult your attorney prior to relying on any information in this article.
Charlie Alovisetti, Vicente Sederberg LLC
Charlie Alovisetti is a senior associate at Vicente Sederberg LLC. Prior to joining Vicente Sederberg, Charlie worked as an associate in the New York offices of Latham & Watkins and Goodwin Procter where his practice focused on representing private equity sponsors and their portfolio companies, as well as public companies, in a range of corporate transactions, including mergers, stock and asset acquisitions and divestitures, growth equity investments, venture capital investments, and debt financings. In addition, Charlie has experience counseling portfolio and emerging growth companies with respect to general corporate and commercial matters and all aspects of compensation arrangements, including executive employment and consulting agreements, stock option plans, restricted stock plans, bonus plans, and other management incentive arrangements. Charlie has experience in both U.S. and cross-border transactions, and has advised clients across a range of industries including technology, manufacturing, software, digital media, energy and clean tech, healthcare, and biotech. He holds a Bachelor of Arts, with honors, from McGill University and a law degree from Columbia Law School, where he was a Harlan Fiske Stone Scholar.
*Currently only admitted in New York
Guest Post: Legislation, Rule-Making, and the Necessity to Be a Unified Industry
In the 2015 legislative session, much changed in Washington State cannabis law. As with any change in cannabis law in any state, there is much drama that happens after such a change. Usually there is much bickering, finger-pointing, rumors, and misinformation in general. People seem to come out of the woodwork with often nonsensical interpretations of the new law. This often makes me wonder where they were during the legislative session when they may have been able to change the details that seem to trouble them now.
The fact is that all laws passed are imperfect. They are going to need to be fixed and those fixes are going to need to be fixed. There is not just one person that writes what is passed as law. There is a plethora of authors that include industry, interest groups, law enforcement, localities, citizen groups, and many others. Omnibus laws are going to advance some things and create problems elsewhere. This is to be expected.
The thing about law is, once it has passed and been signed by the Governor, it is what it is until the next session. This is not the time for bickering for those that are serious about making positive change. This becomes a time to work together. Once a bill becomes law, the legislative verbiage is put through a process called “rule-making.” In this rule-making, things can be steered within the framework of the law. In addition, the time before the next legislative session is a perfect time to solicit consensus and to author and shop legislative verbiage to potential bill sponsors.
After passage, no matter whether you like the law or not, it needs to be studied. It should be done dispassionately. It should be done section by section. You should ask yourself:
What does this section say?
What is the legislative intent of the section?
What is the synopsis of the section?
What rule-making does this section call for and by which agency?
Are there things in this section that need to be changed in subsequent legislative sessions?
You should write your answers to these questions down so that you can refer to them later. This is the way that you can be most effective at influencing rule-making and achieving success in subsequent legislative sessions. Really, how are you to influence rule-making when you don’t know what rule-making is going to happen with which agency? How are you going to achieve consensus enough to get changes in a legislative session when you don’t know specifically what needs to change?
We in the cannabis industry need to stop the self-destructive habit of thinking of legislative changes as “good” or “bad.” During session we need to do our best to be influential to produce the best results possible. After a law is passed we must come together to produce the best possible results in rule-making and plan for the next legislative session. To do this we need to stop finger-pointing and work together. Divisiveness and name-calling poisons the well for consensus-building.
Approaching a rule-making body or legislature as one person or organization is not going to be very influential.
Approaching the same as an industry with a common voice is powerful and will be extremely helpful in creating positive change.
We must put aside the pettiness and ego and work together for the betterment of the industry and the movement. Those that are willing to work together need to be finding the others that are willing to work together. We need to be focused on listening to others in the industry to understand what their ideas and concerns are. We need to include the end users and to consider their points of view. We need to have patience with each other. We need to put in the work to build consensus on the changes that need to be made. We need to be willing to compromise for the greater good. We need to accept that what happens in the end will not be perfect. We need to, in short, be an industry.
Prohibition is the enemy, not each other. To that end, we have been working to bring together the various industry groups in Washington State to form a super organization that is allied in its purpose. The Coalition for Cannabis Standards and Ethics, CAUSE-M, WAMJA, WMA and Northwest Producers, Processors, and Retailers have formed a Steering Committee to bring these organizations under a common banner. These groups represent the full spectrum of the industry, consisting of producers, processors, retailers, and ancillary businesses. It is my belief that there needs to be industry consensus even when there may be differences in perspective. Retailers and producers working against each other in a lobby effort really just has the effect of negating both. We are looking forward to merging together and ultimately forming a commission that is state-recognized.
Together we will move into the future.
John Davis, Northwest Patient Resource Center
John Davis, an entrepreneur and drug policy activist in Seattle, is founder of Northwest Patient Resource Center. After managing the oldest and longest running medical cannabis dispensary in the state, Compassion In Action, John founded Northwest Patient Resource Center, where he currently serves as the organization’s Chief Executive Officer. John is a founder of the Coalition for Cannabis Standards and Ethics (CCSE) and currently serves as the Executive Director of the industry group. He also chairs the CCSE Access Point Subcommittee. John is on the Board of Directors of the National Cannabis Industry Association (NCIA) and the Cannabis Defense Coalition (CDC), and is on the Advisory Board for Blue Sage Microbes and Life Sense Technologies.
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MassRoots (MSRT), a Denver-based social networking company for cannabis users, made headlines when it was denied approval to be listed on NASDAQ. According to MassRoots, the stock exchange justified the decision by claiming that the company was aiding and abetting the distribution of an illegal substance. Some speculate, however, that the decision considered the company’s low share price, although MassRoots stated it did meet the listing requirements with a market capitalization in excess of $40 million and more than 300 shareholders. NASDAQ did not publicly provide the grounds for its rejection. 
There are other, less honorable reasons why a company might want to trade OTC. When a public stock is widely traded, it’s difficult to influence the price of the stock. Imagine trying to materially change the price of Google’s stock – it would require a vast sum of money. But when a company’s stock is infrequently traded and information about that stock is limited, it’s much easier for an individual or group to influence a stock’s price. And information does tend to be quite limited when it comes to OTC stocks. In contrast to stocks listed on the major exchanges, not all stocks that trade on the OTC Link are required to be registered with the SEC. As a result, the overall level of information available for OTC stocks is both less detailed and less up-to-date than that of stocks traded on the NYSE or NASDAQ. It is also not uncommon for an OTC stock to be deficient in providing the limited information that is required. 
But while cannabis companies are focused on legal marijuana compliance and regulations issues, this crucial piece of the employment puzzle often falls by the wayside – and that can be disastrous.
In the municipality you’re considering, what are the setbacks between the property and nearby sensitive uses such as schools, parks, hospitals, day care and drug rehab centers? Based on the licensing jurisdiction, required setbacks and sensitive uses will vary, but typically one thousand feet in a direct measurement between property lines is the longest setback distance that is required. Depending on the municipality’s regulations, if the property is too close to nearby sensitive uses and within the setbacks then the property may be disallowed to be licensed.
Colorado currently has the strictest residency requirements for ownership of marijuana establishments in the United States, imposing a two-year residency requirement for any owner of a licensed business. In addition to the constraints imposed by such a lengthy residency requirement, the Colorado Marijuana Enforcement Division (the “
One additional major change in the Bill is the allowance for commercially reasonable royalties to be paid to Indirect Beneficial Interest Owners. As the law currently stands, a royalty would be considered a form of ownership by the MED (as the royalty would likely be based on the profit of the licensed entity) and would thus make the recipient of the royalty subject to residency and other ownership requirements. In addition, the current system requires all of the Owners to be present at MED meetings—which presents a major obstacle to the operator of a licensed business who wants to enter into multiple licensing agreements since any licensor could potentially put a license at risk by refusing to attend a meeting or by committing a bad act. However, Indirect Beneficial Interest Owners, while still subject to background checks, are not subject to residency requirements or the limitation of 15 natural persons (as is the case for Direct Beneficial Interest Owners when one or more equity holders does not meet the one-year Colorado residency requirement). It may also be the case, though we will need to wait for the final rules, that removing an Indirect Beneficial Interest Owner is easier than removing a Direct Beneficial Interest Owner from a license. 
According to Cody Stiffler, vice president of Government Affairs at BioTrackTHC, who was also present at the panel discussion, Congress has placed so many restrictions on the ability and powers of the DEA, that they can only reschedule cannabis to a Schedule II status. He believes there is almost no possible way that the DEA can de-schedule cannabis. The panel discussed Congress’s consideration of a waiver program for states with legalized cannabis in some form or another. “They [Congress] plan to give the U.S. Attorney General powers to offer waivers to state governments, exempting that state from federal law regarding cannabis, allowing banks and other institutions to take part in the industry without fear of federal backlash under the Controlled Substances Act,” says Stiffler. The waivers would have a duration of a number of years and a reporting and review process would follow the expiration of each waiver. “If the Attorney General decides that states are following the directives of the Cole Memo, then they will be able to continue, but if the data collected proves otherwise, those waivers would then be suspended or revoked,” adds Stiffler. It is important to note that the bill gives states the opportunity to correct any failures before those waivers are revoked.
ccording to Trumble, the SMART Enforcement Act would resolve many of the conflicts between federal law and state legalization measures. “It is the bridge that gets us from the broken system we have now to a future date when public opinion and Members’ positions may have shifted, while in the meantime fixing the problems people are experiencing on the ground,” says Trumble. She believes the bill provides for the protection of consumer safety through logical regulatory systems while eliminating federal prohibition of cannabis. “Every three years, a state will have to re-apply for the waiver and submit data showing that their regulations are working to keep Americans safe.” This would allow states to have the space they need to implement a sound regulatory framework.
Aaron G. Biros is the editor-in-chief of 
Hopefully by now you know the importance of building your brand’s presence on social media. However, there may be days when you ask yourself, “WTF am I doing?” 
Thanks in part to an over-saturation of weed porn and of course constantly 
As a successful entrepreneur, longtime marijuana advocate and medical grower, Alexa Divett understands the unique needs of the cannabis industry. 
When I was cooking, the Bay Area was home to a new sustainability movement that focused on local ingredients. Pioneering chefs like 
At a recent event, I spoke with a woman about her catering services, a service that pairs fine dining with smoked flower. When I asked about using cannabis as an ingredient, psychoactive or not, she said it was “too dangerous.”
Mountain Medicine recently became the first edibles company to co-brand with a mainstream (non-cannabis) food manufacturer. On my constant hunt for the best local ingredients, I discovered 
Jaime Lewis has more than nine years of experience managing the production of medical marijuana-infused products (MIP), as well as all facets of managing and operating a medical and recreational marijuana dispensary. A California Culinary Academy graduate, she’s worked in many highly acclaimed kitchens, including serving as the executive chef of a Michelin-rated three-star restaurant in San Francisco. She began creating medical marijuana edibles for HIV/AIDS patients in California in 2006 as part of a Compassion Co-op.
When asked to write for the NCIA blog, I first thought I’m not sure if anyone really wants to read my ramblings via an open blog format. So I thought about where most of my cannabis conversations start and end. More often than not, I am asked how I started out, what it has been like, and where I think the industry, Solstice, and myself are headed. Recently I celebrated 10 years cultivating the cannabis plant and I figured this format is as good as any to rehash (pun intended) the last decade of my life.
In the early days of 
As someone who’s been active in the cannabis movement for nearly two decades, and a member of the NCIA board of directors since 2014, I’m thrilled by the progress we’ve made in the last two years towards ending cannabis prohibition and creating a properly regulated economy around this most beneficial plant. But it’s not enough. My driving motivation, now as when I first became a member of this culture, remains helping to create a world where no adult faces punishment for cannabis, and the plant is safely and readily accessible to all who want or need it.
Jeanine Moss is the Founder of 
As the seasons change, so does the amount of light that enters into your greenhouse. Summer months may offer an abundance of natural light; however, the longer nights of winter require supplemental lighting for growers to achieve the best yield possible from their crop. Some greenhouse facilities shut down during the winter months due to natural lighting restraints, but there are easy solutions that can mean more harvests and bigger profits for growers. The first step is to target a daily light interval (DLI) number for each facility and design the supplemental light accordingly. This ensures optimal light intensity and uniformity in the facility year-round. 
For example, at urban-gro, once we know the facility’s DLI and obstructions within the greenhouse structure, we begin the planning process and consider technical factors for the layout of the lighting system. Ensuring optimal lighting layout for the grow facility is the top priority. Incorporating lights into the structure so they create minimal shadowing is critical; this ensures that the crops are getting the optimal amount of natural light when the sun is shining. 
No other business organization has done (
By John Davis, 