The legal cannabis industry is growing at an unprecedented rate, with more and more states legalizing its use for medical and recreational purposes. However, despite this progress, cannabis businesses face a major obstacle: Section 280E of the Internal Revenue Code. This provision is a significant burden on cannabis businesses, limiting their ability to take deductions for basic expenses like rent, utilities, and employee salaries. The result is a higher tax burden and reduced profitability, putting cannabis businesses at a disadvantage compared to other industries.
Section 280E was introduced in the 1980s as a way to prevent drug dealers from taking business deductions on their tax returns. At the time, the provision was aimed primarily at illegal drug dealers. However, when it comes to cannabis businesses, Section 280E has become a significant hurdle. The problem is that while cannabis is legal for medical or recreational use in many states, it remains a Schedule I drug at the federal level. This means that cannabis businesses are still subject to the same limitations as illegal drug dealers when it comes to tax deductions.
The impact of Section 280E on cannabis businesses is significant. Without the ability to deduct basic expenses, cannabis businesses face higher tax burdens and reduced profitability. This makes it difficult for them to reinvest in their operations and grow their businesses. In addition, the provision makes it challenging for cannabis businesses to obtain financing, as many traditional lenders are hesitant to work with them due to the regulatory environment and the industry’s status as a Schedule I drug.
The insurance industry plays a vital role in supporting the cannabis industry. With the help of insurance professionals, cannabis businesses can protect their assets, mitigate risks, and navigate the complex regulatory environment. However, insurance providers also face challenges in the cannabis industry due to the regulatory environment and the industry’s status as a Schedule I drug. For example, some insurance companies are hesitant to provide coverage to cannabis businesses due to concerns about federal prosecution.
Despite these challenges, there are insurance providers that specialize in the cannabis industry and offer tailored solutions to cannabis businesses. By working with these providers, cannabis businesses can protect their assets and minimize risks, while also demonstrating to potential investors and lenders that they are taking the necessary steps to manage their risks.
In addition to the insurance industry, there are other steps that policymakers can take to support the cannabis industry. Revising Section 280E is one of the most critical steps that can be taken. By allowing cannabis businesses to take more deductions on their tax returns, policymakers can help level the playing field and create a more equitable regulatory environment for the industry. This would enable cannabis businesses to reinvest in their operations, grow their businesses, and create jobs.
One could say that 280E could be equally or more importantly about de-scheduling cannabis than about changing a tax code. This a vital step that policymakers can take to remove cannabis from the list of Schedule I drugs. The current classification of cannabis as a Schedule I drug is outdated and based on outdated stereotypes. This is also contributing to a massive roadblock with the potential to destroy many businesses in the legal market, which only helps the illicit market thrive. Removing it from the list of Schedule I drugs would enable researchers to study cannabis more effectively and provide a clearer understanding of its medical benefits and potential risks. It would also allow cannabis businesses to operate more freely and obtain financing from traditional lenders.
Creating a more supportive regulatory environment for the cannabis industry is critical to its success.
With the help of insurance professionals, tailored solutions, and supportive policymakers, the cannabis industry can continue to grow and contribute to the economy. Revising Section 280E and removing cannabis from the list of Schedule I drugs are essential steps that can be taken to support this critical industry.
Valerie has over 16 years of experience in the insurance industry with specialized niches in cannabis, real estate, and community associations. With experience working for companies such as McDermott Costa Insurance Brokers, AmWINS Group, Inc., Commercial Coverage Ins. Agency, and Colemont Insurance Brokers, Valerie has developed a love of helping clients navigate the world of insurance by creating an understanding of the value behind insuring their business. In addition to her professional work, Valerie serves as the CREW East Bay Chair on the Programs Committee, is a National Cannabis Bar Association member, NCIA member, and volunteers in East Bay communities with Richmond Grows Seed Lending Library to show people how to save vegetable seeds and grow their own food. In 2021, Valerie received the 2021 and 2022 CREW East Bay Connections Award and was a nominee for the Elevate 2021 Industry Impact award.
With a drive and passion for helping people, Valerie has gone back to her long-standing roots in the plant medicine industry and uses her unique lens of growing up surrounded by cultivators and sellers to validate her client’s business needs. Valerie strives to break the mold of how insurance and cannabis has partnered together to give back to the community she grew up in. With a strong insurance background and an in-depth knowledge of the cannabis industry, Valerie has been a trusted advisor for over 70 cannabis clients.
For more information on Liberty’s National Cannabis Practice Group, please reach out toValerie Taylor, Vice President (National Cannabis Practice Leader), The Liberty Company Insurance Brokers.
Member Blog: From Hazy to Clear – Incorporating Data in your Cannabis Business
In today’s hyper-competitive cannabis landscape, a data-driven culture can make all the difference. Those who leverage data can confidently estimate the total addressable market, evaluate risk and opportunity, track performance, and execute against opportunities. From day one, cannabis businesses should strive to incorporate data into operations to make more informed decisions, problem-solve effectively, and understand the cannabis consumer and what drives their purchase decisions.
Leveraging Experience vs. Data
Some may look to experience and boots-on-the-ground exposure as justification for not investing in data, which brings up an important question: what’s more important – experience or data? We say both. Having either without the other puts your business at a great disadvantage.
Data provides a concrete base to view and understand a situation without the bias of anecdotes or squeaky wheels. However, data can also be interpreted in several ways for any given context and can take you off course if you aren’t looking at the “right thing”. Experience and instinct overlayed with that data is the key to success.
Let’s unpack some key questions that data can support and where to find data.
Use Cases for Data in the Cannabis Industry
We would be hard-pressed to find many examples of business applications for which you can’t find value in leveraging data. The following are some of the common business questions that data can and should support:
Fundraising – What is the size of my total addressable market (TAM) and opportunity to capture market share?
Pricing Optimization – How should I price given the existing competitive and economic landscape?
Assortment & Purchasing Planning – What products should I make or carry?
Revenue Forecasting & KPI Tracking – What are my revenue goals and how can I track milestones and growth?
Consumer Insights – Who is my target consumer and how do they make their product decisions?
Sales Operations – How can my sales team be more effective?
Marketing Metrics – How can I maximize the return on investment (ROI) of my marketing spend?
Budtender performance – How can I track and incentivize my top-performing budtenders?
Increase grow yields – How can I increase the efficiency and effectiveness of my grow operation?
If you’re asking yourself a question about how to optimize an area of your business, there is almost certainly data available to guide confident decision-making.
Types of Cannabis Data
So you may be asking, how do I get my hands on data?The good news is that data is available for every budget (including no budget) and at every stage of business development. The challenge is identifying and extracting the right data to support your goals and pulling out the insights in a way that makes sense to your target audience – whether that be your customers, partners, investors, or your own team. In other words, the value is not just in the data itself, but what you can do with it.
State Provided Data
Informal Observational Data
Market Retail Sales Data
Point of Sale Data
Consumer Insights Data
Wholesale Data
Market Forecast Data
Availability and Pricing Data
Marketing Data
Context is everything – framing up the data
When citing a data point, would you consider 50% a lot or a little? It depends on the context. A data point generally represents an unanalyzed figure, it only means so much as an independent number. However, once you add context, you may unpack a compelling story.
For example, if evaluating a cannabis product category market share, consider some of the following: What size is the total market? What other categories have more or less share? Is the category growing or shrinking? What time frame is being referenced?
Then, diving deeper into more granular data affords you visibility into WHY. For example, why something might be shrinking so you can address the root cause issue, or why an opportunity is worth investing in. This insight that is derived from the data is where you are likely to find the greatest ROI from data.
By leveraging data and insights, businesses can optimize their operations, identify growth opportunities, and improve customer satisfaction. In the fast-paced and constantly-challenged cannabis industry, companies that rely on data to drive decision-making are better equipped to succeed, adapt to changing market conditions, and remain ahead of the competition.
Headquartered in Louisville, Colorado, BDSA helps businesses improve revenues, reduce innovation risk and prioritize market expansion with accurate and actionable cannabis market data, consumer research, and advisory services. The company provides a holistic understanding of the cannabis market by generating insights from point-of-sale data, market data, consumer research, and market forecasts. To learn more, please visit bdsa.com.
Committee Blog: Hop Latent Viroid (HLV) – Overview of Pathogen Biology, Spread, Control, and Testing
by Sarah Taylor-Laine (NCIA Education Committee, NCIA Cultivation Committee)
Hop Latent Viroid (HLV/HpLV), sometimes referred to as “dudding” or “stunting”, is one of the most pressing biological threats facing the cannabisindustryworldwide. In the United States, HLV was first detected in California in 2017. Subsequent research by Dark Heart Nursery indicated that 90% of Californian facilities tested at the time were positive for the pathogen. The Dark Heart Nursery research team estimated that an HLV epidemic could result in up to US$4 billion in losses to the cannabis industry annually. To add insult to injury, HLV-infected cannabis may be linked to cannabis hyperemesissyndrome (CHS), which affects both adults and children.
Viroids are subviral pathogenic RNA molecules which replicate within host plants and are only approximately 1/50th the size of the smallest viruses. Specifically, HLV is a circular RNA molecule of approximately 256 nucleotides in length, which can assume a rod-shaped secondary structure. In hops, HLV has been shown to interact with other viruses and alter the gene expression patterns of host plants. HLV has been found to not only infect hops and cannabis, but also Dianthus deltoides, Chenopodiastrum murale, Dysphania pseudomultiflora, cowpea (Vigna unguiculata), common bean (Phaseolus vulgaris), and stinging nettle (Urtica dioica). Notably, by subjecting hop plants to heat stress, researchers have been able to induce “thermomutant” HLV variants which could then infect both tomato (Solanum lycopersicum) and Nicotiana benthamiana, opening up the possibility that HLV could spread to new plant species under climate change-induced warming scenarios.
HLV often does not produce obvious symptoms in hops, and where they do occur there may be a long latency period, making control difficult. In hops, HLV is often detected early in the season at the plant base, where it gradually spreads up the plant and can be detected in all aerial tissues by mid-season during the flowering period. In cannabis, HLV causes brittle stems, a horizontal growth habit, and the destruction of flowers and trichomes. In both hops and cannabis, HLV may cause pathology in host plants through RNA interference (RNAi). HLV infection is reported to reduce THC content by 50-70%, which is not surprising as glandular trichomes are the source of THC in cannabis. In hops, HLV infection has been shown to reducethecontentof terpenes and other secondary metabolites in susceptible varieties. It is currently unknown whether HLV infection decreases the terpene content in cannabis, but it is very likely.
In hops, HLV is not readily transferred byseeds, but may be transferred in uninucleate pollen. However, activating pollen nuclease HBN1 was shown to eliminate HLV in mature pollen. “Real world” transmission of HLV appears to primarily occur through the use of contaminatedcutting tools, the use of infected plant materials, or from plant-to-plant. However, as an obligate pathogen, HLV requires living host tissue in order to survive and propagate. HLV has been confirmed to be transmitted between hop plants by potato aphid (Macrosiphum euphorbiae), green peach aphid (Myzus persicae), and hop aphid (Phorodonhumuli), and may also be transferred by other herbivorous insects. Planting cannabis on sites previously planted with infected host plants is likely to be a source of infection, although this has not been experimentally verified.
In hops, chillingplants at 2-4 °C (approximately 35-40 °F) for 8-21 months prior to harvesting meristem tips for propagation has been shown to reduce or eliminate the spread of HLV, although the effect may be variety-specific. In addition, subjecting hop mericlones to heat treatment cycles (25-35 °C/77-95 °F for two weeks) has been shown to reduce HLV incidence by 70-90%. In terms of waste management, anaerobic fermentation at 70 °C (158 °F) causes HLV degradation, although standard ensiling does not appear to be effective. As with most viral and viroid diseases, there is currently no cure available to disinfect mature host plants. However, researchers are currently studying whether RNAi may have utility in cannabis crop protection against viral and viroid infections. Therefore, it is currently recommended to test all stock plants to confirm that they are pathogen free and to destroy all infected materials.
Plant materials can be tested for HLV infection using several molecular techniques, including DNA barcoding, RNA sequencing (RNA-seq), recombinase polymerase amplification (RPA), quantitative real-time polymerase chain reaction (qRT-PCR), reverse transcription PCR (RT-PCR), dot-blot hybridization, tissue print hybridization, in situ hybridization, and enzyme-linked immunosorbent assay (ELISA).
It is unknown how many, and which, lessons learned in hops will be transferable to cannabis. Both susceptibility and control of HLV in cannabis is likely to be variety-specific. To enable the breeding of HLV-resistant cannabis varieties, future research should focus on characterizing the molecular mechanism underlying HLV pathogenicity and host susceptibility. However, the situation remains that HLV is likely endemic in many cannabis growing regions and cultivators should focus on targeted biosanitation efforts to thwart HLV infection in their crops. These efforts should include testing all propagation materials for infection, destroying infected materials, sanitizing cutting tools and work surfaces, and limiting herbivory by sap-sucking insects such as aphids.
Sarah Taylor-Laine is a plant science polymath. Sarah has taught and developed college-level courses related to general biology, plant biology, and cannabis sciences at several institutions, most recently at Beal University. She has also worked across many industries including agriculture, horticulture, and arboriculture, performing diverse work in research, quality control, product development, regulatory affairs, scientific communication, and field-based consulting.
Equity Member Spotlight: Taking Events to the Next Level
by Mike Lomuto, NCIA’s DEI Manager
Events are a major way in which the culture of cannabis is preserved and evolves. With 4/20 upon us, we felt it appropriate for this column – which is all about staying true to the culture – to focus in on some of our members who specialize in innovative cannabis events.
For this celebratory month of 4/20, we’re checking in with:
Michael Webster, Founder & Managing Member of Falling Leaves Events, and new member of NCIA’s Banking & Financial Services Committee
Toni, Founder of Toni Consulting and Wellness, member of both NCIA’s Health Equity Working Group and Education Committee
And the ladies of HUSH
Kay Villamin, Co-Founder and Creative Director, and Chair of NCIA’s State Regulations Committee
Vanessa Valdovinos, Co-Founder and Director of Events, Organizer of NCIA’s Marketing & Advertising Committee
Michael shares his infused fine dining and networking series. Toni spreads wellness through the community with her movement-based events that balance the endocannabinoid system and educate the mind. And Hush brings an innovative and highly professional approach to elevate cannabis experiences through their immersive events.
We asked these three cannabis companies some questions about their events and the mission behind them. The journey is always part of the destination, and in this spotlight we get to hear about how these industry groundbreakers are bringing positive innovations to the culture, transforming it with each event. Read to the end to find out where to catch them next.
What type of events do you throw?
MW: Our offerings have evolved with the Michigan adult-use market. While our early events were consumer-focused, we’ve become much more industry-focused, situating ourselves as a B2B connector in the event space. Our current event series, The Falling Leaves Infused Dinner Series, brings together operators, influencers, stakeholders, and allies of the Michigan cannabis industry for infused networking and fine dining. We are also working on a B2B cannabis industry expo to connect the many brands, cultivators, and processors here in Michigan.
Toni: I offer wellness events in the community that provide education highlighting the numerous wellness benefits and usages of the plant. My events are rooted in creating community awareness and solutions around the necessity of cannabis health equity policies.
HUSH: We host and produce high-level experiential events focused on providing immersive experiences with cannabis through interactive design, entertainment, and customized activations that provide creative ways to engage with the plant. From networking events to large conference afterparties and trade shows, we produce a wide range of experiences for brands in the industry.
What makes your events unique?
MW: In a word – or two – Form Factor. Our choice to offer consumption via infused food and beverages is what truly sets us apart from other consumption events. Our networking component offers the opportunity to connect with other members of the industry, and has become quite an attractive feature. Our events feature a carefully curated guest list of folks targeted by sponsors to be in the room so the deals can get done. We have replicated the diplomatic dinner table, where, traditionally, wars have been averted, treaties signed, and industry deals secured. Instead of the smoky, tobacco-filled back rooms, we’re providing smoky, cannabis-filled rooms that feature equity and transparency.
Toni: I curate events that provide education in a way that helps to destigmatize the plant while highlighting its various wellness benefits and usage options, delivered through storytelling, movement, stillness, creative expression, and reflective practices.
HUSH: Every aspect and layout of our events is intentionally designed with the goals of innovation and impact. Our guest experience is first in mind from beginning to end – from accepting an invitation to when they leave the doors to go home – we think of every detail involved. We think of how we want our guests to feel when they enter and guide them in their entire journey, as well as how they can interact with the brands and sponsors we work with. We attract high-caliber, global majority leaders in the industry from all over the country.
How do you roll your mission and advocacy into your events?
MW: Beyond our core mission of equity in the regulated cannabis industry, championing normative integration of mindful, responsible public cannabis consumption remains our cause celebre. Having, in some ways, been chased from the licensed, regulated consumption event space by burdensome insurance regulations that render Michigan’s cannabis event organizer license effectively unviable, we have pivoted to the private event space as our front in this war against normalization.
We perform a critical role in the Michigan cannabis ecosystem for the benefit of all. Our push for normalization eases pain points up and down the industry supply chain, from municipal hearings considering licensure to breaking stigmas and gaining acceptance from important community organizations intent on preventing harm outside of the supply chain.
Toni: My wellness events are rooted in creating community awareness and solutions around the necessity of cannabis health equity policies.
HUSH: Whether it’s our own hosted event or in collaboration with another brand, our goal is to highlight, serve, and work with fellow BIPOC and social equity brands in the industry. With this intention since inception, we’ve cultivated an audience that believes in the same mission. As part of our mission, we create world-class experiences that bridge the gap between small and big operators to collectively provide environments where we can normalize the consumption of cannabis.
What can sponsors or attendees expect from the experience?
MW: Expectations from our sponsors and guests are high because that’s exactly where we set them. We operate on the more sophisticated end of the cannabis consumption event spectrum. Much like our dear friends over at HUSH Chicago, we seek to deliver an immersive experience that is powered by cannabis but involves much more. Sponsors can expect the highest level of quality engagement possible with attendees. A quote from Chris Hammond, Senior Sales Director at Kairos Labs, LLC, best captures expectations – “This past weekend I went to an event hosted by Michael Webster MSc. The food was amazing, the ambience was perfect, and I got more quality contacts in one night than I have in a week at MJ Biz. Very excited for the next event!”
Toni: Sponsors and attendees can expect to learn about educational needs and ways to support wellness initiatives in communities most affected by the “war on drugs.” My goal is to spread knowledge for the betterment of communities, utilizing the old African proverb; Each One, Teach One.
HUSH: Sponsors and attendees can expect to have all senses engaged when attending a Hush event. Each experience is different from the next as we create new ways to engage our guests. For our sponsors, we think of creative ways to activate their brand while keeping their goals in mind, and measuring metrics that will prove their return on investment. Guests and sponsors alike can expect a stark improvement on what was once considered a cannabis consumption event. Attendees should expect to pull up to the intersection of cannabis consumption and decadence, be greeted by grown folk maturity, and be prompted that it is indeed time to go home after our event, no matter how much they wish to stay.
How has being an NCIA member helped the development of your events?
MW: NCIA membership has been transformational. The ability to tap into a national network of eco-partners from disparate cannabis markets gets us out of our silos. We are influenced by empathy and shared resources. We are nurtured by the collective and dream with the expectation of an eventual common market in which to operate. Our events truly are the manifestation of the old African adage – “if you want to go fast, go alone. If you want to go far, go together.”
Toni: NCIA has helped me identify the need for cannabis education and wellness initiatives in marginalized communities.
HUSH: Being part of NCIA has allowed our company to extend our reach beyond local and regional markets. Being a member of committees has enabled us to build relationships with a national group of leaders in the industry who became supporters and sponsors of our events. We have also received great mentoring and advice from other members.
When and where should we expect to see you in the coming months?
MW: We continue to operate on a monthly cadence in the Metro Detroit area, but we are expanding into other municipalities in Michigan as well. In May we expect to take our show on the road and into the Show Me state. As a brand-new market, Missouri has tons of potential and can benefit from a healthy event market. Check out our website – fallingleavesevents.com – and follow us on social @fallingleavesevents to learn about our upcoming events.
Toni: I have a new offering every other Tuesday in Oakland, CA at Snow Park. I will be leading Community Wellness Yoga where we experience movement for the endocannabinoid system with a live saxophonist.
April 11th & 25th
May 9th & 23rd
June 6 & 20th
You can also catch me on my youtube channel or follow me on instagram @cannabisnursetoni for healthy-infused recipes, movement, and your daily dose of wellness.
HUSH: We are hosting an afterparty for NECANN in Illinois on June 2nd and we are also excited to be working on a large cannabis career conference with 40Tons to take place at Malcolm X College in Chicago on Jun 19, 2023 Lookout for an announcement for a fun event in Q4 when we will be celebrating our 5th year anniversary!
Member Blog: Hydrocarbon v. Solventless – Which is Better?
by Jessica McKeil, cannabis writer for Agrify
The cannabis industry regularly pits solventless extraction against hydrocarbon extraction. Across social media and online forums, the debate ranges in both directions. But with a global cannabis concentrate market hitting $1.7 billion USD in 2022 (Market and Research), it’s clear that no single extraction technology is driving this remarkable growth.
Instead, a variety of extraction techniques, including solvent-based and solventless, allow producers to navigate an ever-evolving landscape and pivot as needed in response to consumer demands and market prices.
Rather than asking if hydrocarbon or solventless is the better option, it makes more sense to consider both extraction technologies together as a total, harmonious strategy.
Limitations of a Single Extraction Method
According to BDSA, the top three influences over consumer purchasing decisions are high THC content, taste and flavor, and, finally, low price point. When we apply these considerations to the world of cannabis concentrates, no extraction technique captures all three.
These often conflicting consumer demands layered with other industry influences mean that choosing a single extraction technology to apply across all markets is impossible, especially if long-term growth is the goal.
A new market may prefer the low price points and high THC offered by hydrocarbon extraction. A mature market may demand better flavor and allow for the premium pricing of solventless extracts. But there are nuances within even these basic assumptions. Investing in a single extraction technology will limit your ability to scale and survive in an always-evolving marketplace.
Let’s look at the limitations of hydrocarbon extraction. There is an initial barrier to entry thanks to the significant capital expense for not just equipment, but the buildout of extraction booths, and the requirement for highly skilled staff. Additionally, hydrocarbon extraction is an incredibly competitive category, especially in newer markets. While you’ll have the flexibility to process just about any biomass, it’s more challenging to differentiate by quality to capture a premium price point.
Solventless extraction has lower upfront costs and also eliminates the need for highly skilled engineers, architects, and even the fire marshall inspection required for hydrocarbon facilities. But solventless only works with high-quality flower and a limited spectrum of genetics. Should harvest quality not meet expectations, solventless extractors have little recourse to recoup costs. Plus, not all markets can bear the premium price point of rosin extracts.
Limitless Production: Harmony of Solventless and Hydrocarbon
Cannabis, as a global commodity, is unsurprisingly seeing consistent upward growth. Yet the fluctuations within each product category and each regulatory market are much more challenging to predict. No matter what state we look at, consumer tastes evolve, regulatory and taxation burdens change, and available biomass quality remains highly variable.
A dual approach to cannabis extraction with solventless and hydrocarbon technologies guarantees flexibility and offers a type of production insurance to weather ongoing market volatility.
First and foremost, having both extraction options on the table allows brands to make real-time production decisions in response to the available biomass and whether or not price, high THC, or flavor is driving sales.
If high-quality flower is available and the market can bear the premium price point, solventless is the definitive choice. As per BDSA Retail Sales Tracking, “Rosin’s share of dabbable dollar sales has grown significantly in mature markets (CA, CO, OR, MI, IL), from 8% in January 2021 to 16% in October 2022.” Even in markets with price compressions, solventless can help secure market share.
But, not all markets are ready for high-priced premium extractions, Illinois being a primary example. Despite its relative maturity and the recent numbers from BDSA, the uniquely high flower prices mean that rosin concentrates are priced out of reach for most consumers at roughly $120 per gram. In this case, it may make more sense to focus on selling quantity rather than selling premium quality, which is where hydrocarbon offers a smart alternative.
Hydrocarbon is also a winning strategy for dealing with lower-quality biomass. No matter the quality of the input, provided the extraction process is controlled, hydrocarbon extraction in combination with distillation is an effective crop insurance.
Hydrocarbon extraction is more versatile than its solventless counterpart, allowing for a wider variety of finished products. It’s possible to create an entire range of products, including shatters, waxes, resins, sauces, and more. Plus, hydrocarbon-extracted crude oil is more easily formulated into consumer packaged goods like edibles and vape carts.
Building production around a dual-extraction strategy, combining solventless and hydrocarbon techniques, is a proven approach. The industry’s leading multi-state operators, including Curaleaf, Trulieve, and Viola Brands, to name a few, have already broadened their SKU portfolios to offer both hydrocarbon and solventless products. This has allowed them to adapt successfully to changing consumer tastes, market conditions, and other influences, no matter where they operate.
Jessica McKeil is a cannabis writer for Agrify based in British Columbia, Canada. Her focus on cannabis tech, scientific breakthroughs, and extraction has led to bylines with Cannabis & Tech Today, Terpenes and Testing, and Analytical Cannabis, among others. She is the owner and lead-writer of Sea to Sky Content, which provides content and strategy to the industry’s biggest brands including Agrify.
Agrify includes extraction brands Precision Extraction and PurePressure, which provide extraction technologies to help producers create the products customers want. From planning and equipment to installation and training, they help operators build out flexible, nimble extraction strategies geared toward long-term viability. Precision Extraction offers best-in-class hydrocarbon extraction, ethanol extraction, distillation, and lab equipment plus vacuum ovens by Cascade, along with extraction lab rooms, pods, and design services for any size operation. PurePressure encompasses solventless extraction, from industry leading rosin presses to hash washing equipment and consumables. Together, Precision Extraction and PurePressure by Agrify offer the full array of options needed to nimbly navigate the volatile cannabis market—no matter operator size. For more information visit https://precisionextraction.com/contact-us/ or https://gopurepressure.com/pages/contact-us.
Committee Blog: The Benefits of Partnering with a Security Provider and What to Consider When Choosing One
As the cannabis industry continues to grow, security has become an increasingly important concern for consultants and business owners. From seed to sale, the cannabis industry faces a unique set of security challenges including permitting and compliance, systems design, theft, and inventory loss.
Add to these challenges a myriad of state laws and regulations that need to be followed. But, if you partner with the right security vendor, they can help you navigate regulations to make sure your business is compliant, as well as offer detailed security plans that integrate with your business goals.
Below are some benefits an experienced security provider can offer cannabis consultants and business owners, and tips on how you can choose a partner that’s right for you:
Dedicated Team with Experience in State and Federal Regulations
An important factor to consider when choosing a security provider is their experience in the cannabis industry as well as security as a whole. How long has the company been in business? Do they have a team dedicated to the cannabis industry? How well-versed are they in cannabis laws and regulations? Do they provide comprehensive support from seed to sale? Look for a security provider that has a dedicated cannabis team that understands the regulatory landscape.
Permit Application Support and Permit Drawings
One of the most challenging aspects of the cannabis industry is permitting and design. An experienced security provider can review your state application to verify regulations are met in order to maximize your score. They should be able to provide the narrative for the permit application related to your security plan. Consider if they are able to design a comprehensive security plan showing location of devices, rough-in, power requirements, standard operating procedures and network requirements. Look for a security partner that provides these services, and inquire if these services are free or if there is an additional charge.
Trade Coordination
There’s a lot of moving parts that go into getting a cannabis business up and running…and even beyond. A good security provider can coordinate with builders, construction companies, power companies/utilities, architects, and other partners for streamlined deployment of systems.
Enhanced Security and Asset Protection
Cannabis businesses tend to deal with large amounts of cash and valuable products that make them a target for internal and external theft, as well as other security threats. An experienced security integrator can design, install and implement a comprehensive security plan that includes video surveillance, access control, panic buttons, and monitored intrusion and fire alarm systems. Make sure your security provider can offer a range of products and services that will protect your business and your staff during and after business hours.
Alarm Monitoring
An essential part of security is protecting inventory from internal and external theft as well as environmental threats like fire. Rapid response and quick emergency dispatch arekey should an incident occur. Look for providers that offer 24/7/365 in-house alarm monitoring, redundant communication capabilities, and ask if their monitoring centers are U.L.-listed. They should also have false alarm protocols in place so your business can avoid costly fines associated with false dispatch.
Increased Operational Efficiencies
Working with a security provider can help cannabis businesses increase their operational efficiencies. For example, with a comprehensive security plan in place and a security partner that can proactively advise on best practices, you can focus on running your business knowing that your people and product are protected. Additionally, video analytics can supply valuable data and reporting to help you optimize operations such as identifying areas for improvement, opportunities for growth or additional employee training; spotting violations to help avoid compliance and permitting infractions; and analyzing traffic patterns to maximize store layout performance and ensure adequate staffing during peak business hours.
Access to the Latest Security Technology
The security industry is constantly evolving with new technology being developed to address emerging threats. Working with a security partner gives cannabis consultants and businesses single-source access to the latest products. By leveraging these advanced technologies, you can stay ahead of potential threats. Choose a security vendor that has well-established relationships with trusted equipment manufacturers. Your provider should be able to offer curated devices that integrate with each other and that can be controlled via a single platform, such as a mobile app, so you can control all aspects of your security system anytime, anywhere. Some security providers even have dedicated in-house product teams that continually source and evaluate the latest technologies. Consider how your provider stays on top of new trends and technologies.
Ongoing Service and Support
Even if your business is operational, you’ll still benefit from the ongoing support an experienced security partner can provide. If the security vendor provides a single point of contact, it’s easier to schedule service, inspections, monitoring, and other critical
needs, ensuring your facilities remain fully functional. Ask if your security partnerprovides post-installation service and support including ongoing testing and inspections to remain compliant with the authority having jurisdiction.
Whether you’re a cannabis consultant or a business owner, look for security providers with industry experience; permitting, compliance and design expertise; customized security solutions; reliable alarm monitoring; and cost-effective solutions. By choosing the right security partner, cannabis businesses can mitigate security risks and ensure compliance with state and federal regulations.
Casey Mitchell is an enterprise account manager for Vector Security’s dedicated cannabis solutions team. He has more than 22 years of experience designing security and communications systems for the U.S. Department of Defense and other highly-regulated industries, like cannabis.
Committee Blog: Three Things Your Company Can Do For Sustainability (And Why You Should Care)
Contributors to this article include current and former members of NCIA’s Sustainability Council: lead author Laura Wilkinson Sinton, Shawn Cooney, David Schwartz, Fred Whittlesey, Gabe Cross, Emily Long, and NCIA’s DEI Manager, Mike Lomuto.
“Everyone talks about changing the world. Nobody talks about changing themselves.” – Leo Tolstoy
Sustainability can be a confusing term for cannabis companies. The reality is, in a still- federally-illicit market, individual businesses taking active steps towards reducing their own environmental impact (no matter how small) is the catalyst for systemic change across the broader industry. Does sustainable mean to recycle? Does it mean regenerative farming? Compostable packaging?
It means some – or all – of those things, depending on your industry vertical. It means a collection of all of the seemingly little steps toward a larger collective impact.
Sustainability is the ability to exist and develop in the current generation without depleting our natural resources for future generations.
Here are our top 3 reasons why you should pay attention and take action.
Your future depends on it.
As the cannabis industry seeks legitimacy with both private and institutional investors, institutional and private investors have made it clear that a robust sustainability plan is mandatory. The Security and Exchange Commission (SEC) will be instituting reporting standards for publicly traded companies, and ESG (Environmental, Social, and Governance) reporting will be required. If you are or will be looking for capital and investors in the near future, you need to start reporting metrics today. If you have to play catch up, it may play out like musical chairs – leaving you with a “nosebleed” seat at the money table, if at all. Another point to consider – the number of women in cannabis has been rapidly declining, so pay attention to your hiring practices and be aggressive on inclusion. Women sit on investor boards and will be looking closely at your leadership gender balance metric when you court them. It’s both environmental AND social statistics they’ll be looking for and inclusion gives you a competitive advantage. The inclusion of minorities and those affected by the “War on Drugs” should be on your roster as well.
Your customers are demanding it.
According to a recent Calivate survey, 79% of cannabis retail customers (the revenue drivers) indicate through their purchases that environmentally conscious brands get their preference. Companies like Wyld, with their forward-looking ESG reporting and social justice activism, demonstrate the power of their market positioning. It has become a major competitive advantage for Wyld. You can make it yours, too. The ICR-Spectacle 2021 showed customers prefer to buy their weed from women (46%) and from people of color and veteran-owned businesses (44%). Sustainability and ESG reporting of these types of metrics go hand in hand. It will bring different perspectives (and customer acquisition viewpoints) to your strategy. It’s not just about the cheapest price point or highest THC anymore. And all indicators show that ESG reporting will play an even more crucial role in the future, with both investor and customer loyalty,
It’s actually easier than you think.
Depending on your vertical, you can easily start measuring and setting benchmarks today. Most of these metrics you already measure, but not for sustainability reporting. Efforts to improve them will impress investors with both prudent money-saving strategies and social indicators. Here are a few easy ones to start quarterly or monthly, depending on your company.
Water. Indoor and outdoor grows and most manufacturers already measure water usage. Establish a benchmark of where you currently are and measure quarterly for seasonal changes. Then you can develop strategies to reduce usage, including, as simply as installing low flush toilets and watering less volume but more frequently throughout the day to reduce wasted runoff
Electricity/Power. Everyone, regardless of vertical, pays a power bill. Establishing a quarterly benchmark and implementing reduction strategies (including time of day use and working with local utilities) will save both money and power usage e.g. lower wattage LEDs. Avoid bandaid approaches to environmental controls such as installing more and more systems providing a single function, like additional large dehumidification units. You don’t want to be using diesel generators for your indoor cultivation facility in a major Port of a major California city on the water adjacent to a low-income population area like these guys. It will get you in trouble with every authority, and likely cost you your license (and any downstream customers). The news cycles will hammer you and your brand’s reputation in the worst possible way. Be mindful of the perils of making a quick buck with cheap, polluting energy. It comes at a cost. It’s unsustainable.
Waste. All verticals can measure their waste output. Organic waste with cultivation can be included in the metrics of landfill-waste diversion (and there’s a simple way to calculate this measurement in “cars taken off the road.” Plastic waste – which so many manufacturers must use for child-proof packaging – is a fertile arena for reduction. Several cannabis packaging companies like Sana Packaging use oceanic plastic lids on glass bottles, which are recyclable. Wyld is now using compostable child-proof packaging which is a revolution in our industry. Manufacturers have different takes on waste depending on process type.
The most important thing is to just get started. Even if you think you don’t need it today, you will tomorrow. And make sure your CEO is onboard 100%. If you don’t have the backing of your CEO and investors, you will have an uphill battle that will make your sustainability goals nearly impossible. Make sure you bring them the data and the reasons why your company will benefit financially from these actions and get them to engage in this process. This may mean hiring an environmental sustainability professional or consulting firm to help collect the data to bring to the executives showing the clear financial benefits. If you are a smaller company, try it yourself.
If you feel overwhelmed, try this free sustainability website to input sample data and see instant graphs. It’ll start you on the path, and prepare you for the future of cannabis.
But only if you plan to be around for it.
NCIA Today – Thursday, April 6, 2023
Join NCIA Director of Communication Bethany Moore for an update on what’s going on with NCIA and our members. This week we discuss 13 women scientists you NEED to know, our recent podcast check-ins with members of the New York State Office of Cannabis Management, discuss a recent letter NCIA sent to the Congressional Banking and Finance Committees, and look forward to the remainder of our city events coast-to-coast leading up to Lobby Days in May.
Member Blog: Merchandising in Your Retail Dispensary – How to Make the Most of Your Space and Increase Profits
How to make the most of your space and increase profits and move inventory when sales stall
Merchandising a dispensary can be a daunting task. There are many components to consider; different brands, product types, customer needs, compliance, promo’s, and security are just a few. Product placement in a dispensary often determines the traffic low of the space. We know that certain products that require a longer “browse time” may also create traffic flow bottlenecks in the floor plan if not carefully planned and executed. But often in the design process, merchandising comes after the general front of house layout. Then, merchandising and product placement sometimes becomes a task left for the last minute, or worse, someone on the staff who has no experience.
Another tricky merchandising caveat is that it needs to lend itself to the vision of the brand and the overall customer experience. There are so many nuances to how merchandising effects the customer journey, that without vast knowledge in customer trends, store layout conventions, general marketing and design, hiring a professional is the only way to check all of those boxes.
There are some general guidelines that will help you and your team navigate merchandising your dispensary and getting a professional, cohesive feel to your cannabis dispensary.
‘Less is more’ applies here in a big way. Overloading your fixtures with multiples of each product creates visual clutter and removes the “specialness” of each package. I highly recommend no more than three of each SKU on a single display. If the packaging is large or tall you may want to reduce the quantity. Products should have ample space around each package to give visual breaks from product to product.
The ‘less is more’ strategy also applies to signage and info cards too. Font overload or forcing your customers to read or scan QR codes constantly detracts from the product, detracts from the implied budtenders connection to the customer and ultimately their unique expertise. This is why most digital menu boards are unsuccessful. Control what your rented shelf space looks like with your vendors. Make sure guidelines are put into contract that outline very clearly what their topper or display will look like. You don’t want to give them free reign of your carefully planned dispensary. Visual clutter and font overload is a common merchandising mistake.
Review your human scale. The heights and depths of fixtures are sometimes calculated to simply put as much product inside as possible, not how comfortably someone can view or reach something. This is very common with the vision type merchandise tables built for display and cash wrap vision cases. You usually have to move around a bit, stretch to see the middle or back up and lean over to look inside. Would your staff have to constantly bend or reach to access products? Or turn their backs on the customer? If the scale is correct, the customer will not have to be uncomfortable while looking at your products. This also goes for furniture. The scale of your seating, tables, reception desks are all crucial to the comfort level of your space.
Checking your profit margins by SKU’s is a great way to begin laying out your cases or shelves. A complete inventory list with markup percentages, top sellers and unique products will be needed to identify which products deserve the hottest locations in the cannabis dispensary. You may actually be surprised at what you find. Every individual fixture will also have a hot zone, or an area where customers gravitate to and typically select products from. You want to take full advantage of those top-selling sections.
Identify the ‘hot zones’ in your space. Interior store merchandisers will have a complete system in place for identifying these areas. But you can get a great snapshot for yourself if you look closely at your store on a busy Saturday. Watch how the customers enter. Did they go left or right? Where do they look and walk first? When they look at a wall display or into a vision case, which side are they looking at? What level? How long did they stand there? Make some notes and see if all of the customers entering are shopping in nearly the same convention. Are there areas of your dispensary that customers seem to be avoiding? Take notes on those too. What products are in those areas? Are they just not trending products? Ugly or awkward packaging? Or are the fixtures not well lit? Too much signage? Now compare that to what you see on a slower day and time. Are the results consistent?
This is commonly called journey tracking and will give you great insights into how well your fixtures and store floor plan is working (or not working) for you. Customer shopping habits are both fascinating and trackable, and very likely give you the info you’ll need to make any adjustments to your current shelf conventions or floor plan.
Make them meander. Often, dispensaries have a long and narrow footprint. The tendency is to put all the cases on the side walls and the checkout counter running across the back of the store, leaving your middle of the store empty. Runway-style floor plans can be extremely successful if you take deliberate steps to stop the customer at various points and encourage a meandering path of travel. If your customers are going straight to the back counter and straight back out the door, you are definitely not capturing sales you could be, and you’re wasting your real estate. Without cluttering the middle space, i do like to add staggered fixtures (table height as to not create a security sight blind) that display various products, impulse items and even merch when applicable. These meandering tables encourage the guest to move through the space in a zig zag pattern and more often than not they will walk in a zipper pattern. Which also means, the items that are on the outside walls where the meandering tables terminate will be hot zones. Use that to your full merchandising potential. Use LED light strips or spots to highlight these areas and products.
Finally, stop overcomplicating things. Every single product does not need museum- like merchandising, staging, lighting, or signage. Lay off the repetitive info and QR codes, neon, digital, and clutter. A great hint is to go to your favorite store. It doesn’t have to be a dispensary either, just a great shop or boutique that you enjoy shopping in. Do your own self-customer journey while you’re there. Revisit how you entered, where you walked and paused, and where specifically you purchased from. Think about how the product was presented to you, and ask yourself if the layout and merchandising encouraged you to buy more?
Thinking critically about your personal shopping experience and making some simple changes will help you shape the customer experience in your own dispensary. It’s also helpful to bring in a fresh perspective from time to time.
Setting a standard for merchandising practices across all of your locations is a great way to make sure that you’re implementing tried and true techniques to increase sales, food traffic and put your best image forward as an organized, beautiful and profitable dispensary.
Melinda Yoo designs innovative, profitable and award-winning cannabis retail dispensaries across North America. Her work is inspiring, her clients are notable and her vision for the cannabis industry is unparalleled. She leads her team thoughtfully through the creative and technical processes of creating unique retail experiences that are both jaw dropping and profitable.
After over a decade at a traditional, residential interior design firm in Chicago, Melinda followed her curiosity to retail interior design and merchandising. She quickly fell in love with dispensary design and all the quirks and challenges that go with it.
Since then, she has grown and led Sungrown Studio, received press recognition with her magazine-worthy retail environments and thought leadership. Sungrown Studio was named Dispensary Design Master 2022 by mg Magazine. Melinda continues to design amazing retail stores that reflect her clients values and brand.
When she’s not leading her kickass team, you can find her spending time on the hiking trails with her dog or raising her three little humans.
Member Blog: Debit and Credit Card Processing at Your Cannabis Dispensary, Finally
Accepting money for legal and licensed cannabis dispensaries has been like the wild west over the past few years. In the U.S., the banking landscape for marijuana businesses is confusing and can seem flat-out impossible to organize. Because of this, many shops still take cash for most of their payments. In 2023 this should not be the case. The problem is that many dispensaries have no access to debit card processing that allows them to take card sales but with severe limitations. Here we’ll look at some signs it is time to upgrade your cannabis debit card processing provider.
Processing Fees & Rates Per Transaction
The most straightforward item to look at is the processing rates and per-transaction fees for your cannabis dispensary. This has gotten more competitive over the years, with merchant service providers pushing down rates to stay relevant. But the fact remains that many cannabis merchant services have higher rates and more expensive per-transaction fees than what businesses should be paying in 2023.
Long gone are the days of dispensaries and marijuana accessory shops being labeled “high-risk” by banks. We’ve come a long way, but dispensaries are still looked at in an unfair light when compared with traditional business varieties. If you are facing direct deposit times longer than one business day, providing high cash reserves to your processor, and paying anything more than regular processing fees, it’s time to make a change.
Why Offer Credit & Debit Card Processing
When a patient or customer enters a dispensary to make a purchase, dispensaries that do not have a cashless payment option may find they are limiting the amount of product they can sell. Look at it this way; a patron comes into the dispensary with $80. They plan to spend a total of $80 on cannabis. However, when they get to the counter and see the great options, they think, “I’m here now; why don’t I double up my order and save myself the next trip.” Or they see the menu options and want to try a few varieties, quickly getting over $80. But they only have $80 cash in hand, no ATM nearby, and the dispensary doesn’t have a card-paying option. The dispensary misses out on more business, and the patient or patron is disappointed.
This is the last place we want to find our customers as business owners. If they have a desire and you have the product, you should be able to meet them in the middle and offer additional options for making their purchase.
The Point Is…
Dispensaries who offer cash-only payment options lose sales, period. How many times have you seen customers in this scenario? They come to your cannabis dispensary and browse the menu. Make a few choices, but when it’s time to pay, a problem, your dispensary only takes cash, and the customer doesn’t have any on them. Don’t leave sales on the table (literally) because you don’t take any form of card payment. POS systems are often free and can be installed easily in a matter of minutes. It also eliminates the need for making cash deposits at the bank or installing a cash management system to keep staff in check. It is a true win-win for dispensary owners and accessory businesses. In 2023, not offering a card payment option is just silly.
Benefits of Changing your Merchant Service Provider
There are a few key reasons to upgrade your processor; let’s take a quick look:
get new and better processing rates
eliminate per transaction fees
upgrade your card reader and touchless payment options
allow customers to make larger purchases
eliminate cash where possible and streamline the customer experience
take higher tickets per customer
improve direct deposit time frames
increase sales volume and profit margins
Offering customers every available payment option will give them confidence in their cannabis purchases. Therefore making them more likely to return.
Find the right Cannabis Merchant Service in the U.S.
So many merchant services are out there, but few specialize in the cannabis industry. This industry isn’t like others, so it stands to reason that working with a cannabis-specific company makes the most sense. You don’t want to use a big box bank that will look for reasons to pile on fees and moral judgment. Working with a smaller cannabis-focused outfit is something the entire industry should consider.
Stuart Lutterman is the owner/founder of Brother Processing Solutions (BPS), a family-run business with more than fifteen (15) years of experience in the Merchant Account/Credit Card Processing industry. BPS specializes in all cannabis business varieties from farming, processing, packaging, and sales of both recreational & medical dispensaries as well as Indigenous-owned businesses. BPS works closely with every client, understanding their individual needs, and providing a direct point of contact to financial services across the board. https://BrotherProcessing.com
Dispensaries who offer cash-only payment options lose sales, period. How many times have you seen customers in this scenario? They come to a cannabis dispensary and browse the menu. Make a few choices, but when it’s time to pay, a problem… your dispensary only takes cash, and they don’t have any on them. This problem is so common we shot a commercial about it.
Member Blog: Licensing 101 – A Guide for Local Cannabis Entrepreneurs
An interview with Nate Reed, Unity Rd. & Item 9 Labs
Curious about opening up a dispensary? Here we sit down with Nate Reed, Unity Rd.’s Director of Licensing, to answer commonly asked questions about one of the most crucial pieces to open a compliant dispensary in any market – obtaining a license on the local and state levels.
What Do I Need To Apply For a License?
Let us start with the basics. In cannabis, every business venture is going to be looked at under a microscope.
First, it is wise to have a team at the ready. Having owners, executives or principals in place is essential to begin, both for paperwork purposes as well as the face of the organization that will be presented to regulators.
This does not mean having a store’s general manager in mind from the outset, but rather the high-level management that make major decisions.
In this regard, it is also wise to include leadership with qualities that are desirable for owners and managers in this industry—if it is not stated explicitly, look to read between the lines. Someone with prior cannabis experience is always first prize.
This includes anyone with relevant legal cannabis experience, such as someone who has run or owned a dispensary or headed up a cultivation operation. These folks will bring the most value when rounding out a team.
Beyond that, license applicants will want to be able to demonstrate that they have a solid suite of business-minded staff. Some may be able to keep rounding out the team to present a full picture, including a head of finance, and leaders that understand construction, real estate and security—essentially all the various talents that will make an enterprise successful.
The other important piece is the cash. Is there capital or an investor in line to finance the venture?
Whether that is an actual owner or a third-party financier, everyone wants to feel confident an applicant is not going to run out of money before breaking ground.
Next, there are some basic fees associated with the application process that vary by jurisdiction.
Typically, one can expect an application filing fee at the state level. These can vary wildly ranging from a few hundred dollars to over $10,000.00. The local government might also require an additional fee, but these will be typically lower than state fees.
Finally – social equity. This umbrella term includes everything from previous disenfranchisement to being disproportionately harmed by the war on drugs. If an applicant falls into one of these categories, they may qualify for reduced fees or cost reimbursements.
What Is the Timeline Like To Apply For and Receive a License?
Again, this largely depends on where the license is being applied for – individual cities and states all have their own timelines.
States have a certain amount of time to receive applications, which is followed by a review process. In most states, there is a window – for example, applications will be accepted from August to October, followed by a 100-day review period before a license is issued. However, most municipalities also carve out exceptions for themselves, so they are not strictly held to deadlines, further obscuring clear timelines.
Keeping expectations in check in this area will keep applicants from getting discouraged.
From the day an application window is open to the day a license is issued, be prepared for the timeline to be lengthy. It can take from months to years and any number of factors can slow it down—all stalling the process.
Often, though, most licenses are issued somewhere between six to 18 months. This is admittedly a wide window and will ultimately depend upon the state the application is being made in. Understanding the process takes time and can drag on indefinitely will be helpful.
Before any of this, however, the entire process of gathering the application materials is time-consuming and intensive. Unlike a typical business license, cannabis licensing is complex. Take, for example, merit-based or competitive applications. In these cases, applicants are required to write narratives and answer prompts. One may be required to supply ten years of income tax returns. A spouse’s information may be required. Expect robust hoop-jumping before even submitting the application.
It is wise to begin the application process as soon as possible, allowing time to be thorough and present the best possible case.
Do I Need To Live in The City or State I Want To Apply in?
As with everything else in licensing, it depends. However, as the industry expands, this is less important than it once was. Early on, states and cities were more guarded with who could apply for and receive licenses and emphasized a local approach. However, some recent court rulings have deemed it unconstitutional to limit licenses solely to state residents.
While this requirement does still exist in some states, it is falling away in others. If there is a residence requirement, it is helpful to know that this is not an automatic disqualifier – someone who already owns a different business in the state may qualify based on that.
Do I Need To Form a New Company To Apply Under?
Is it required? No.
Is it advisable? Absolutely.
When applying for a license, it is always advisable to form a new company.
Presenting a clear picture of the new company will make life smoother for both applicant and the regulator—outline the operating agreement, ownership structure, mission statement, and the like.
Typically, most opt for LLCs as they tend to be the most straightforward entity to form. Creating a C Corps is another option for those with grand plans.
Do I Need Real Estate or Site Control To Apply? If so, Where Should I be Looking?
Again, this will depend on the state in which the application is being filed and what its specific requirements are. Some will want to see a lease, a purchase agreement, or a title deed for a compliant piece of real estate as part of an initial application package.
Regardless of whether real estate is required at the time of application, almost all states or municipalities will mandate a site with requisite buffers or setback zones. Across every state, dispensaries are required to be at a certain distance from schools, for example. There may be further requirements regarding proximity to residential areas. Finding the proper piece of real estate can often feel like searching for a needle in a haystack.
Some states, such as New Jersey and Illinois, offer conditional licenses – these include a proposed area but do not require a pre-existing lease agreement. Once a state grants this conditional license, it will trigger a countdown of sorts to fulfill the real estate clause before the issuance of a full operating license.
Does it Matter if I Have Been Arrested or Convicted of a Crime?
Simply put, it depends on the crime. In certain cases – such as being previously arrested for low-level cannabis possession; it may actually help! This is in line with social equity provisions in state legislation that seeks to redress harms caused by war on drugs. These benefits may include discounts on application fees, technical assistance, or even real estate in some cases.
However, convictions for other types of crimes, such as fraud or violent crime, are automatically disqualifying.
How Many Other Licenses are Going To be Awarded
This varies by location and often evolves along with shifting sentiment and legislation.
Generally, states with medical-use-only laws are more like to have caps, as this is their first foray into the cannabis market. When Alabama legalized medical marijuana, for example, they allowed 37 total dispensaries. However, as states learn from neighbors or adopt plans to legalize adult-use cannabis, these limits are often drawn down.
Nevertheless, there are few universal truths when it comes to market size and local laws – Oklahoma is medical use only, with no upper limits on dispensaries, while New Mexico removed its cap for adult-use.
Can I Apply For Multiple Licenses?
Typically not, although this depends on location. Generally speaking, regulators tend to limit licenses to one vertically integrated operation – encompassing cultivation, manufacturing and retail.
In some states with more laissez-faire regulation, it can be essentially unlimited, however – think New Mexico, Mississippi and Oklahoma. An outlier is Florida, where only a certain number of licenses are allowed, but under those licenses, an operator is allowed to have as many locations as they want, as long as the real estate is compliant.
How can Franchising be a Viable Vehicle?
By now it is probably clear that jumping into the business of cannabis is not for the faint of heart.
Many who have taken the plunge have found it indispensable to have access to the experience of those with industry acumen to navigate the complexity of everything from licensing to zoning and real estate.
At Unity Rd., we made it our mission to provide insight and expertise to guide local entrepreneurs and small business owners through these challenging hurtles – allowing them to enter the cannabis industry with the confidence they need to thrive successfully and compliantly.
Nate Reed is currently the Director of Licensing for Unity Rd., the national cannabis dispensary franchise in the U.S. from Item 9 Labs Corp., which also cultivates and produces the award-winning Item 9 Labs product brand. He spearheads licensing efforts for the Company’s retail brand, develops standard operating procedures (SOPs) for corporate and franchise partner applications and conducts in-depth market research as cannabis legalizations increases.
He first began his career in the legal cannabis industry in 2016, handling legal and compliance work for a cannabis real estate company. Reed has since worked in various licensing, legal and compliance roles for CannaRegs, MedMen, Embarc Retail and Vicente Sederberg.
In 2015, Reed graduated from the University of Denver’s Sturm College of Law where he attended a Dean’s Scholarship and held various impressive legal internships and clerkships with companies such as MillerCoors and Fortis Law Partners. After successfully passing the Bar exam, he received his J.D. and officially became a lawyer.
Member Blog: What Ever Happened with the New York Minute in the Cannabis Industry?
2023 is New York’s year for cannabis – at least that is what we are being told. It has nearly been two years since the state voted in legalized recreational use and sale, but the state has been very slow in getting processing facilities and dispensaries up and running, with only three of the 66 licensed establishments in operation as of the end of February. It is no secret that New York has the potential to be one of the largest cannabis markets in the world. This year alone, New York City is expecting over 50 million visitors – many of them looking to buy legal weed.
Everyone can see the value that New York will bring to the industry, but why does it feel like they are dragging their feet to bring something to the table?
It appears that the state may have bit off more than it can chew.
A lack of understanding of the complexities of securing commercial cannabis real estate combined with the fact that raising necessary capital has been slow-moving, has made it so that cultivators now have too much supply with no means of distribution to meet the demand.
Good intentions, slow follow-through
The guiding social equity program behind New York’s retail licensing system is a giant leap forward within the cannabis industry to bring up those directly affected by the failed war on drugs. The Cannabis Adult-Use Retail Dispensary (CAURD) licenses are aimed at prioritizing these underserved communities and awarding licenses to those who have been convicted of marijuana-related crimes, or have a direct family member that has been charged, with the opportunity to open retail locations. Nonprofits that work directly with these communities have a chance at obtaining licenses as well.
One of the most enticing things about these licenses is that the Dormitory Authority of the State of New York (DASNY) has been tasked with finding storefronts for entrepreneurs who have been granted licenses and even build them out for them. To do so, the state has contracted 10 firms to design and construct each dispensary. But again, the state has been very slow in getting dispensaries up and running. It seems that DASNY has discovered the reality that finding landlords willing to lease to a cannabis business may be more daunting than expected.
This only adds to the sense of urgency that has lingered in the air for the last two years. Businesses are ready to get up and running just to play catch up to the underground market that is thriving across New York City’s boroughs. Currently, New York has estimated that there are roughly 1,400 unlicensed retailersoperating in the city. Unregulated sales mean that weed has the potential of going to underage kids, being tainted and it is all ultimately going untaxed. New Yorkers and the state are hurting due to the delayed rollout, but there is still time to change things around.
Since spaces are limited for license holders waiting on DASNY to figure out the real estate landscape, the state has started to give licensees the option to go out on their own to secure a location for the sake of being one of the first to the legal market.
The problem is that this good news comes with a caveat. If a licensee decides to break out on their own, they will be forgoing their share of the $200 million public-private fund that DASNY has budgeted to help with operating costs. This fund is essentially a state loan that each retailer will have to pay back, including interest. But the problem is that DASNY has not yet raised the necessary funds to dole out to retailers – the only amount that the public is aware of is the $50 million that the state provided.
So, the million dollar questions are, do these entrepreneurs take a chance to be first to the scene? Or do they trust that the money and real estate issues will work themselves out?
It is hard to say. But what we do know is that there are new cultivating and processing licenses being secured this year as well, and a huge backlog of weed in storage, so there will be no lack of product once the doors to the public open up – right now, it is just a matter of time.
So maybe NYC should get out of its own way, put a bit more “market” in the cannabis market, and let 1,000 blossoms bloom!
Andrew Kaye has been involved in all aspects of the financial services industry, as a fund portfolio investment manager, investment banker, family office investor and attorney. He has worked with start-ups on their first raise through global enterprises undertaking billion-dollar stock offerings, and has significant investment experience in the cannabis industry. Currently, Andrew works as Sweet Leaf Madison Capital’s Chief Commercial Officer. Lending his expertise toward the creation of middle market financing solutions for real estate and equipment financing needs in the cannabis space.”
“Sweet Leaf Madison Capital provides non-dilutive, asset-based lending solutions to the underserved middle market of the cannabis industry by originating real estate loans, equipment financing, securitized term loans, and more for entrepreneurs and businesses. The company is based in Denver, Colorado and has offices in New York City and West Palm Beach, Florida. To learn more or complete a loan application, visit Sweet Leaf Madison Capital online, or continue the conversation on LinkedIn, Twitter and Facebook.”
Andrew J. Kaye is Chief Commercial Officer of Sweet Leaf Madison Capital. He can be reached at akaye@sweetleafmadison.com.
Committee Blog: The Importance of Skilled Cannabis Accountants
Managing finances and complying with complex regulations in the highly regulated cannabis market can be challenging for business owners. For this reason, it’s crucial to have a competent cannabis accountant. In this article, we will discuss four major reasons why a good accountant is essential in the cannabis market, grouped into distinct categories.
Mitigate the risk
Having specialized professionals, such as a cannabis accountant, can bring a wealth of knowledge and expertise to your business. They understand the unique challenges and regulations associated with the cannabis industry and can provide guidance and support to help you make informed decisions and navigate potential risks. By leveraging their expertise, you can ensure the success and stability of your business in this rapidly evolving industry.
Accountant who has experience working in volatile and new industries is well-equipped to handle the risks that come with operating in such environments. By regularly identifying and measuring these risks, the accountant can help mitigate them and ensure the stability and success of a business.
At the early stages of starting a business, it’s critical to bring on board a competent cannabis accountant and attorney. Don’t let the simplicity of creating an entity mislead you into missing out on getting proper counsel on the appropriate entity type. Stay attentive to accounting and legal concerns and make informed decisions. If the chosen entity type does not align with your business goals, a knowledgeable cannabis accountant will discuss the potential consequences of each option. This will enable you to make an informed decision.
Given the ongoing discourse surrounding entity type and its status as a commonly asked question, I deemed it worthwhile to introduce this information. It should be noted that a Limited Liability Company (LLC) is not officially classified as a tax entity by the IRS. The taxation of an LLC can vary and may be classified as a single-member LLC, a corporation, or a partnership.
One of the biggest risks in the cannabis industry is the risk of failure and the accumulation of a large tax debt. The cannabis industry is heavily regulated and taxed, which can present significant financial challenges for businesses operating in this field. In order to mitigate this risk, it is important for cannabis businesses to have a strong understanding of the tax laws and regulations applicable to their operations, and to have a robust system in place for tracking and reporting their financial transactions. Working with a knowledgeable and experienced cannabis accountant can help ensure that tax laws are applied correctly and that businesses stay in compliance with the regulations, reducing the risk of financial failure and tax debt. The establishment and enhancement of robust internal controls, coupled with diligent monitoring, can also significantly contribute to mitigating potential risks as well.
It is noteworthy that individuals who own cannabis businesses are known for taking risks. As a result, it is essential to have accountants and attorneys who are skilled in evaluating and reducing these risks. Selecting your advisory team carefully is of utmost importance.
Aligned Mission and vision
It is necessary for the business owner and accountant to have a clear and transparent understanding of each other’s needs and goals, in order to create a win-win situation. The highly regulated and complex cannabis market can be challenging, and having an accountant who is passionate and aligned with the business owner’s mission and vision can help smooth the business cycle and avoid conflicts. An accountant’s mission is to help their clients manage their financial resources effectively and efficiently. This involves tracking the financial performance of the business, providing advice on financial decisions, and ensuring compliance with legal and regulatory requirements. In order to carry out this mission effectively, an accountant needs to have a deep understanding of the business owner’s goals, objectives, and overall strategy.
When a cannabis accountant’s mission is aligned with a business owner’s, they can work together to achieve common goals. This alignment helps the accountant understand the business owner’s financial needs, which enables them to provide more targeted advice and recommendations. It also helps the business owner understand the importance of financial management and how it can contribute to the success of their business. It also helps the business owner feel more confident in their accountant’s advice and recommendations, which can lead to collaborative and effective working relationships and more successful outcomes.
Experience or training in the cannabis industry
The cannabis industry is new and constantly evolving, and it is important to have an accountant who is trained and up-to-date with the latest developments. Many CPA firms are now specializing in the cannabis industry, giving business owners more options to choose from. A cannabis accountant should be familiar with 280E of the Internal Revenue Code, which can be a monster in terms of tax for the industry. They should also have knowledge of cost accounting and inventory management, which are crucial for producing accurate financial statements. Cannabis accountants with a background in manufacturing industry can bring their expertise to the industry and be of even greater value.
The use of the word “trained” is intentional in highlighting the fact that the cannabis industry is new and constantly evolving. Even though accounting firms with decades of experience are doing their best, when they have a high volume of clients, they may not be able to provide timely service and may lack time for innovation and data analysis. There are many cannabis think-tank groups and programs that can give trained accountants the same advantages, or even more, as experienced ones, as technology has revolutionized all industries, including accounting.
Analytical Reporting
A knowledgeable cannabis accountant should be able to provide financial statements and analyze them to help the business understand its financial position and take actionable steps towards its goals. They should be able to simplify complex financial analysis and provide key performance indicators and ratios that can help the business stay on track. They also have the responsibility of managing cash flow, which is key for the success of any business, especially in a competitive market. Many businesses fail because they run out of cash, not profit.
An insightful analysis takes the information one step further and presents the data in context in a way that identifies the necessary actions to be taken to maintain or improve the organization’s operations. Reports that allow managers to do their jobs better and make better decisions will be highly valued.
In a competitive market, the role of accountants and CFOs becomes increasingly important.
Ultimately, conducting business is a spiritual pursuit that involves the right mindset, effective communication, and teamwork. A business will flourish and make a positive impact if it brings together a team with a strong cultural alignment and a growth mindset.
We have great respect for those who work in the cannabis industry, as they often put their lives or licenses on the line. Let us strive for greater compliance and work towards creating a better world for all.
Sevana Janian is a Certified Public Accountant in California with more than 17 years of experience in tax and accounting. She is a member of the Cultivation Committee of the National Cannabis Industry Association (NCIA) for the year 2023. She is also a member of AICPA and CalCPA organizations. Sevana enjoys traveling with her family and playing the piano during her leisure time. She is committed to networking with others to expand her personal and professional knowledge. Sevana is passionate about inspiring and motivating the younger generation to succeed.
Green Plus CPA aims to offer a world-class automated tax and accounting solution nationwide for CEOs and business owners in the cannabis industry who seek accurate financial statements. Established in 2022, we are deeply interested in the medicinal properties of the cannabis plant and firmly believe in its potential to heal. We are enthusiastic about supporting and serving this industry that has been overlooked.
Member Blog: Breaking the Bad – Easy Steps to Better Secure Your Cannabis Facility – Part 1
First things first, when I selected this article photo I wanted to show someone prying a back door to a business. While this illustrates the message that I’m trying to get across, cannabis burglaries do not often occur during daylight hours. In fact, it seems much more likely that this is a pic of a distressed GM who lost their badge and is frantically trying to get in the building so that they can open before their Retail Director finds out!
All joking aside, rear-door breaches account for the majority of cannabis burglaries throughout the United States. Burglars prefer this entry technique mainly due to the fact that they are much more concealed at the rear of the building than the front (streetside) portion of the structure. Having this in mind, we can literally focus on bolstering this ONE door in order to mitigate much of our overnight vulnerabilities.
Rear commercial doorways almost always come with two built-in theft deterrents, one by design, and one from just plain luck. The first being that they are mostly solid and constructed of metal, and the second being that they swing outward rather than swinging into the location due to fire egress mandates. From a breaching standpoint, it is much easier for a bad guy to force a door open by inward force (kicking, shouldering, etc.) than by prying the doorway outward. Having established this, burglars are forced to pry these doorways open in order to achieve entry.
So good news, now we have deduced not only where our bad guy is likely to come in from, we now know how they are going to do it! All we need to do now is find a product that will make a pry-fashioned entry nearly impossible. I’ll list three options with each of their respective price points and considerations.
Common Latch Guard:
A latch guard is a strip of metal that basically covers the empty space between the door and frame. This makes it much more difficult to “get a bite” with a pry tool by placing the tool in the aforementioned space. Most of these guards are 6 to 8 inches long and are placed on the area covering the area where the door latches to the frame, however, I would recommend a full-length latch guard that will cover the full length of the door. While the shorter piece may keep a villain from getting in, their attempts could damage the doorway to a point where it would need to be replaced, which leads to compliance issues and subsequently unwanted store closures. Local locksmiths will have these in stock and should be able to install them for around $500.
“Panic bar” styled exit system:
These systems are basically a panic bar on steroids. The system bolts to the interior of the door with retracting bolts that insert into each side of the door’s jamb/frame while deployed. Once the handle is depressed, both bolts retract and allow the doorway to open. These systems often come with an alarm that can be programmed to sound when opened and can also be ordered with an electrical kit that will work with your access control system. This option will cost around $1000.
“Three Point” bolting systems:
On the higher end of the spectrum are “Three Point” bolting systems. These systems incorporate a heavy latch with two additional bolts to the top and bottom of the doorway. These systems can also be incorporated into your access control system, making it possible for authorized users to badge-in from outside. These systems carry a price tag around $2,200, although they come with all the hardware needed for the door, so you are at least saving additional hardware expenses.
So there you have it, three options to GREATLY diminish the likelihood of a break-in.
Over the span of a 22-year career with the City of Tulsa Police Department, Kevin served much of his tenure as a Disaster Response Team member, violent crimes task force investigator, and homicide detective.
In 2018 Kevin retired from the Tulsa Police Department and joined Harvest Health and Recreation, a top ten vertically integrated, multi-state operated cannabis company. Kevin served as Harvest’s National Security Director until Harvest was acquired by the cannabis industry giant Trulieve in 2021. Once at Trulieve, Kevin assumed the role of National Security Director, overseeing all facets of physical security for 200 retail locations, 15 production facilities, and 11,000 employees throughout the United States.
In November of 2022, Kevin launched Spara Group, a niche cannabis consulting firm focused on offerings related to Physical Security, Compliance, and Learning+Development throughout the cannabis canopy.
Kevin maintains his residency in Tulsa, Oklahoma, where he lives with his wife Sonya.
Please give me a call at 918-809-8850 or email kevin@sparagroup.com if you have any questions.
Take care and thanks everyone!
Member Blog: How to Navigate the Cannabis Payment Landscape in 2023
With the recent crackdown on cashless ATMs in the U.S. for cannabis payments, dispensaries have been scrambling to find alternatives to this banking system. As more consumers nowadays prefer to pay by credit or debit cards, or another form of digital payment, dispensaries must offer convenient forms of making payments to their customers. But until there is federal legalization in the U.S., the cannabis payment landscape will continue to be marred by complications. This complete guide on cannabis payment processing can help you navigate the hurdles better and set your dispensary up for success with the best digital payment solutions. But continue reading for some quick tips on handling cannabis payments in 2023.
Reduce Cash Transactions and Risks
Cash may still be king in the cannabis industry, but it comes with many risks. And in this highly regulated industry, compliance must remain the priority for dispensaries. Cash also limits your ability to retarget or upsell to customers. By reducing cash transactions, you can avoid the following risks:
Cash theft by robbers, employees, or customers.
Mistakes in daily cash counts and accounting.
Inventory compliance issues due to untraceable cash.
Encourage the Use of Digital Payments
With digital payments, instant reporting capabilities give cannabis retailers a better understanding of business performance. Also, providing customers with a modern and convenient shopping experience is a competitive advantage in the cannabis industry. There are significant advantages to encouraging the use of digital payments:
Improved dispensary experience for customers.
Increased safety and security for everyone.
Easy Banking, Tracking, and Reporting.
Maximize the Benefits of Going Cashless
The most important benefit of going cashless is that you’ll see a massive increase in sales and revenue. When a customer is not limited by the amount of cash on their person, they always tend to buy more, and budtenders are better equipped to upsell. Most dispensaries using cashless payment solutions witness:
Minimum 25% increase in average transaction value.
Increased customer loyalty and retention.
Overall improved operations with data insights.
Choose a Compliant Payment Solution
There are quite a few cannabis cashless payment solutions out there, but not all can provide you with the enhanced safety, security, and compliance needed for cannabis retail. Ensure that you choose a multichannel payment solution that integrates seamlessly with your cannabis POS and complies with all laws and regulations. A dispensary cashless payment solution must offer the following:
PIN Debit Payment: The most compliant solution.
ACH Electronic Transfer: No-cost direct payments.
Integration with loyalty and gift card programs.
Implement Cannabis eCommerce and Delivery
To provide customers with the most convenient and efficient way to purchase cannabis products, dispensaries should also consider implementing eCommerce and delivery services. This allows customers to browse and buy products online, with the added convenience of home delivery. Implementing such services also helps reduce cash transactions, as customers can pay digitally if you have a compliant cannabis payments solution.
Set up an eCommerce website by using a cannabis-specific eCommerce platform that integrates seamlessly with your POS system.
Use cannabis-specific delivery software to set up compliant delivery services or outsource to third-party delivery companies.
Dispensaries must have a robust digital payment system that complies with all regulations, which can only be achieved by using a cannabis-specific payment processing system that integrates with your eCommerce platform and POS system.
Bonus Tips
Here are a few more tips for navigating the cannabis payments landscape:
Consider implementing a loyalty program to encourage repeat customers and increase sales.
Ensure that your payment processing system can handle high volumes of transactions to avoid delays or downtime.
Stay up-to-date with the latest regulations and compliance requirements for cannabis payments to avoid any legal issues.
Offer multiple payment options to customers, such as debit and credit cards, ACH transfers, and mobile payments, to provide greater flexibility and convenience.
Conclusion
The cannabis industry is rapidly evolving, and dispensaries must adapt to the changing payment landscape to remain competitive. By reducing cash transactions, encouraging digital payments, and implementing cannabis eCommerce, dispensaries can offer customers a convenient and safe way to purchase cannabis products while complying with state and federal regulations.
Offering the convenience of digital payments increases dispensary profits, enhances the customer experience, and elevates your dispensary business beyond the limitations of cash only. With a truly transparent and compliant cannabis cashless payment solution, you can facilitate faster check-out at your dispensary with simple, frictionless, and secure digital payments. Dive into Cova Software’s free cannabis payments processing guide to learn more.
Gary Cohen is the CEO of Cova Software, the fastest growing technology brand in the cannabis industry. Cohen’s focus has been driving the company’s overall strategy, including its vision, go-to-market plan, and strategic development. Since joining the cannabis industry in 2016 and launching Cova commercially in 4q17, Cohen has led Cova to dominate the enterprise sector for dispensary Point of Sale, while forging client relationships with hundreds of single-store retailers across North America.
With Cova’s cannabis POS and its excellent integrations with eCommerce and delivery services, the online order automatically pops up for the budtender to tender the sales, and the POS system updates inventory once payment is approved. Cova offers multiple eCommerce solutions to choose from, as per your needs and budget, and you can legally sell cannabis online stress-free while staying compliant with strict government regulations.
Committee Blog: NCIA Committee Work Provides Lasting Value To All – A 2022 Highlight Reel
by David Vaillencourt, The GMP Collective Facilities Design Committee Chair
NCIA Committees are one of the easiest ways that NCIA enables its members to make a positive impact on the cannabis industry. The Facility Design Committee is one of fourteen (14) committees. We are all member-led, meeting monthly (if not more frequently) to discuss needs and to work together to create resources for the community and industry at large. This translates into blogs, webinars, and more. As the new Committee term gets underway, this article provides a recap of our 2022 term. Who are we? What did we accomplish? How can you as an industry operator or NCIA member leverage these resources? Read on!
“As the outgoing Chair, it was an honor to work alongside over a dozen experts ranging from business management solutions, architects, engineers, construction companies, quality management experts, equipment vendors, and more. I want to thank each and every one of you for your tireless contributions.” – David Vaillencourt, The GMP Collective
Accomplishments and key member takeaways
Now entering our fourth year, the FDC put together a significant amount of content for the industry to utilize. I have highlighted the top three impacts that our Committee felt we made. Seeing busy industry pioneers put aside valuable time in their days to consistently show up and create this content for the betterment of you all was a rewarding opportunity in itself and it’s impossible to do justice and recognition to the hours contributed by all.
“The knowledge and energy that is gained from this collection of experts who all have one overriding goal to advance cannabis as an industry both educates and motivates me… The cannabis industry evolves extremely rapidly, by participating in NCIA committees you ensure that you do not get left behind and you have an opportunity to shape the future of cannabis.” – Cary Richardson, Miles Construction
What is VPD / HVACD and why should you care?
Understanding plant dynamics and how they impact the selection and sizing of HVAC systems is critical to the cannabis cultivation space. The design assumptions and directions made during early planning will impact plant quality, quantity, operational costs, and energy expenditures for the life of the facility. It should not be surprising to owners and shareholders that if the first steps of design are made incorrectly, costs to correct original mistakes may exceed the original project budget, and oftentimes that may be too late. It is easy to get lost in the technical details on paper, but our members broke this important topic down for decision makers to better understand in our blog article and webinar “WTF is VPD” (available for free to watch on demand!).
“The details of HVACD get lost at times on me and [Adrian and Kevin] can explain it in a way, that a layman can understand it. David, Brian, and Sean are the other members who are always showing up, we meet at events and they have valuable input on topics of the FDC. We all connected outside of the FDC multiple times and are working on common business opportunities.” – Chris Uhlig, Ceres Greenhouse Solutions
Social Equity is a major problem
Mike Lomuto who led NCIA’s Diversity Equity and Inclusion Committeemet with Shawn Cooney, our Vice-Chair early on to discuss sustainability and DEI issues in the space. Social equity applicants have so many additional hurdles that the FDC members prioritized how to steer our knowledge to solve real problems social equity applicants face. During several of our meetings, we invited a social equity applicant to share where they were stuck. They benefited from having a team of experts to listen, understand their problem, and offer direction and guidance.
“The most meaningful thing that occurred [for me] was participating in a hot seat with a social equity license recipient… We followed up with this individual and it led to us becoming more educated and aware of the issues surrounding social equity in the cannabis industry. Unfortunately, what we uncovered wasn’t that great. Social equity programs in several states are fraught with issues and there are often firms who are preying upon vulnerable people… I have a whole new sense of awareness. It’s opened me to educate myself and others as well.” – Eric Myers, COO, Omega Equipment Supply
But don’t take our word for it – hear it from one of our “hot seat” guests who came to us after having multiple setbacks getting their design plans for a dispensary approved by the city.
“Prior to our meeting with the Facility Design Committee, we had experienced so many setbacks. After my hotseat with the FDC, we were able to identify what we did wrong and why we were having so many delays with the city. [The FDC members] helped us prioritize what steps we needed to take to get our project back on track… We redesigned our floorplan and now we are closer than ever to getting our building permits. We are back on track and I am even more confident in our plan all thanks to the Facilities Design Committee.” – Adolfo “Ace” Castillo Founder/Chief Operating Executive Banyan Tree Dispensary
Networking
Not only do we meet monthly virtually, enabling volunteers from Maine to California and everywhere in between to connect and share knowledge – but many of us made time to connect in person to speak on panels and support each other throughout the year. While the pandemic wreaked havoc on conferences and in-person events, we were able to build lasting relationships thanks to the Committee structure.
“The most impactful aspect of this year was getting to know members at an individual level” – Kevin Quinlan, Mintropy
From left to right Jon Crozier, Chris Uhlig, Adrian Giovenco, Eric Myers, David Vaillencourt, and Cary Richardson all met up in person at MJBiz Con.
Looking forward into 2023
Stay tuned industry! Bookmark NCIA’s Blog page, and subscribe to the newsletterso you can take advantage of the latest webinars and resources published by the FDC and the other NCIA committees. The pathway to a harmonized and equity industry may seem daunting and far away, but rest assured that the hundreds of NCIA members participating in the diverse Committees are working hard to divide and conquer for a unified mission.
Member Blog: 2023 Retail Dispensary Design – Three Ways To Layout Your Space
Dispensary layout plays a huge role in not only how the space will function from an employee and security point of view, but even more importantly, how your customers view their shopping experience with you and how your brand speaks to them. The way your dispensary looks matters and is often a key factor in boosting sales and standing out from your competition.
The dispensary floor plan you land on ultimately drives sales, tech application, experience, and employee retention. It is crucial to totally understand the three types of layouts, how they could work (or not work) for you and then how to implement them. Your end goal is always a positive customer experience, and state/local compliance. Not all states or municipalities allow all three of these models, so make sure you are aware of your regulations before dive too far into space planning.
Let’s review the three main types, pros and cons of each, how each specific layout drives customer experience, and how tech is integrated.
The Bank Layout
The bank dispensary layout is super common, and has a few easy-to-identify features. Picture your local bank and you’ll likely understand the flow. Your customer enters through a secure entry and waiting room. The product is neatly tucked into individual budtender stations, each with its own POS. This means that the customer is prompted to an open station, selects products, fulfilled right there by the budtender. Each budtender manages and reconciles their own inventory and till. The customer exits through the same door they entered, or a separate man-trap exit. The bank model can be a great shopping experience for the customer because they do benefit from a 1:1 budtender experience. Products are suggested and recommended, a trusting relationship is built and the shopping journey is both easy and personal. Tech is replicated at each identical station and any countertop display is also repeated. All product is securely stored behind glass.
Bank models do require custom case fabrication on the casework as well as behind-the-counter wall display. Your measurements will be unique to your space as well as your finish type, lighting, and branding.
The Pharmacy Dispensary Design
We are seeing more and more of the pharmacy layout because it offers great inventory advantages and customer shopping experience. In this layout, the customer walks in through a secured waiting area just as they did in the bank model, but upon entering the sales floor, they are able and encouraged to wander a bit. Budtenders meet them on the floor with digital shopping carts. Once the customer is done shopping, the employee completes the sales transaction and the order is fulfilled in the back of the house. The guest then reviews their order with another employee at the pickup counter and exits through the same door they entered, or a secured exit. This model works well for a few reasons. Inventory control as mentioned, but also specialized employees. You will have some employees trained specifically in selling and customer service and separate employees trained on cash handling and product review. Tech will speak to each other, the orders sent to the back of the house for fulfillment (think like a restaurant). Our example above is actually a hybrid model. In this location, the employees behind the cash wrap fulfill the order as well as take payment. The customer experience is great, they have more interaction with product and merchandise. It feels a little more like shopping freely, but very secure.
The Open Retail Model Dispensary Design
An Open Retail dispensary plan is really what we see in a true ‘Apple store’ layout. It is by far the most interactive, but also holds the highest operating costs. Many experiential dispensaries use this model, or a hybrid version of it. The customer will enter and provide ID, then freely wander through the sales floor. Dummy product (empty packaging for security reasons) is displayed, or products are in locked cases. They will fill a virtual shopping cart which is checked and entered by a budtender on the sales floor and filled back of house. Inventory is centrally located in the back of the house and managed. The guest pays at a central cash wrap area and the budtender meets them to review their purchase. This model is fun and interactive, but also requires more employees than typical to care for each guest. Security systems in place are also a cost factor, since you will likely require far more camera angles and security staff. From a customer point of view, this really is the most premium experience and can lead to high sales. You will be able to facilitate the impulse buying process easily.
A few takeaways on the three types of dispensary layouts. First, every single one of these dispensary layouts can be done in any amount of square footage. You don’t need a massive open space to make any of these super functional and beautiful. All of these can be done successfully in any budget level if you have access to the right sources. If you’re trying to decide on a layout, remember the key components of each. How many employees will I need? How are inventory and fulfillment managed? Can my budtenders handle sales and cash transactions? What experience is my customer used to and what experience do I want my employees and guests to have? Is it compliant in my state? And last, if you love parts of one model and parts of another, each layout can be designed in a hybrid way to retain the best features that work for your unique brand.
Melinda Yoo designs innovative, profitable and award-winning cannabis retail dispensaries across North America. Her work is inspiring, her clients are notable and her vision for the cannabis industry is unparalleled. She leads her team thoughtfully through the creative and technical processes of creating unique retail experiences that are both jaw dropping and profitable.
After over a decade at a traditional, residential interior design firm in Chicago, Melinda followed her curiosity to retail interior design and merchandising. She quickly fell in love with dispensary design and all the quirks and challenges that go with it.
Since then, she has grown and led Sungrown Studio, received press recognition with her magazine-worthy retail environments and thought leadership. Sungrown Studio was named Dispensary Design Master 2022 by mg Magazine. Melinda continues to design amazing retail stores that reflect her clients values and brand.
When she’s not leading her kickass team, you can find her spending time on the hiking trails with her dog or raising her three little humans.
NCIA Best of 420 CLIO Cannabis Award Returns for 2023
The cannabis industry’s most accessible award program returns in 2023. A coveted award by brands and creatives alike, NCIA Best of 420 Award sets the standard for top creative work highlighting this important holiday and the biggest day in cannabis.
When launched in 2021, the NCIA Best of 420 Awards was a digital event for NCIA members highlighting each brands marketing efforts in a very challenging year. In 2022, the Best of 420 Awards partnered with the prestigious Clio Cannabis Awards – live in Las Vegas. What a thrill to showcase the NCIA Best of 420 winners alongside the industry’s most prestigious creative work.
For the cannabis community, by the cannabis community, the award program, wholly conceived and executed by the NCIA’s Marketing and Advertising Committee volunteers, is a labor of love that celebrates the most impactful 420 marketing work in the industry.
seen at Clio Cannabis Awards at Thursday, Sept. 29, 2022, in Las Vegas. (Photo by David Becker/Invision for Clio Cannabis Awards/AP Images)
“The Clio Cannabis Awards presentation during MJ Unpacked was a 2022 highlight for Claybourne Co., it made the sweet success of our 420 campaign even more special. The award brought the internal team together, made our external partnerships stronger, and created free awareness! It’s a great cannabis industry event, and we’re proud to be a recipient.” said Jonathan Griffith, VP of Marketing for Claybourne Co.
Any brand with a 2023 420 campaign is eligible, so now is a great time to start planning for success! Entries will be judged on the following criteria:
Community Impact: How did your campaign bring your community together? How did it highlight the best of the cannabis community to others? Did it support an advocacy campaign such as DEI, or sustainability?
Creativity: How creative was your overall 420 campaign?
Results: Was it an effective campaign for your own goals and KPIs?
It’s never too early to start planning your 420 campaign! Stay tuned for more information about how to enter the NCIA Best of 420 Award program!
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Cannabis Community Marketers – as you form your Best of 420 Campaigns, the NCIA Marketing & Advertising Committee provides these: 10 Tips for Winning Campaigns.
Tip #1: Build campaigns with end goals and metrics in mind. What gets measured gets done. Be ready to report on metrics for your submissions even before you start your campaign.
Tip#2: Be authentic and personable. The most successful cannabis brands show their authenticity and personality. Campaigns celebrating the audience /community as much as they do the brand tend to resonate best!
Tip #3: Collaborate and be creative. Campaigns are great opportunities to collaborate within or outside the cannabis community and gain exposure in each other’s networks.
Tip #4: Think beyond the campaign date. You can start a campaign anytime they can be tied to the 4/20 event, before or after.
Tip #5: Apply a 360-degree approach. Where possible and where budget allows, include as many channels and assets as possible for the best ROI and impact.
Tip #6: Engage your community. Great cannabis brands are constantly looking forat ways to engage in deep, lasting relationships with their communities.
Tip #7: Success at all budgets. A campaign does not have to have a big budget, and often the best campaigns are executed on smaller budgets. Focus on 1-2 applications of your campaigns that are better for your KPIs.
Tip #8: Tap into customer passions. Don’t be myopic and see this as an opportunity to tap into the full range of your customers’ interests and what is meaningful to them. This is about relationship building, and you want to see the customer’s lifetime value improve year after year.
Tip #9: Remember those regulations. A reminder that it is not just the general cannabis federal and state regulations but also the marketing and communications regulations in states and across the country that provide guidelines. Be creative within the legal boundaries.
Tip #10: Have fun!
Committee Blog: VPD Topics for Cannabis Cultivation and Opportunities to Reduce Facility Energy Costs
Indoor cannabis cultivation facilities are complex environments, where a large number of variables interact to create an ideal ecosystem to grow cannabis. The upside of an indoor facility is it allows a year-long growing climate, optimized for each stage of the plant grow cycle. The downside, however, is creating this ideal climate is very energy-intensive.
There are three (3) main types of precision cooling equipment offered in the cultivation space. Those are Air Cooled DX, Water Cooled DX, and Chilled Water Units. DX stands for direct expansion systems. The immediate and most noteworthy difference between these systems is that DX units cool air using refrigerant, and Chilled Water units cool air utilizing chilled water. A DX unit uses refrigerant-based cooling and cools indoor air using a condensed refrigerant liquid. Typically, the decision regarding which cooling source is better for a cultivation facility is usually driven by the size of the cooling plant as well as other unique site conditions. Selecting the right HVAC system for your cultivation facility can be a challenging process driven by many factors, however this is beyond the topic of discussion for this article, it should be noted that the following analysis assumes an Air Cooled DX based system.
The total energy costs for indoor cannabis grow operations typically vary between 25%-50% of total operating costs (or approximately 150-200 kWh/sq.ft). In comparison, energy use in a typical commercial building environment is approximately 25 kWh/sq. ft. As indoor cultivation facilities increase, they can be a source of strain on electrical grids. A recent study showed indoor cannabis cultivation alone accounted for 4% of the energy grid usage in Denver. (IEEE, 2020)
With that context, any areas we can identify to improve energy efficiencies without introducing a negative impact to the grow environment can have enormous bottom-line impacts for cultivation owners and society at large.
In this article, we are going to be examining two ways we can optimize HVACD systems to improve energy efficiency. When HVACD systems are designed for grow facilities, the primary variables we are looking to influence are the following psychrometric properties: temperature (either wet or dry bulb) and relative humidity. Mechanical engineers will often refer to an information-packed graph called a psychrometric chart shown below.
This chart helps to visualize the relationships different properties of air like temperature, humidity (relative and absolute) and dew points along the saturation curve have with each other. This is useful to analyze, as these are direct inputs to a scientific measure often favored by growers called Vapor Pressure Deficit (VPD).
Vapor Pressure Deficit, simply described, compares these variables to determine how much additional room for water vapor there is in the air. This is important as it determines how readily cannabis plants can transpire. Controlling transpiration rates help to aid in healthy, robust growth through the plant life cycle. Growers tend to want lower VPD, and thus lower transpiration, early in plant maturity, and increase to higher VPDs, and thus high transpiration, at the flowering stage before harvesting.
So we know a successful indoor cultivation facility HVAC system will need to control temperature and humidity to ensure the desired VPD values. How can we do that efficiently?
Stand-Alone Dehumidifiers Are Inefficient
A cannabis plant can transpire up to 99% of the water absorbed through its roots. Due to this, we often tell people that designing an indoor cultivation facility is like designing a data center with a swimming pool inside. Because of the increased humidity introduced from plant transpiration, we must pay special attention to dehumidification strategies within the grow space. Humid air requires treating significant latent loads in the grow space, requiring additional energy to remove moisture from the airstream. This is one reason HVACD systems can consume up to 50% of the energy budget in a cultivation facility. As previously mentioned, higher humidity levels will lower the VPD in the room, preventing a plant from transpiring effectively to continue healthy growth. To combat this, sometimes stand-alone dehumidifiers are added into the grow room.
While these units can do the job of removing moisture from the room, it is a very energy-intensive process. One of the issues with stand-alone dehumidifiers is that they reject heat back into the grow room, thereby adding additional cooling load onto the main HVAC equipment.
Integral Hot Gas Reheat System
An air handling unit, sometimes called an air handler or AHU, is a piece of equipment that is used to condition and circulate air as a component of a heating, ventilating, and air conditioning system.
The air handler is usually a large metal box that contains a blower, heating and cooling elements, filter chambers, sound attenuators, and dampers. It then connects to ductwork that distributes the conditioned air throughout the space before returning it back to the AHU.
Of particular interest are the units cooling coil and reheat coil. These two components are namely responsible for controlling VPD levels in our grow space. In an AHU equipped with Integral Hot Gas Reheat, the cooling coil serves as a dehumidifier, by cooling the air thereby reducing its moisture/latent load (we recommend considering capturing this water for treatment and reuse: read more here). The hot gas reheat capability utilizes heat from grow space and compressor heat to reheat the air before returning to the grow space (without using additional heating energy).
While this may seem like a minor design change, it results in a considerable reduction in energy. As the chart below illustrates, leveraging Integral Hot Gas Reheat units can result in a 30-35% reduction in HVACD energy when compared with other dehumidification systems. Additional automation capabilities built-into these systems will ensure that the grow room will remain tightly controlled within the desired state points of your grow room to optimize VPD.
This reduction in energy quickly adds up to reduced utility bills. Despite marginally higher upfront costs as compared to standard HVAC equipment coupled with standalone dehumidifiers, this option results in a lower 5-year system cost than common HVACD systems installed in cultivation facilities, and these savings will only increase over time.
Maintaining Consistent VPD, but at higher Temperature / Humidity Ranges
The second energy-saving measure we would like to discuss goes back to the earlier discussion of VPD. Recall the equation for VPD is
V P sat – V P air = VPD
This is important, as it provides growers the flexibility to fall within desired VPD ranges, but at higher temperature and humidity ranges than typically used. Many growers target grow room setpoint temperatures around 72-75F and limit relative humidity to a maximum of 50 percent, but by allowing slightly higher room setpoint temperatures of 76-82F, with corresponding relative humidity increases, we can create identical VPDs at higher setpoint temperatures. The cost-benefit of this small adjustment is considerable. The HVAC system (including cooling and dehumidification) can be sized at roughly 20-30% smaller capacity, reducing the owner’s up-front equipment costs. In addition, the system’s energy consumption and costs during operations will be significantly lower, to the tune of 30-40%. In a theoretical 30,000 square foot facility, this could result in $1,125,000 savings in the first 5 years.
The case for a hybrid greenhouse, using VPD controls
Another way of growing instead of full indoor, is a highly efficient, sealed greenhouse. It is designed to maximize sunlight inside the growing environment, meaning energy used for lighting is dramatically reduced. And because it is sealed, energy-efficiency is maximized, as leakage is kept to a minimum. In order to make this work, these greenhouses need to be hybrid (using insulated walls and glazing) and the orientation and design play a bigger role.
In this hybrid greenhouse environment, the growing space typically heats up as soon as the sun comes out, no matter the outside temperature. Cooling in this instance would increase the power usage vs. increasing the humidity to keep the VPD level in the same range. When the sun goes down, the opposite happens. The grow environment starts to cool and it would be expensive to try and keep the temperature up.
In order to achieve VPD control, the control system needs to be able to variably adjust temperature and humidity, based on inputs like weather forecast, time of the day, day of the year, etc. Being able to control the grow environment by VPD level will significantly reduce the energy consumption for your HVACD system.
Member Blog: The Importance of Genetic Studies for Identifying Plant Mutations
by Angel Fernandez, Joselyn Guadamuz, and Maria de Catarina of MyFloraDNA
The cannabis industry has experienced significant growth in recent years, highlighting the importance of quality control measures. One of them is the utilization of laboratory partners to ensure the genetic integrity of the products. However, the connection between cannabis and genetic studies is often underappreciated.
A genetic study or test is a type of analysis that is carried out on a tissue or cell to search for essential traits in the genetic material of the plant. The results obtained from these analyses can provide a lot of information that helps confirm or refute many theories.
In recent years, genetic studies of cannabis have played a crucial role in the industry by providing growers with more advanced tools and techniques. These studies have enabled growers to improve crop yields by identifying key traits and characteristics for reproduction. Furthermore, genetic testing has been instrumental in quickly and effectively detecting diseases that affect crops and identifying the gender of the plant well in advance of flowering, thus saving growers time and resources.
Even more, genetic testing also allows cannabis workers to detect changes or damages in the genetic material of their plants.
Plants, like all living organisms, have a complex genetic makeup that plays a crucial role in their growth and development. However, the genetic material of plants can be susceptible to mutations, which are changes in the DNA sequence that can occur naturally or be caused by external factors. These mutations can have varying effects on the plant, from having no impact to causing serious detrimental effects on its growth and development.
One of the main factors that can cause mutations in the genetic material of plants is found in controlled environments such as in vitro culture laboratories. In these environments, plants are exposed to chemicals and UV radiation that can cause mutations in their DNA. However, not all mutations are harmful to plants. For decades, scientists have been making changes to the genetic material of plants with the goal of improving crop quality and characteristics.
While controlled environments can cause mutations in the genetic material of plants, it’s also important to consider the impact of environmental factors in uncontrolled environments, such as outdoor crop plantations. Factors like air (oxygen) and sunlight (UV rays) are two of the main factors influencing mutations in the genetic material of plants. Because these two factors are part of the normal conditions in which a crop lives on a plantation, mutations can be expected to occur at some point in the growth process of plants.
The damage caused by these factors can not only generate simple changes in the genetic material of the plants but can also have serious detrimental effects on the plant, such as growth inhibition. Even subsequent cumulative damage to genetic material can not only prevent plant cells from dividing and growing but can seriously damage tissue and ultimately kill the plant.
Although some of these mutations can be subtle and go undetected, the composition of the plant could have changed at a molecular level, which may mean that, for example, in the case of cannabis, a mutation causes the cannabinoid content to be of poor quality or even non-existent, but to the naked eye the plant looks normal. This is why genetic and molecular studies have played a key role in this industry.
Additionally, if a grower obtains a particularly outstanding trait in their plant, the only way to obtain information on that trait and validate its function is through genetic studies, allowing them to obtain a genetic profile of the plant as proof that it is unique. These studies also work to detect unique, outstanding traits, such as high THC or CBD production in cannabis, which would not be possible without laboratory analysis, as these traits cannot be measured visually.
It is crucial for growers to have a good understanding of the genetic material of their crops in order to ensure that they are of good quality and to detect any mutations that may have a negative impact on the plant. Genetic and molecular studies play a vital role in this industry by providing growers with the necessary information to make informed decisions about their crops, and to ensure that the plants they grow are of the highest quality and free of mutations that could have a negative impact on the final product.
About MyFloraDNA: We are a genomic laboratory based in Woodland California, delivering modern genomics for the cannabis industry.
Our services include Trait detection (cannabinoid profile and sex/gender ID), Pathogen Detection, and Genetic Validation Services. We offer breakthrough solutions using the inner power of your plants.
Angel Fernandez, author. CEO & Co-Founder at MyFloraDNA. Member of the NCIA’s Scientific Advisory Committee. “It is time to fill in the gap between DNA Sciences and Agriculture. MyFloraDNA is willing to show the huge opportunities that exist for modern genetics in agriculture. Now, it is time for another agricultural revolution”.
Joselyn Guadamuz, co-author. Scientific Researcher and Content Writer at MyFloraDNA.
Maria de Catarina, editor. Public Relations Specialist at MyFloraDNA.
Video: NCIA Today – Thursday, January 26, 2023
NCIA Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook and LinkedIN for NCIA Today Live.
Member Blog: 2023 Cannabis Compensation Survey Announcement
The 4th annual Cannabis Compensation Survey is open for participation registration until April 2023.
This survey analyses data provided by employers and produces industry-specific benchmarks for 140+ unique positions. It complies with federal guidelines meant to protect anonymity and ensure unbiased results.
Participation in the survey grants your organization exclusive access to the Detailed Report – containing more data, additional percentiles, and demographic breakdowns by state, headcount, and revenue. The Detailed Report is ideal for conducting internal compensation reviews and can be used to attract, engage, and retain key talent.
Per federal guidelines – the survey welcomes organization-wide submissions only (meaning no individual submissions). Typically, data submission is completed by an organization’s HR department, payroll administrator, or a representative from leadership. It is 100% free to participate.
Produced by FutureSense & Marijuana Business Daily, the project is endorsed by National Cannabis Industry Association and supported by Green Leaf Payroll & Business Services and Western Management Group. The survey’s mission is to support cannabis businesses, their operators and their employees by standardizing pay analysis for a dynamic, evolving, and important industry.
Enrollment is open through April 2023.
Data submission kits will be sent out in March 2023 and due back by May 31, 2023.
The final results will be published in August 2023.
Did you know that as of this writing, Utah is the only state that allows firefighters to use medical cannabis during their off-hours?
The January 2022 Utah legislative session passed SB 46. This closed a loophole in prior cannabis laws and allowed for all State employees, including firefighters, to consume medical cannabis on their off hours with a valid medical card. So, while Utah may not have the freedom to grow its own medicine as other states do, Utah is continually pushing to improve access to medical cannabis for those who severely need it.
To better understand how the passing of SB 46 affects our patients, I spoke with Connor Carpenter. He is a specialist for the Sandy City Fire Department, a hemp grower, and a medical cannabis advocate.
Carpenter became a firefighter after meeting the woman who would become his wife. Her father, grandfather, and uncle had all been firefighters themselves and inspired him to devote himself to a new line of work. After marrying, Carpenter and his wife began growing their own CBD-rich hemp to create sleep-aiding medicine. Although he was finding moderate relief with CBD alone, he began adding a ratio of THC to the mixture and found the right balance his body needed to rest effectively – firefighting is no walk in the park and that extends to their off-duty hours.
“Firefighters don’t have great sleep habits,” Carpenter explained. Although THC and CBD products are a much safer alternative for helping induce healthy sleep, Carpenter says many other firefighters have routinely turned to alcohol or opioids to self-medicate on their off-hours.
Eighty-five percent of career firefighters reported drinking within the past month, up to ten days a month, which is about half of their off-duty days, according to surveys by the Center for Fire and Rescue and EMS Health Research. And although there is no hard data on opioid use among firefighters, their high rate of injury and constant exposure to stress and trauma-inducing events puts them at higher-than-average risk of developing a substance use disorder, according to indicators from the Substance Abuse and Mental Health Services Administration (SAMHSA) in a research bulletin from 2018. With over 2000 firefighters working for the State of Utah according to the website Firefighter Now, those addiction statistics could affect the lives of not only the firefighters, their families, and their friends, but also the lives of those in the communities they serve.
Carpenter saw this problem affecting his colleagues and knew he had to act. He started to provide CBD-rich topicals and tinctures through his family-run business TriCombzzz & Cripple Juniper Farms. As a cannabis patient himself, he also encourages them to apply for medical cards to reduce their dependence on alcohol and opioids. He explains:
“I can see a huge difference in their personality when they show up in the morning or even talking to them outside of work and talking to their families. To see some of the turnarounds for these people is huge.”
The top two qualifying conditions for medical cannabis in Utah have consistently been chronic pain and PTSD, according to monthly reports released by The Utah Department of Health. Both conditions afflict firefighters, and emergency services workers in general, at a much higher rate than the average person, according to data from the CDC and SAMHSA. Which should not come as a surprise. Firefighters, EMTs, and other first responders witness sights that an average person would recoil at, often under circumstances that are already stressful and/or physically demanding enough.
Former Fort Worth Texas EMT Aaron Gann, now a Utah Medical Cannabis patient working the ski industry in Park City, says: “We would start to develop pretty dark senses of humor to make up for it. But at the end of the day that only gets you so far. I’m pretty sure we all got some kind of PTSD from it but smoking at night always helped more than drinking.”
But opponents of SB 46, including an Ogden City attorney and former Ogden City police chief, fear that allowing state first responders to participate in the medical cannabis program will put the public at risk. That fear is unfounded according to Carpenter:
“I just don’t know anyone that would risk it. There’s not anything stopping one of us from coming in drunk either, we just wouldn’t risk it. The job is hard enough already, to try to do it high would just be stupid.”
It makes sense for firefighters to be allowed to use cannabis in their off-hours – as it does for all EMS employees. These people put their lives at risk every day to ensure that our communities are safe and stable. They are not seeking to do anything that would put the public, the very people they are supposed to protect, at risk. If they can provide for us during our emergencies, shouldn’t the state allow the same for them?
Corey Morrill is the Copy Editor at Dragonfly Wellness, Utah’s first medical cannabis pharmacy. Corey started out as a passionate budtender in the pharmacy but quickly used his background with a BA in Creative Writing from Southern Utah University to move towards writing product descriptions, and eventually worked his way into the marketing department. Corey is the chief content writer and editor and additionally serves as an SEO expert for the company. Follow the Dragonfly newsletter to see more of his work.
Dragonfly Wellness is Utah’s first and largest, vertically integrated medical cannabis company. Wellness opened its doors in March of 2020, sharing its anniversary with the birth of the state medical cannabis program and becoming the first of what is now 15 medical cannabis dispensaries in Utah. Wellness is constantly offering its patients the best service and features an ever-expanding catalog of products, and a delivery market that continues to grow as well. Dragonfly is a state-wide staple but aims to make itself a national one.
Member Blog: In 2022, U.S. Cannabis Supply Exceeds 48.8 Million Pounds
When it comes to the national and state cannabis markets, most of the conversation is centered around demand. Cannabis investors have for years raised funding based on the potential of the market, or on the growth in demand. Cannabis business operators have talked about capturing market share and, of course, policymakers have always talked about taxes. Until recently, very little data was available on cannabis supply. On December 1, my team at Whitney Economics published a report on the total cannabis supply in the U.S. market. We wanted to share some of our data and insights with the NCIA community.
The Supply and Demand of American Cannabis
The total cultivated output of cannabis in the United States in 2022 is 48.8 million pounds. This figure may be surprisingly large to some people, because it includes both legal and illicit cannabis supply, and addresses all delivery methods, including flower, edibles, concentrates, and other products. Current legal sales of cannabis will be an estimated $29.3 billion in 2022, and are projected to be at $81.6 billion by 2030.
Interesting Fact about Cannabis Demand: Unless there is some major development in cannabis application or market conditions, the total demand for cannabis will not grow substantially over the next decade. Instead, demand will shift from the illicit market to legal channels for cannabis. There will be more legal supply than illicit cannabis supply in the U.S. by 2026 or 2027. While the total number of consumers will be rather consistent, the value of the cannabis market (in terms of dollars) is actually forecasted to decline over time as more and more states come online and competition from both inside and outside of the U.S. drives down prices.
Consumer Consumption is Consistent and Predictable
The U.S. cannabis market is as big as it seems, with one out of three adults over the age of 18 consuming cannabis at least once in the past year. That number currently equates to more than 80 million adults. The report also includes data on total consumption, which is extremely consistent from state market to state market. Consumption is the basis for the amount of supply in a market.
Interesting Fact about Consumer Participation: When it comes to purchasing cannabis products, consumers remain very price sensitive. That is to say that the “elasticity of demand” is very high. This elasticity number can be used to predict legal consumer participation levels, based on how much higher the legal price is than the illicit price. Predicting consumer conversions into the legal market is not that difficult to do.
Consumer participation in the legal cannabis markets is very predictable and based on three factors:
Price of legal cannabis relative to the illicit cannabis market
Availability of legal cannabis supply
Ease of access to legal cannabis
These three factors are interrelated. For example, if supply or access is limited, prices will rise and there will be less legal participation. Or if policy makers tax cannabis too much, the rate of legal conversion will slow significantly and policies surrounding public safety will be impacted. There is a sweet spot, however.
There Can Also Be Too Much Supply
On the other hand, if there is too much supply, this can be harmful to cannabis businesses as it creates a pricing race to the bottom. When businesses compete on price, profit margins are compressed, and businesses fail. States including Oregon and Michigan are currently in that situation, as prices have collapsed and some licensees are calling for cannabis business licenses to be limited.
State-by-State Cannabis Cultivation Capacity
In the 2022 U.S. Cannabis Supply Report, we were able to calculate the total legal cultivation capacity of every state in the country. California leads the nation in cultivated output at 22.2 million pounds this year alone. Using this valuable information, investors, operators, regulators, and other stakeholders in the U.S. cannabis industry can see which state markets are oversaturated by supply.
Interesting Fact about Cannabis Cultivation: Today, the total legal cultivation capacity that has already been licensed is greater than the total U.S. demand (illicit + legal) for cannabis. With more and more states coming online, this imbalance will only get more pronounced. Business operators in the cannabis industry should ready themselves for a reckoning when it comes to their profit expectations.
New Analytical Tools Have Been Developed That Combine Supply and Demand
The development of an integrated supply and demand model that encompasses both the legal and illicit markets for cannabis in the United States is a significant development for the cannabis industry. Stakeholders in every state now have the capability of assessing the market for operational, investment, and regulatory risks with granularity. Policymakers at the state and community levels can incorporate both these supply and demand models in order to make informed, data-driven decisions. There is a lot of potential in these new tools, and we are just beginning to scratch the surface of bringing a higher degree of sophistication and analysis to the cannabis industry.
Beau Whitney is the founder and Chief Economist at Whitney Economics, a global leader in cannabis and hemp business consulting and economic research, and has served as Senior Economist for NCIA.
Serving an international clientele, Beau is considered one of the leading cannabis economists in the U.S. and globally. His applications of economic principles to create actionable operational and policy recommendations has been recognized by governments, and throughout the economic, investment, business communities.
Drawing upon his previous hi-tech experience, Beau has applied his supply chain and operations expertise to the cannabis industry, where he has designed and implemented efficiencies into the cultivation, extraction, edible manufacturing, wholesale and retail distribution operations of a vertically integrated cannabis operation, that eventually went public in 2015.
His Whitney Economics and New Frontier Data white papers analyzing the adult-use, medical and industrial cannabis markets have been referenced in Bloomberg, the Wall Street Journal, Washington Post, New York Times, USA Today, the Associated Press, as well as in leading cannabis industry publications. Whitney is a member of the American Economic Association, the Oregon chapter president of the National Association of Business Economics, is a member of multiple regulatory advisory committees throughout the U.S. and participates on the Oregon Governor’s Council of Economic Advisors.
Beau has provided policy recommendations at the state, national and international levels and is considered an authority on cannabis economics and the supply chain.
Member Blog: What’s in Your Garden? Identifying, Preventing, and Exterminating Pests
Unfortunately, there are a variety of insects with the potential to damage the majority of your cannabis plants. Before we can fight back, we must be able to identify each symptom an insect may leave behind. Symptoms often vary amongst individual pests allowing us to identify them and treat the plant accordingly. This blog serves to highlight some of the biggest threats to cannabis gardens, including the following insects:
Aphids
Spider Mites
Fungus Gnats
Thrips
An aphid is a soft-bodied insect with a piercing-sucking mouthpart, allowing it to access a plant’s vascular system and steal its nutrients. They are visible to the naked eye but come in various colors, sometimes blending into the plant and making them hard to spot.
So, how can we know if aphids are present in our cannabis plants? According to Ryan Douglas, author of “Playing Plant Detective: How to Identify Insect “Fingerprints,” these insects often leave behind a smokey mold or “sooty mold,” consisting of a black or brown fungal disease. Aphids are mainly attracted to the protein within the sap of the plants, so the rest of the sugars in the sap pass through their body and are left behind on the leaves. This forgotten waste is known as honeydew and does not stay forgotten for long as ants are highly attracted to it. With this in mind, some other signs to be aware of are the collection of ants and left-over honeydew.
For preventative and exterminate measures, regularly check your plant for symptoms of the pest, remove and spray off as many bugs as possible, and also consider insecticide soaps and sprays that will not harm your plants.
Figure 1. Aphids in different phases of life
Spider Mites
Spider mites are smaller than aphids but still visible to the naked eye. They are often dark red, orange, or brown. Spider mites also have tiny piercing mouths that allow them to feed on nutrients obtained from the plant leaves.
It can be hard to spot their presence in the early stages, as they tend to remain under the plant leaves until their population expands. Once the populace has reached a larger capacity, spider webbing will be present along the top of the plant canopy. In addition, the mites will often leave behind little white specks on the top of the leaf. The idea is to spot the mites before webbing occurs; this can be done by frequently and thoroughly examining your plants.
Early detection of spider mites is vital for exterminating and preventing their growth. According to Nebula Haze, author of “Cannabis Pests, Bugs, & Viruses,” these mites quickly reproduce and gain immunity to extermination methods. Therefore, it is important to use multiple forms of extermination consistently to prevent their return.
Figure 2. Spider mite webbing on a cannabis plant
Fungus Gnats
Unlike aphids and spider mites, fungus gnats primarily feed on plant roots. These gnats look like tiny black flies and can have quite harmful effects on plants. Not only are the flies feeding on the roots, but the larvae destroy root hairs and young roots of the cannabis plants (Haze, 2022).
Fungus gnats are not as easy to trace because their usual resting spot on the plant allows them to blend in with the dark soil and surface area. A more visible clue of “fungus gnats is the presence of their feces on the leaves, nursery pots, and grow benches” (Douglas, 2022). If there happens to be any flying bugs around the plant, that could also be a prominent symptom.
Ensuring prevention and extermination are possible from a variety of practices. Be sure not to over-water the plants, as gnats a more attracted to overly damp areas. It may also be helpful to hang sticky cards near your plants and, once again, utilize insecticide sprays when necessary.
Figure 3. Fungus gnat, in comparison to a quarter
Thrips
A thrip is yet another insect that raises a threat to the healthy growth of cannabis plants. “Adult thrips are small, fast-moving insects, while young thrips look like tiny unmoving pale worms on the leaves” (Haze, 2022). Depending on their stage of life, they could look a variety of ways. They often blend into the plant because of their color and will jump around if they feel threatened. These variables cause their extermination to be quite tricky.
Thrips have small, piercing mouths like spider mites and aphids, but the leaves often look more scraped than pierced (Douglas, 2022). Douglas gives a great suggestion to test a plant for thrips. If you hold a white piece of paper under the suspected leaf and tap on the leaf, you will be able to see the thrips fall on the paper. As adults, they will typically appear as orange, brown, or yellow.
Figure 4. Thrip-damaged leaf
Examining your cannabis plants regularly makes the prevention or early diagnosis of pests a manageable task. As you examine your plants, keep in mind the range of symptoms that stem from various insects. In the end, if you happen to come across any harmful pests, be diligent in your extermination methods and find the necessary method according to the pest you discover.
References
Haze, N. (2022, August 7). Complete pest guide – cannabis pests, bugs & viruses. Grow Weed Easy. Retrieved October 19, 2022, from https://www.growweedeasy.com/bugs-pests-symptoms-marijuana-grow
Photographer: Whitney Cranshaw, Colorado State University, Bugwood.org
About MyFloraDNA: We are a genomic laboratory based in Woodland California, delivering modern genomics for the Cannabis Industry.
Our services include Trait detection (cannabinoid profile and sex/gender ID), Pathogen Detection, and Genetic Validation Services. We offer breakthrough solutions using the inner power of your plants.
Authors: Ashlyn East and Angel Fernandez
Angel Fernandez, CEO & Co-Founder at MyFloraDNA. “It is time to fill in the gap between DNA Sciences and Agriculture. MyFloraDNA is willing to show the huge opportunities that exist for modern genetics in agriculture. Now, it is time for another agricultural revolution”
Editor: Maria Zuccarelli
Member Blog: Glove Fit – Too Loose, Too Tight, or Just Right?
While everyone has heard the saying, “…fits like a glove,” disposable glove wearers don’t always adhere to the literal meaning behind this popular phrase – especially in the cannabis industry. This is part and parcel of the problem, particularly when companies routinely buy only one type of glove, in one or two sizes, for the entire staff to wear. That may make for a much easier purchasing decision, but it’s capable of putting cannabis workers’ hand health – and even job place safety – at risk. Because of the highly tactile nature of work in the cannabis industry, worker productivity is best enhanced with better-fitting gloves that need to be changed less often.
Aside from offering workforces a supply of gloves in various thicknesses and sizes, which seems like a logical solution, what other factors come into play with regard to finding a proper glove fit? As it turns out, quite a bit.
Sizing Up the Supply
While many employees are aware of the different types of disposable gloves, the majority of workers have never laid eyes on a glove-sizing chart. When ordering supplies, it’s advisable to start with the specific glove sizes that have worked for staff, while sampling several others to offer a wide variety. Hand-related safety risks in the cannabis industry include the potential for cuts, pinches, and even sprains.
The Downside of Ill-Fitting Gloves
Neglecting a proper fit can easily lead to work-related disorders in the cannabis industry. These include occupational skin diseases (OSDs) like dermatitis, work-related musculoskeletal disorders (WMSDs) caused by repetitive tasks that can strain the muscles, tendons, ligaments, and blood vessel damage, and the biggest risk of all – partial contamination. Ill-fitting gloves, such as the excess material in a size too large, can catch, snag, and tear. Frequently ripped gloves increase costs, while ill-fitting gloves also leave the wearer with less tactility, reducing worker productivity and efficiency.
Glove Preferences by Type
Disposable gloves come in several different varieties, of which the tactility and durability are directly related to the quality of their raw materials and ingredients. The optimal glove type for cannabis-related work is nitrile, due to their enhanced strength, durability, and puncture resistance. They also offer some of the best protection against chemicals, bacteria, and fungi.
Conduct a Trial Run
Many purchasers are unaware that reputable glove suppliers will often offer a free trial of samples, both of varying thickness, colors, and sizes, in order for individual workers to determine the best glove for their needs. An ordering process that takes into account the needs, safety, and risk factors associated with every staff member’s needs is an essential consideration for every cannabis grow operation.
Before you place your next bulk glove order, do a little research to determine what factors are at stake for the fit, comfort, and safety of your workforce. A great place to start would be Eagle Protect’s comprehensive Disposable Glove Buying Guide.
Justine Charneau is the head of cannabis industry sales at Eagle Protect, a disposable glove supplier dedicated to the responsible sourcing of quality products that ensure customer safety and impact reduction, ultimately mitigating customers’ risk. Eagle Protect is the only global PPE supplier that is a Certified B Corporation, a designation that a business has met the highest standards of verified performance, accountability, and transparency. She can be reached at justine@eagleprotect.com
Member Blog: Dollars and Sense – 2022 Michigan Cannabis CFO Outlook
The cannabis industry is one of the fastest-growing sectors in Michigan. It’s also an ever-changing industry, leading to myriad challenges for businesses operating within this space. One issue licensees face is a significant gap in vital business intelligence that’s needed to remain relevant in an extremely competitive market.
To help fill this gap, Rehmann partnered with A&K Research, Inc. of Northville, Mich. to survey cannabis operations within the state and to create the 2022 Michigan Cannabis CFO Outlook. As one of the leading professional advisory firms serving the cannabis industry in Michigan, Rehmann spearheaded this project to help cannabis licensees make empowered business decisions based on peer feedback.
The 2022 Michigan Cannabis CFO Outlook shares findings from the survey, including top challenges the cannabis industry faces in Michigan. Top-of-mind concerns: managing the financial side of the business; deciding whether it’s time to sell the business and how best to go about it; staying on top of compliance requirements; navigating federal legislation and resulting tax burdens; and understanding potential changes in lending laws that impact relationships between banking institutions and legitimate cannabis-related businesses.
In addition, this report features industry spotlights highlighting current cannabis businesses facing these issues in real-time. They share how they’re navigating this ever-evolving industry and economic landscape.
Michigan Marijuana Sales
Just how quickly is this industry growing? Michigan saw $21 million in medical cannabis sales and $188 million adult-use marijuana purchases in July 2022 – a total that is about $15 million greater than the previous monthly record set in April 2022. Most of the marijuana sales for both medical and recreational use were for flower products, followed by vape cartridges. Data also shows a continuation of a sales trend in Michigan’s marijuana market, with medical cannabis purchases decreasing and adult-use sales increasing.
Report Takeaways
Here’s a snapshot of report insights and some of our takeaways. You can download the full 2022 Michigan Cannabis CFO Outlook here.
Tax and M&A Activity
39% of companies are considering or are in the process of selling their business. This could be due to the current challenges of operating within the Michigan cannabis market or for a variety of other reasons. Many licensees are entrepreneurs who enjoyed starting and growing the business from the ground up and are ready to move on.
Half of the companies are paying an effective tax rate between 20% and 30%. One in five currently show a loss from operations. This was surprisingly much lower than we expected. It’s not uncommon to see tax rates of over 50% within the industry depending on where the business falls in the vertical chain and how aggressive you can be with your structure or costing model.
Cannabis Business Operations
Just over one-quarter (28%) of businesses have been subject to some level of federal, state, or reporting audits. The industry is still young, and as we continue to look at this data year over year, we expect this number to drastically increase. It’s important to have your finances in order to be prepared for that time to come.
Almost two-thirds (65%) use QuickBooks for their accounting system, with the remainder being dispersed between Sage, SAP, Dynamics, and Xero. Accounting for the cannabis industry can be extremely complex. Many cannabis businesses started with QuickBooks and are now outgrowing that system and ready for more powerful systems to meet their unique needs.
Perceptions of the Current Michigan Cannabis Industry
The majority (56%) expect retail pricing needing another 1-3 years to stabilize. One of the biggest concerns within the industry is pricing of cannabis. We’ve seen a significant drop in retail pricing over the past several years and there is concern that it may drop even more.
Nearly half (42%) think that between 26% and 50% of wholesalers are losing money at current retail prices. Given the struggles with pricing, growers who are selling wholesale are facing a lot of challenges at this point. As more and more operations start up within Michigan (a state without a license cap), the market continues to move toward oversaturation.
What some of the survey respondents had to say about the state of the industry:
“As a small-sized grower focusing on high-end quality, we are impacted greatly by falling retail prices. The rampant increase in licenses/grows caused a glut in the market that has yet to subside. We are focusing all our efforts on lowering costs to keep up with falling prices.” [Grower]
“The industry is currently in a very fragile state. The testing numbers are overinflated for potency, customers are going back to the black market and the current pricing is not sustainable. In addition, new businesses for all areas are opening and believe there is enough capacity for everyone to make money.” [Testing Facility]
“If 280E would go away, things would be much better. Limited licensing for cultivation and processing would also help.” [Grower, Processor & Provisioning Center / Retailer]
To download your digital copy of the full report today, click here.
Chris Rosmarin manages the commercial audit practice in Grand Rapids and also leads the Firm’s cannabis practice. He provides audit and other assurance services, due diligence services and accounting advisory services to various companies both large and small.
Chris understands that clients expect and deserve a partner that is responsive, invested in the relationship and dedicated to helping them respond to their challenges. He strives to deliver on those expectations by meeting deadlines and being available and present throughout the relationship.
Rehmann is a professional advisory firm that provides accounting and assurance, business solutions and outsourcing, specialized consulting, and wealth management services. For over 80 years, Rehmann has provided forward-thinking solutions to our clients. With nearly 900 associates in Michigan, Ohio, and Florida, we are the momentum behind what’s possible. We focus on the business of business — allowing companies and individuals to focus on what makes them extraordinary. We help you look to the future with confidence, thanks to our unrivaled expertise and integrity. Through our partnerships with our clients and communities, we drive impact that empowers our world. Find us online at rehmann.com.
Member Blog: Future Of FDIC Easing for Cannabis Banking After Biden Decriminalizes Marijuana
Over the years, the simple possession or use of cannabis has seen many lives upended by arrests and criminal convictions. Unfairly, racial disparities have determined that black and brown individuals suffer most of these convictions, arrests, and prosecutions, even though white individuals use and possess cannabis at similar rates. The resulting criminal records lead to individuals being denied fundamental rights to employment, housing, and education opportunities.
However, on October 6, 2022, President Biden made an announcement that could change the cannabis and criminal clemency conversation. The president asserted he would:
grant pardons to individuals with prior low-level federal cannabis possession offenses
change federal cannabis laws by reviewing the cannabis Schedule I rule.
The federal government’s classification of cannabis as a Schedule I substance puts it in the same category as more lethal drugs like heroin and LSD while drugs like fentanyl are not considered less severe than marijuana since it falls under Schedule II.
As more states legalize the sale and use of cannabis, the classification of Schedule I no longer makes sense. Additionally, more direct research on the proper utilization of marijuana can develop suitable restrictive and preventative measures to protect against harmful outcomes of cannabis use.
The Biden initiative is crucial because it can begin to remove the burden of employment, education, and housing limitations often experienced by individuals with simple cannabis possession convictions. Besides, if marijuana is rescheduled to Schedule II, or as many advocates champion for a complete descheduling, it could mean the end of cannabis prohibition altogether.
Widespread Support for this Initiative
Nearly 70% of Americans support the President’s pardon proclamation. Publicly, two in three Americans support Biden’s plan for cannabis reforms, and three in four support the removal of cannabis from Schedule I of the Controlled Substances Act.
Bipartisan support for this move is also high, with 74% of Independents, 84% of Democrats, and 58% of Republicans backing the proposal. At the state level, 68% of respondents support governors that want to issue pardons for people with low-level cannabis possession convictions.
Why This is Important
The expeditious review process requested by President Biden has the potential to open the cannabis industry to further changes, like the easing of banking restrictions for cannabis businesses. For instance, the call for action by governors is already inspiring many to rethink state and local relief for marijuana users. Kentucky, Colorado, and Kansas are three states already actively considering enacting the Biden pardons and drafting new reform bills for marijuana cases.
“The lack of safe banking and financial services for the cannabis industry in the State of Colorado has become a dire public safety issue for highly regulated cannabis businesses operating in compliance with state law,” Gov. Jared Polis’ office wrote to House and Senate leaders.
“Further, the lack of safe banking exacerbates the uneven playing field faced by small and minority-owned cannabis businesses, despite their serving the same communities and being subject to the same increased state regulation as other cannabis businesses in the State,” the letter said.
It’s true – over the years, the cannabis industry has dealt with a lack of financial and banking services because of the strict regulations and criminalization associated with marijuana. Consequently, this has resulted in severe public safety issues, even for cannabis businesses that operate within the compliance mandates of the state law.
Additionally, operators are disadvantaged because they lack funding or banking systems that support cannabis business processes. But following Biden’s pardon, many hope that Congress’ marijuana reform will pass the Secure and Fair Enforcement (SAFE) Banking Act for the industry.
If passed, the protection against armed robbery will increase. Also, the SAFE Banking Act will support the minority, veterans, and women who own small cannabis businesses. This, in turn, is expected to improve public safety amid the growing use of cannabis and cannabis products while simultaneously creating jobs within states.
Ushering in the Era of Cannabis Banking and FDIC
Even though the SAFE Banking Act has been in the House of Congress seven times, federally insured banking services and modern digital banking solutions like electronic payment processing are still inaccessible to the cannabis industry.
The Act lags in the senate under Democratic and Republican control. However, the senate is said to be preparing to enact the reform for the SAFE Banking Act as part of the Biden marijuana proposals. And why not? There is significant support for the SAFE Banking Act.
For instance, National Association of State Treasures members have voiced their support for the SAFE Banking Act. Public policy also demands the immediate relief the ACT will provide cannabis businesses. Therefore, the expectation that leaders in the government will push for banking reforms for cannabis businesses is prevalent.
The SAFE Banking Act is an Advocate for the War on Drugs
Many believe that the baking legislation would advocate for the war on drugs because it would offer protection against the risk of robbery and violence. By denying cash-based cannabis businesses access to the traditional financial system, the state and local governments provide an invitation threat that has seen many victims working in cannabis businesses lose their lives or livelihoods.
On the other hand, the right to payment solutions, like credit cards, protects against armed robbery. Nonetheless, for the banking legislation to work, it requires the support of criminal reforms. This is where initiatives like predicant Biden’s pardon and marijuana schedule reform come in.
The SAFE Banking Act will solve the injustice associated with financial inequality, thus, providing public safety that protects customers, employees, and businesses in the cannabis industry. And with reduced invitations for armed robberies working in tandem with the use of mandated cannabis products, the war on drugs will ensue.
Cannabis Businesses Contribute Equally to the Economy
As such, it is only fair to provide them with the same rights and protections that other businesses, whether big or small, enjoy. Therefore, starting with the push to decriminalize and legalize marijuana, not just at the federal level but at the state level, is a solid place to start.
Following this pardon with an advocacy of the SAFE Banking Act will additionally provide cannabis businesses with the capability to carry out operations securely and optimally. But attention must be paid to the details pertinent to these reforms to ensure thousands of convicts get a better chance at life and cannabis businesses get opportunities to continue contributing to the economy.
FAQs
What does President Biden’s pardon for marijuana possession entail?
President Biden’s cannabis reform initiatives are set to accomplish three things:
Pardon convicts with low-level marijuana possession offenses, thus, allowing them to get housing, education, and employment without prejudice
Reduce the marijuana Schedule level on the Controlled Substances Act from Schedule I to Schedule II, which lessens the seriousness of marijuana possession
Inspire governors to offer the same pardons at the state and local levels where most marijuana convictions are carried out
Is there support for President Biden’s announcement?
Yes. There is ample support from the public and bipartisan control for Biden’s pardon and advocacy for the marijuana schedule change in the Controlled Substances Act.
What would the pardon mean for cannabis banking?
The de-scheduling of the marijuana Controlled Substances Act would remove the many legal hurdles and fears of the financial institutions that keep them from supporting cannabis businesses. This would reduce the discriminatory risks associated with banking or financing cannabis businesses.
Joshua Gilstrap is the Marketing Manager for e2b teknologies, in addition to his marketing responsibilities Joshua leads business development for e2b teknologies emerging Canna Suite product line. A business graduate with a focus in marketing from Miami University in Oxford, Ohio, he joined the e2b team in the Fall of 2019. Josh brought with him a wide array of business and practical experience in planning and execution. Since coming aboard he has led multiple projects including website hosting and theme standardization company wide, marketing automation streamlining the efficiency of the customer journey, and sales automation where he is changing the conversation from promotion to education, from pitching to catching, and from push to pull in order to keep up with the shifting tides of a digital transformation.
Member Blog: Payment Processing in the Cannabis Space – Part 3
This is Part III in a series of blog posts entitled Payment Processing in the Cannabis Space. Click here for Part I, and here, for Part II.
It would be naive to suggest that the cannabis retailer isn’t also facing headwinds resulting, simply, from a century of bad press. Putting the questions of federal vs state legality aside, it’s important to note that payments and banking issues are not unique to the plant-touchers, or Cannabis-Related Business Tier I, or CRB Tier I. CRB Tier II, the ancillary, or cannabis-adjacent businesses, have challenges of their own.
On any given day, there are a galaxy of companies, consultancies, medical practices, and professional organizations expanding their reach into our growth industry. And why not? The legalization of cannabis is a bona fide 100-year event, and intrepid business owners of all shapes and sizes sense opportunity, a new market for their wares and expertise.
And while they may be welcomed with open arms by their new colleagues and contemporaries in the cannabis community, they often find their banking relationships suddenly souring.
A message from their payment processor arrives.
It says, “Sorry, Gayle Force Grow Lights. Your processing has been suspended.”
A message from their bank hits the Inbox.
It says, “Sorry, Gayle Force Grow Lights. Your account is being shutdown down.”
These are chilling, but easily explainable events. And while it may be tempting to tuck them neatly into a dystopian ‘Big Brother is Watching You’ framework, what’s happening here is more Kafkaesque bureaucracy than Orwellian totalitarianism.
So what happened? Gayle Force Grow Lights has been marketing its grow lights to the people of Maine for 25 years. Gayle, the owner, saw cannabis legalization sweeping the nation, and thought, “Here is a new market for my grow lights.”
She updates her digital storefront accordingly, which is to say, she added a new marketing bullet: Ideal for cannabis cultivators.
To us, the word ‘cannabis,’ is an industry term. In Gayle Force Grow Lights’ case, it is marketing jargon. However, to the processors and banks employing dummy algorithms to crawl their clients’ sites, that word is a red flag. When that red flag is tripped, Gayle’s processing is suspended. When that red flag is tripped, Gayle’s business bank account is shut down.
Gayle Force Grow Lights, in the eyes of the PSP it’s been using to accept credit cards, and in the eyes of the financial institution it’s been using to bank, has, suddenly, transitioned from a reliably safe client to a potentially risky client.
Risky clients need to be watched more closely. Risky clients require more due diligence and KYC measures. And since it is not cost-effective for a PSP with 24 million accounts — or a bank with 70 million clients — to police Gayle Force Grow Lights, which processes $100,000 in transactions per-month, and has an average cash balance of $2 million, they show Gayle, and her small business, the door.
The good news? Gayle Force Grow Lights is fictitious. I made it up.
The bad news? Gayle Force Grow Lights is a composite. This is happening to businesses in the cannabis space every day.
What Does the Future Hold?
Right now, merchant accounts are only an option for sellers of hemp and hemp derivatives. But the day will come, with national legalization, when every cannabis-related retailer will have the legal option of accepting credit cards.
As with CBD, it is inevitable that there will be numerous challenges to merchants when this occurs. It is inevitable that cannabis sales will be deemed ‘high risk’ by the card associations. It is inevitable, also, that only a handful of Acquiring Banks will elect to throw their hats into the ring.
The good news is that it is just as inevitable that the companies providing merchant accounts for CBD businesses today will be the ones providing merchant accounts to businesses selling THC in excess of .3%, tomorrow. As always, the most dependable among them will be those that have direct relationships with the Acquiring Banks. This will ensure that account acquisition and maintenance for all cannabis-related businesses is as smooth and as easy as it can be.
MobiusPay, Inc. is a US-based global financial services organization that is committed to empowering individuals and businesses. For more than a dozen years, MobiusPay has leveraged state-of-the-art secure billing technology, long-standing relationships with financial institutions and award-winning customer support to provide merchant processing and payment solutions to brick-and-mortar and digital businesses around the world.
Todd Glider has been an e-Commerce leader since the start of the Internet age. He has an MFA in Creative Writing from the University of Miami, and has served as CEO for small and medium-sized technology companies in Spain, Austria and the United States. As our Chief Business Development Officer, Todd introduces MobiusPay’s suite of award-winning financial services to new industries, and implements the development strategies and key partnerships needed to bring value to new customers.
Member Blog: Reaching The Highest Common Denominator
by Raina Jackson, Founder & CEO of PURPLE RAINA Self Care Member of NCIA’s Diversity, Equity, & Inclusion Committee (DEIC)
This past September I had the pleasure of lobbying in D.C. for the first time as part of NCIA’s 10th Annual Lobby Days. The lobbying process was demystified for me, and I found that lobbying isn’t easy, but it isn’t that hard when you share your talking points from your heart, representing your own and others’ experiences. I learned that the NCIA delegation shares more common ground than we realized with Congressmembers, especially through their younger and more hip staffers and family members. One senator has a daughter who used to be a budtender and now podcasts about the industry, Senator Gary Peters (D-MI).
I was encouraged by how receptive legislative aides and advisors were to the factual talking points and statistics NCIA provided us to appeal to their sense of reason and fairness. They recognized the public health and economic benefits cannabis has delivered and its potential, without being distracted by useless moral arguments against it. Our team gave an overview of the cannabis landscape and advocated while offering solutions to our varied struggles as cannabis entrepreneurs.
We highlighted that 47 states have adopted some form of cannabis commerce and decriminalization, representing 97.7% of the U.S. population! The majority of the American public demands safe access to cannabis. Why not ride the wave?
Cannabis has been found to be a “gateway” medicine for a more safe withdrawal from opioid addiction, especially crucial to states experiencing high overdose death rates.
We discussed the DEA recently approved funds for even more substantial clinical research on the myriad of proven and potential health benefits delivered by the cannabis plant in a wide range of forms. Yet existing cannabis research is often more robust and held to higher standards than over the counter aspirin. Many pharmaceutical drugs are advertised on TV as the best thing since sliced bread one day (albeit with alarming potential side effects), then next named in TV ads for class action lawsuits for their harmful effects.
A case for an enhanced SAFE Banking Act
The legal U.S. cannabis market is valued at $17.7 billion, with a substantial amount unbanked, causing a public safety crisis. Our discussions illuminated our common ground regarding the public safety improvements and economic benefits that the bipartisan supported SAFE Banking Act will bring to each state choosing to introduce its own customized hemp CBD/low THC, medical, or adult recreational cannabis program.
When compliantly banked these funds will offer financial institutions of all sizes more capital for lending to spur economic recovery and a safer industry. While no financial institution will be required to participate, the risk mitigation and sizable financial benefits can’t be ignored.
SAFE will remove the risk of federal prosecution for compliant financial institutions already offering banking to cannabis businesses, while encouraging more banks and credit unions to join them. Too many existing entities providing cannabis banking services tend to mitigate risk by charging exorbitant monthly fees, financially hobbling startup cannabis businesses or excluding them altogether.
SAFE would also support hemp CBD businesses like mine, still navigated the grey area regarding access to banking, loans, leases/mortgages, and payment processing.
In my follow-up email to the Congressional aides and advisors we met with, I attached a white paper authored by the Cannabis Regulators of Color Coalition (CCRC) offering best practices for increasing financial access to cannabis businesses, prioritizing groups that have been historically underserved by traditional financial institutions and disproportionately harmed by prohibition.
What’s next?
This regulated cannabis industry is so new that we must allow each other some grace as stakeholders. As cannabis advocates, we have learned that “calling people in” for discussions on the benefits of the SAFE Banking Act and comprehensive cannabis reform is more effective than “calling them out.”
Elected officials and their staff don’t understand first-hand what we experience as cannabis entrepreneurs, and many care more than I expected. Lobbying and sending them emails on new and modified policy recommendations helps them to be well-informed enough to support us. My highlight was meeting with a CA legislative aide who is a fellow CA native and sincerely wanted to be updated on my progress and pain points. We all had a laugh about him agreeing to let me go into “the weeds” concerning the licensing process, pun intended.
Since Lobby Days, President Biden announced the upcoming FDA and DEA review of cannabis as a Schedule 1 drug. It could potentially be de-scheduling within the next 12 to18 months! However, to date, only seven states provide licensing priority, exclusivity, or set aside a percentage of licenses for qualified social equity applicants. The same way the SAFE Banking act should be passed with amendments fostering equity, state, and future federally legalized cannabis programs must include targeted equity programs to help level the playing field. I look forward to returning to D.C. in May for 2023 NCIA Lobby Days!
Raina Jackson is a multifaceted cannabis brand strategist, product developer, and advocate, and is the founder & CEO of PURPLE RAINA Self Care, the culmination of her love for beauty wellness products, the color purple, and the musical and cultural phenomenon Prince. For the past 7 years she has worked in the San Francisco Bay Area cannabis industry in sales management, field marketing, distribution, and product development, and a verified SF Cannabis Equity applicant in Oakland and San Francisco. For the past year she has served on the NCIA Diversity, Equity, & Inclusion Committee and the Regulatory Compliance subcommittee.
Raina has over 15 years of experience in beauty/wellness care product development, sales/ marketing management, and product education at Maybelline, L’Oréal Professional, and Design Essentials Salon System and has taught cosmetology at The Aveda Institute in SoHo NYC. A San Francisco native, Raina earned a B.A. degree in cultural anthropology and linguistics from Stanford University and an MBA in marketing and management from NYU.
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Valerie Taylor, Producer, Vice President and National Cannabis Practice Leader, The Liberty Company Insurance Brokers
by Mike Lomuto, NCIA’s DEI Manager 
Jessica McKeil is a cannabis writer for 
By Casey Mitchell, 
Melinda Yoo designs innovative, profitable and award-winning cannabis retail dispensaries across North America. Her work is inspiring, her clients are notable and her vision for the cannabis industry is unparalleled. She leads her team thoughtfully through the creative and technical processes of creating unique retail experiences that are both jaw dropping and profitable. 
Stuart Lutterman is the owner/founder of Brother Processing Solutions (BPS), 
At 
Andrew Kaye has been involved in all aspects of the financial services industry, as a fund portfolio investment manager, investment banker, family office investor and attorney. He has worked with start-ups on their first raise through global enterprises undertaking billion-dollar stock offerings, and has significant investment experience in the cannabis industry. Currently, Andrew works as Sweet Leaf Madison Capital’s Chief Commercial Officer. Lending his expertise toward the creation of middle market financing solutions for real estate and equipment financing needs in the cannabis space.”
Sevana Janian is a Certified Public Accountant in California with more than 17 years of experience in tax and accounting. She is a member of the Cultivation Committee of the National Cannabis Industry Association (NCIA) for the year 2023. She is also a member of AICPA and CalCPA organizations. Sevana enjoys traveling with her family and playing the piano during her leisure time. She is committed to networking with others to expand her personal and professional knowledge. Sevana is passionate about inspiring and motivating the younger generation to succeed.
Common Latch Guard:
“Panic bar” styled exit system:
“Three Point” bolting systems:
Gary Cohen is the CEO of 
by NCIA’s 
Corey Morrill is the Copy Editor at 
Beau Whitney is the founder and Chief Economist at 
Justine Charneau is the head of cannabis industry sales at 
Chris Rosmarin manages the commercial audit practice in Grand Rapids and also leads the Firm’s cannabis practice. He provides audit and other assurance services, due diligence services and accounting advisory services to various companies both large and small. 
Joshua Gilstrap is the Marketing Manager for 
Raina Jackson is a multifaceted