Social equity can be boiled down to a way of seeking remedy for the harms caused by the racist war on drugs and to help individuals, families, and communities that have been disproportionately impacted by prohibition. A big part of this is making sure that no one is left behind by the economic developments created by making cannabis legal. As local, state, and federal governments continue to grapple with implementing policies that effectively address this issue, there is a lot the industry can – and should – do to help make sure that the opportunities in regulated cannabis markets are inclusive and equitable, and to help support businesses owned by members of marginalized communities.
As many as 70% of consumers want brands to take a stand on social and political issues. That’s a 66% increase from 2017, according to Sprout Social’s 2019 #BrandsGetReal survey. Customers are more likely to purchase from companies that take a stand on causes aligning with their values and more importantly, companies hold the power to make a difference; even if it’s encouraging people to take baby steps towards a larger solution. Data shows they might already be doing that, because 67% of consumers say brands are raising awareness around just causes, and 62% believe brands are educating them on important topics.
Here are just a few ways that cannabis retailers can help be a part of the social equity solution to economic unfairness created by the failed war on drugs:
Partner with Job Programs
Cannabis arrests or convictions can erect barriers in someone’s life. More specifically, they can affect housing, education, and career prospects. Consider partnering with city, state, and national programs and organizations that are creating pathways to cannabis ownership and employment – including the formerly incarcerated – to create job opportunities for underserved communities.
Expungement Days
Reach out to a local law firm or social justice organization and talk about hosting “expungement days.” Your efforts will help provide free legal measures for expunging low-level cannabis-related convictions. The Last Prisoner Project is a cannabis reformation project seeking to release prisoners currently convicted for cannabis-related crimes and help them assimilate back into society. However, local organizations may often have direct experience with this work in your communities and have well-established relationships with them to help better connect with the people who need these services the most.
Reach out to them and see what they recommend before planning your expungement day. You can also find out more information about expungement efforts nationally at the Collateral Consequences Resource Center.
Create shelf space
Socially conscious companies should show equity and racial justice on your stores’ shelves. Whether it is making a “social equity section” or finding ways to educate budtenders on the merits and stories behind the products, you will be moving sales in the right direction and promoting socially conscious consumer patterns. You can also provide tabling space for brand ambassadors to help promote social equity company products that you carry. This not only helps the brands but also creates greater loyalty to your store.
Find products that are both socially equitable and fit your dispensary’s needs. That way, you push the product because you love the product, not just because it’s trendy. But in doing so, you are contributing to positive social change and acceptance, and driving commerce toward BIPOC-owned companies. Remember, the goal is equity.
Form equitable partnerships for ownership
Are you a retailer, cultivator, or production company? Maybe you’re a vertically integrated, multi-state operation. You might not even touch the cannabis plant at all, but provide services to those who do. No matter who you are in cannabis, find ways to partner with social equity companies and help increase their recognition. Maybe it’s mutually beneficial joint venture projects on brands or another arrangement, but find ways to form fair and collaborative relationships.
Above all, keep it real
In the end, authenticity is key, and to take a stand in a way that inspires customers: your message can’t be filled with empty words. If you’re a company that’s looking for causes to rally behind, keep it in your wheelhouse and make sure your audience will resonate with the partnerships you’re creating.
Retail businesses have the power to become change agents and inspire customers to take action in their own backyards. Seek out opportunities like the ones we mentioned and provide opportunities for wealth generation, education, and social restoration in marginalized communities.
According to statistics, you’ll make a lasting impression on your audience, increase sales, and you’ll be a force for positive social change as you impact lives in your community and beyond. What’s better than that?
Committee Blog: Cannabis And Cancer – As We Go Forward (Part 1)
No part of the following information should be construed as medical advice on the part of NCIA.
As a cannabis industry professional, you’ve probably been asked the question: “Is it true that cannabis cures cancer?” If we know someone who has cancer and benefited from using cannabis, we may say “cannabis aids in the treatment of cancer.” However, medical research has not indicated that cannabis cures cancer. NCIA’s Scientific Advisory Committee is reviewing the scientific data related to cannabis as an additional treatment to traditional care in the management of cancer.
Our three-part blog aims to give you accurate andup to date information about cannabis and cancer by looking at the federal regulations governing cannabis research; reviewing past, current, and future research; a review of how our cells and the endocannabinoid system (ECS) work together to disable cancerous cells; and looking at institutions involved in cannabis studies.
According to the CDC, cancer is the second leading cause of death in the United States and second on the WeedMaps list of most common conditions that qualify you for a medical cannabis card. This is interesting, but really not a surprise as archeological evidence suggests this sacred plant has been used for medicinal purposes for thousands of years. According to the Pen Tsao Ching, written nearly 5,000 years ago, cannabis is recommended for many of the same diseases and conditions that occupy the current composite qualifying lists in the states where cannabis is legal for medical purposes. This history magnifies the significance of the endocannabinoid system, a little-known, but incredibly important system that maintains balance in our bodies at the cellular level.
Cancer is a disease that begins when the cells of our body go completely out of balance. Instead of following the instructions of their genes, cancer cells become destructive to the body they live in. Cancer starts when one or a small group of cells begin growing out of control. It takes many forms, including blood cancers (leukemia, lymphomas), bone cancer, skin cancer, and solid tumors (e.g., stomach, lung, breast, prostate, ovary). Depending on how aggressive the cancer is, it may metastasize, meaning it can spread throughout the body.
Cancer Diagnosis
If you or someone you know is diagnosed with cancer, always get a second opinion. Be sure when choosing a doctor or Cancer Center that they have solid knowledge of all treatment options for your type of cancer, and understand that diet and lifestyle are critically important for healing.
If you want to use cannabis as a cancer treatment, find a doctor who is knowledgeable about how cannabis can affect the metabolism and effectiveness of chemotherapy and understands the invaluable medicinal benefits. For example, cannabis can alleviate symptoms associated with cancer treatments including pain, nausea, vomiting, weight loss, numbness, tingling, and anxiety. A summary of patterns of cannabis use among cancer patients in the United States can be found here, along with a brief review about patterns of use of medical cannabis among Israeli cancer patients.
Cancer treatment depends largely on the type of cancer, its stage, and what your doctor recommends. The most common treatments are surgery, chemotherapy, and radiation therapy. There are several more advanced treatment options but few insurance companies cover them. Chemotherapy and radiation therapy have significant and unpleasant side effects because healthy cells are often destroyed in the process of killing cancer cells.
The Current State of Cannabis and Cancer Research
Under the existing political and legal landscape, cannabis research has faced multiple hurdles. Currently, little to no research on the medical benefits of cannabis has been done in federally funded institutions due to its federal illegality.
The most serious hurdle is the lack of experimental data proving there is great medicinal value in the plant. Even so, there are numerous physicians, scientists, and other professionals who believe there is no plant on earth with greater medicinal value than cannabis.
Next Steps in Cannabis Research
Hopefully, more clinical trials will be performed as political and legal requirements are improved and clarified.
The National Cancer Institute hosted a“Cannabis and Cannabinoids and Cancer Research Symposium”in December 2020 to “address current barriers to research and strategies to navigate these hurdles to ensure the feasibility of rigorous studies designed to address gaps in knowledge as well as potential research opportunities in the area of cancer-related cannabis research.”
In essence, we’re missing consistent and reproducible evidence that cannabis can treat cancer and treat the side effects of conventional cancer treatments. Also, we need more doctors educated on cannabis use amongst patients with cancer. Oncologists (cancer doctors) want more information about medical marijuana and cannabis.
Recent surveys reveal 30% of oncologists feel they can advise their patients about cannabis formulations in conjunction with their therapy.
The majority of oncologists as well as the American Cancer Society state, “do not forgo conventional therapy in favor of cannabis products only.” Dr. Donald Abrams, an integrative oncologist, discussed this issue in an article, “Should Oncologists Recommend Cannabis?’
In our next blog post, we will explain how the ECS and cells in our bodies interact with cannabis to disable threats from cancer cells.
Ann Allworth, PhD, is a cell biologist, who for more than 35 years has been educating adults, first in medical schools as an anatomy professor; then in the natural product industry, teaching the immense value of phytonutrient-rich foods and herbs to optimal health and well-being. Upon learning of the endocannabinoid system, she founded Cannabis Education Solutions, a company dedicated to illuminating minds to the vast nature of the endocannabinoid system and its unparalleled role in human health. Ann is now semi-retired and will soon be making a transition to a partnership in a new organization involved in medical cannabis advocacy.
Cynthia Shelby-Lane, MD, is an emergency physician, board-certified in anti-aging and functional medicine, and a certified Marijuana Doctor practicing medicine in Detroit, Michigan. Dr. Shelby-Lane has certified more than 10,000 medical cannabis patients in the State of Michigan. She coaches patients on their use of cannabis in conjunction with their current medications and medical conditions. She has been a member of NCIA and the Scientific Advisory Committee for the past five years, in addition to membership in multiple cannabis associations and organizations. She speaks at conferences/webinars and in the community on the use and benefits of cannabis and the evolving landscape of cannabis research. Dr. Shelby-lane has worked closely with the Last Prisoner Project.
As the cannabis industry scales and more states legalize for adult-use, the demand for consumable cannabis products increases. To keep up with the demand, manufacturing facilities have to not only scale, but stay ahead of the curve as far as conserving resources, constantly innovating facility design to meet regulations and third-party compliance, e.g., ASTM Cannabis Certification Program and Good Manufacturing Practices (GMP).
Here are a few areas of environmental, product quality, and worker impacts to consider when planning for the future of your manufacturing facility.
Energy
As with any manufacturing facility, cannabis manufacturers pull power from shared electrical grids, meaning there is increasing pressure to reduce energy usage as they scale their operations. There are many design strategies for facilities to consider, whether they retrofit or build new, to reduce environmental impacts and position their operation for a sustainable future. One example for the cannabis industry is to recapture and repurpose heat generated from the processing equipment used for manufacturing products. Another example is incorporating climate control technologies to reduce the amount of energy required in extreme environments. More and more energy companies are starting to incentivize cannabis operations to reduce their energy usage and offer guidance on how to do so. Furthermore, regulators are beginning to enforce energy usage requirements for manufacturing facilities.
There are many ways to reduce your facility’s energy usage from efficient lighting to control system maintenance and making sure your odor and emissions control systems are designed to your facility’s specific emission load and mechanical design. Whenever possible, installing cloud-based smart systems with the ability to capture energy usage and system maintenance data will help to improve your facility’s energy efficiency. More areas of impact and best management practice guidance can be found in the NCIA’s Environmental Sustainability Report, released in October 2020.
Air Quality
Manufacturers of Infused Products, or MIPs, are Colorado’s manufacturing facilities, which is one example of a market segment facing regulatory enforcements for air quality control. The large-volume use of solvents for extraction leads regulators to monitor the volatile organic compounds (VOCs) emitted from the use of these solvents, as VOCs are contributors to low-level ozone formation, poor air quality, and public health issues. These solvents are also potential contributors to water contamination if wastewater is not discharged properly from the facility and are consequently on the radar for regulators to tightly monitor. The EPA states “the main concern indoors is the potential for VOCs to adversely impact the health of people that are exposed. While VOCs can also be a health concern outdoors, EPA regulates VOCs outdoors mainly because of their ability to create photochemical smog (or low-level ozone) under certain conditions.”
Luckily, smart technology such as cloud-based platforms using the Industrial Internet of Things (IIoT) for control equipment is increasingly being installed in manufacturing facilities, allowing for the collection and monitoring of facility data, such as emissions. Furthermore, the same technologies that are used for odor mitigation, such as molecular filtration systems (aka carbon scrubbers) also remove VOCs in the facilities’ air space from both the products and the solvents in the facility. The ability to prove this removal to regulators with real-time data will help reduce facilities’ contributions to VOC emissions when regulators require reporting.
Worker Health & Safety
In addition to environmental impacts from VOCs, along with other emissions inside of a cannabis manufacturing facility, there is also the issue of indoor air quality and worker health. There is not a lot known about the potential impacts of the processing of cannabis on indoor air quality. What is known is that terpenoids that are emitted in the cultivation and processing of cannabis can contribute, through a series of atmospheric reactions, to the production of known air pollutants. Terpenoids, such as monoterpenes (C10H16) and sesquiterpenes (C15 H24), are highly reactive compounds with atmospheric lifetimes ranging from seconds to hours. These compounds on their own are non-toxic. However, the atmospheric reactions they participate in can result in a range of low volatility products that create aerosols or ozone. These two compounds have clear implications for indoor air quality and thus occupational health.
Uncertainty remains as to the extent of the formation of these pollutants since previous studies have been hampered by a lack of reliable data and are predicated on conditions and practices prevalent in illicit operations. Given that the methods employed in these illegal operations are driven by different needs, the methods currently used in legalized facilities may produce vastly different conditions. This speaks to the urgent need for rigorous new scientific research and evaluation to aid this new industry and relevant regulatory bodies in assessing the current occupational environmental threats of marijuana processing and provide solutions to mitigate those impacts.
Quality by Design
The competitive licensing process, regulatory requirements, and lack of knowledge on scaled cannabis production has contributed to facilities that were not designed to properly ensure control of environments, the process flow that minimizes risks of cross-contamination and the adequate storage for the many types of raw materials, work in process, and final products. The result is an inefficient operation that may have been spared significant Capital Expenses (CapEx), but requires significant Operational Expenses (OpEx) to maintain.
The concept of Quality by Design (QbD) was first developed by the quality pioneer Dr. Joseph Juran.It posits that quality should be designed into a product and recognizes that most quality issues are a result of poor initial design. It is supported by long-standing evidence that increased testing does not necessarily improve product quality.
Currently, there is an overarching emphasis on final product testing as the determinant of whether cannabis products are safe for release into the marketplace. This has pitted labs, regulators, and producers against each other, leading to accounts of lab shopping, exclusive contracts, and other nefarious activities. This approach does not serve anyone, and is in stark contrast with the concept of Quality by Design.
Transitioning from a Quality Control Approach to Quality by Design
Transitioning from our current processes into a proactive Quality by Design approach requires an understanding of Good Manufacturing Practices or GMPs.The first set of GMPs for finished pharmaceuticals were established for enforcement by the United States FDA in the Federal Register in 1963. Since then, GMPs have been created for and adopted globally for nearly all products that can be consumed or applied for human and veterinary use –- categorized under dietary supplements, food, cosmetics, and of course, pharmaceuticals. GMPs represent the minimum sanitary and processing requirements to ensure safe and consistent products. Consider the road map and cross-over between major FDA cGMP (current Good Manufacturing Practices) by industry sector.
GMP regulations are written by the FDA and adopted in the code of federal regulations under the authority given to the FDA by various laws. Almost all of these regulations are performance standards. There are dozens to potentially thousands of substantially different products regulated under each category of GMP standards. It is up to each manufacturer to ensure their unique processes meet the GMP standards. In this way the regulations are flexible yet force all manufacturers to operate with a minimum level of rigor that includes programs that proactively mitigate risks that can lead to product failures and cannot be controlled simply through final product testing. They take a holistic approach to facility operations, starting with the facility culture, design, layout, placement, and selection of equipment, along with ongoing training, supplier qualification, environmental monitoring, and executive commitment.
The current status quo of manufacturing facility design has been built on a quality control approach. Most facility owners believe cannabis will be assigned a cGMP category based on the final product type and have been trying to build compliant facilities under this assumption. Some States have incorporated by reference the federal GMP regulations. However the competitive application process and focus on final product safety via testing has created an environment in which facility owners feel compelled to do as much if not more than the other facilities in order to meet regulator expectations and all focus is on the final product, not the process. In order to win the application, businesses want to look ‘better’ than the other applicants so they tack on as many hazard controls as they can think of. This has given regulators unrealistic expectations as to the best practices required to operate responsibly. Instead of quantifying hazards by collecting data and making informed decisions as to how to best eliminate risks, facilities are simply copying hazard controls they have seen used in other industries with hopes they meet the regulators’ expectations of what a GMP facility looks like. This culture of adding as many hazard controls as possible is a quality control approach focused on the final product, not a Quality by Design approach focused on the process. As a result, envelope in an envelope style facilities in which the manufacturing process is entombed in layers of energy and resource consuming hazard controls are commonplace.
There are other ways of designing compliant facilities; ways that could be more efficient and use less energy and resources. With a Quality by Design approach, these options become explorable. With quantified hazards the process can be approached holistically and significant design questions asked, e.g.. how much energy goes into the outer envelope and how much product quality/safety is gained from that?
In the Southwest deserts, there is consideration given to opening canopy/atrium style extraction spaces that would use less energy while providing the safety of unconstrained open atmosphere ventilation. The important question to ask when considering alternative facility designs is – How much energy/resources goes into containing human contamination versus the likelihood and the actual consequences? Perhaps manufacturing facility workers can wear long sleeves, pants, and hair restraints and that will be sufficient versus wearing a full body gown?
Quantification of Risks
Quantifying the processes and proven hazards of the cannabis manufacturing industry will allow for more informed design and operational choices versus prescriptive solutions that may potentially over-mitigate the risks and possibly introduce additional risks. Moreover, this data would provide validation that the design and operational choices made are in fact the best practices. Instead of scrambling to follow each standard in a quality control approach, Quality by Design considers the whole process, how the 10 principles of GMP standards apply and focuses on finding the most efficient strategies to eliminate risks.
A Way Forward
Training is vital for the manufacturers to know the next steps and why they are critical for the future of cannabis extraction and post-processing. Knowledge is required to put valuable technology, tools, and equipment in place with the least operational downtime. Further, it is necessary to accept guidance from verified knowledgeable support, such as from a vetted supplier. Lastly, risk mitigation education is necessary to highlight the reality of long-term savings and sustainability versus the common short-sighted tendency for immediate cost savings, which can result in significant consequences for a business such as TerrAscend Canada’s 2021 recall of infused gummies due to mold contamination.
Committee Blog: ‘Corporate to Cannabis Crossover’ – An Interview with Portland’s Cannabis Czar, Dasheeda Dawson
by Elise Serbaroli of Strimo, interview conducted May 2021
Elise Serbaroli is a member of the NCIA’s State Regulations Committee, “Informing Local Governments” subcommittee, which aims to bridge knowledge gaps between operators and regulators in the cannabis industry. This is done through interviews with current cannabis regulators in various U.S. states, sharing best practices and lessons learned.
Dasheeda Dawson is a cannabis regulator in Oregon and co-founder of the Cannabis Regulators of Color Coalition (CRCC). As cannabis czar for the City of Portland, she is the highest government official overseeing and advising on cannabis regulation for the municipality. Ms. Dawson brings an incredible breadth of experience to the cannabis space. A self-proclaimed “corporate to cannabis crossover”, she is perfectly positioned to navigate and lead the complexity that is the legal cannabis industry. Before becoming a best-selling author (“How to Succeed in the Cannabis Industry”), she held leadership roles at Victoria’s Secret and Target. Her career is built off of a solid educational foundation, including a Princeton degree (Molecular Biology & African-American studies) and an MBA from Rutgers.
Can you tell us how you got into the cannabis industry?
For the five years prior to formally getting into the industry, I was what you would call a “closeted cannabis consumer/patient.” I have early signs of MS and my mom was actually the one that insisted I give it a try. At the time, I was working at Target in Minnesota. Cannabis was my saving grace for maintaining productivity and overall capabilities. My mom passed away unexpectedly in 2016 and it jolted me out of the standard corporate trajectory I had been on. I ended up moving to Arizona and became a medical cannabis patient there, jumping into the advocacy side of the industry. Arizona legalized adult-use this past November!
From Target to Cannabis Czar! Did you always plan on becoming a regulator?
Certainly not! Straight out of the gate, I got a lot of work as a consultant in the industry, using everything that I had done in my corporate career, including business strategy and supply chain management. I had owned everything for my categories at Target and when you’re the business owner, you lead and oversee the entire cross-functional team. I applied that to the cannabis space as quickly as I could, working for a lot of clients and gaining an entrepreneurial education from working with large cannabis enterprise clients, small operators, multi-state operators, Native American tribes, even government. I gained the truest sense of how NOT to do it. In a corporate role, you usually write a report about what you have learned, insights, etc., and then you move forward. My workbook, now in its 3rd edition, was really built off of those lessons learned.
When COVID hit, my book tour was abruptly stopped overnight! At the same time, I was selected to become the Cannabis Program Supervisor for the City of Portland. I was only the third Black woman at the time to be selected to oversee a cannabis regulatory office. I believe that now there are more, but women and people of color are scarce in these positions. Most of the regulators are white men, many of whom come from another regulatory agency, like liquor or law enforcement. In order to assure that cannabis regulation is equity-centered, you need people at the table that will center equity. This last year has been amazing. I have a lot of runway and support to be exactly who I am, which is the Weed Head (TM). I refuse to be anything else and I’m in a bureau that allows me to do that.
What exactly is a cannabis czar?
On the state level, the Oregon Liquor Control Commission is currently passing legislation to become the Oregon Liquor AND CANNABIS Commission (OLCC), primarily because cannabis is providing substantial revenue for the state. Most of those people are liquor regulators, and they have organized a sub-group, focused only on cannabis. It started off with four people and now there are 50!
As Portland’s cannabis czar, I am a municipality leader, similar to Cat Packer in Los Angeles, and operate independently of the OLCC. Portland represents approximately 40% of the total cannabis revenue for the state and I oversee the entire cannabis program, including regulatory, licensing, compliance, community impact, and equity initiatives for Portland’s medical and adult-use programs.
In the city of Portland, cannabis regulation and oversight was placed in the Office of Community and Civic Life, as opposed to in the Office of Finance and Revenue or the Office of Business Development Services, which is where they license other businesses. This placement is partly due to the idea at the time that the cannabis industry was going to be disruptive to the community. Many individuals were worried about safety for communities. Our office has been trying to decrease the stigma and canna-phobia around the plant, offering education and equity initiatives. We were the first city to have community reinvestment grants tied to our cannabis tax revenue. These grants are administered through the SEED (Social Equity and Educational Development) Initiatives and grant fund.
CRCC and CannRa are two independent organizations, which happened to both launch at the same time. This caused some confusion in the industry. They are not mutually exclusive memberships! In fact, two of our founding members are also founding members of CannRa. The regulators roundtable was the predecessor of CannRa and that association aggregates insights and learnings state by state. The Oregon Liquor Control Commission (state-level) is a member of CannRa.
CRCC centers equity and support of legalization, while also aggregating insights and learnings state by state. If you are a regulator of color, at the state or local level, it makes sense to join the Cannabis Regulators of Color Coalition. We know that legalization is a requirement to start to undo the harm done through the war on drugs.
Centering equity involves re-thinking how we regulate this industry. One challenge is getting people to realize that this is a regulatory agency, like any other government regulatory agency. The Department of Motor Vehicles (DMV), a regulatory agency, gives out licenses and adjusts to assure that no group is precluded from access (adjusting for wheelchairs, visual and hearing impairments, etc.). Yet, in cannabis, we are regulating the industry without dealing with the inequities in the industry. Some of these inequities are directly linked to the historical prohibition of cannabis and the war on drugs, which we define as the racially-biased enforcement of cannabis prohibition.
Supporting equity also includes gender inequities, economic inequities, and disability inequities, to mention a few, that will positively impact everyone in the industry, including and especially patients themselves. Exclusionary practices would not be tolerated if it was an agency like the DMV. With cannabis, we are over-regulating the industry and excluding many people from participating, which is to the detriment of the market and the community. CRCC is focused on equity-centered regulation for the cannabis industry.
What is one thing that you would like to see in the legislation for cannabis businesses at the federal level?
Well, there’s a misconception about the size of companies in this industry. As an industry, we have to be careful about supporting legislation that only benefits large corporations. More than 75% of cannabis businesses have annual revenue of $2 million or less. Compared to small businesses in other industries, for example, in agriculture ($6 million or less) and retail ($14 million or less), cannabis businesses are very small, so everyone needs to push for legislation to benefit these small businesses in whatever regulatory framework is set up on a federal level. This is one step in leading the industry towards a more equitable path.
One aspect of inequity is how cannabis businesses of different sizes are treated. On average, very small cannabis companies have an after-tax rate of 70%, so when you’re going to the table for the regulatory framework, push back on the tax structure, push back on mechanisms that are inherently disadvantageous to small businesses. Surprisingly or not, most Black, Indigenous, or Latinx businesses are also small businesses, so you are positively impacting racial equity.
If you, as a cannabis business, think you’re a big fish, trust me, Big Tobacco, Big Alcohol, Big Pharma, Big CPG (“consumer packaged goods”) – Target has $70 billion in annual revenue – are coming, so a big fish in this cannabis pond is setting itself up to be eaten by much bigger fish and bigger sharks. If we leave back doors open for the larger cannabis businesses, we’re leaving that same back door open for a Walmart or an Amazon. Large corporations are already investigating and supporting cannabis. They plan years in advance for large takeovers and once it starts, it’s a stampede of well-financed, organized strategic efforts.
At a state level, the industry and those who want to support the industry, need to be careful to not overtax the small businesses and to vote to provide a framework of support mechanisms for small cannabis businesses.
What are some examples of frameworks that support or negatively impact small cannabis businesses?
Some of the early legalization efforts required vertical integration. Because of the way the state and local jurisdictions are regulating and taxing, forcing vertical integration is not a small-business-friendly approach to licensing. This was the case in some earlier states, but we’re also seeing newer states like Georgia taking this approach.
By breaking up the licensing into different parts of the supply chain (like California), you open up possibilities for smaller businesses to operate. If the state is giving out micro-business licenses, there should also be a track to grow into a larger size so that there is no ceiling on those businesses’ growth prospects. For example, in New Jersey, advocates fought to amend provisions that failed to create a way to sell out of a micro-license for a growth event.
Everybody has a different opinion depending on which economist you talk to about how you tax up and down the supply chain. I’d like to see states have tiered tax by production weight. Once you start doing it by the percentage of THC, you’re negatively impacting businesses and patients. It’s meant to be a deterrent and is an example of the government intending to overregulate in an area that it doesn’t fully understand. But usually, those penalties wind up impacting the smaller craft businesses. Too many people are assuming that consumption in the adult-use market is just for recreational purposes, but there are plenty of small niche operators aimed at a specific medical community and they are producing small batches, for example, with high THC, but their clientele may be negatively impacted, simply as a function of the way the tax law was written.
Thanks, Dasheeda, for taking the time to speak with us! If readers want to get involved in changing legislation and connecting with regulators, where should they start?
It’s certainly a long and hard process when dealing with big issues and change. For operators, NCIA is a good place to start. There is also the M4MM and the MCBA. Folks should really try to connect with the local- and state-relevant organizations. Building and operating in coalitions can be very powerful. On a national level, be sure that any group you are part of is actually going to D.C. and is having conversations with the legislators, because at the end of the day, whether it’s cannabis or any other business, you need to be involved with influencing the policies that impact your industry. Everything starts with the law and civic engagement.
Elise Serbaroli leads Global Business Development at Strimo, where she provides cannabis businesses with software solutions around inventory management, cost accounting, QA, and compliance. She’s back in the USA after over a decade of experience in Spain, Germany, Switzerland and Ecuador.
Understanding the importance of efficiency, scalability, and profitability, Elise created solutions to financial and legal processes for the R&D team at CPW, a joint venture of two of the world’s largest food companies, Nestlé & General Mills. As a systems coordinator, she gained a deep appreciation for food safety, GMPs and regulatory compliance. Her supply chain software experience builds off of her Business Development role at Tradeshift, the world’s largest network for digital B2B payments.
New Risk Management and Insurance Committee Manual: Introduction to Cannabis Insurance
The cannabis industry is one of the fastest-growing industries in the U.S., maturing at more than 25% annually. As the cannabis industry continues to emerge and flourish from state to state, there remains uncertainty as to the immediate future of federal legislation to remove cannabis from the schedule of controlled substances.
The cannabis industry will continue to experience the convergence between state and federal government regulations until a uniform regulatory and compliance framework can be established. Fundamental services such as banking, financing, and insurance, along with IRS 280E tax regulations, will continue to burden state-regulated cannabis businesses. And, with the industry still in its relative infancy, emerging and shifting regulatory backdrops create risks to these businesses.
Cannabis businesses can manage these risks in a variety of ways. Perhaps the foremost among them are the procurement of appropriate insurance coverage. While just a few years ago, insurance coverage options for cannabis operators were incredibly limited, today there are dozens of insurance carriers serving the industry.
Cannabis operators have to be proactive in developing a risk management program that conforms to local and state compliance and security requirements. As the industry continues to evolve, we will need to be more diligent in controlling and managing risk.
To assist with this process, NCIA’s Risk Management & Insurance Committee (RMIC) is pleased to provide the first in a series of Insurance Manuals that will help guide you through the various coverages and definitions used in the cannabis insurance industry. This first edition of the RMIC Insurance Manual will outline the basic and entry level knowledge base for the cannabis insurance industry, and explore the various insurable risks attributed to the cannabis supply chain. Future additions will dive deeper into more specific insurance topics.
NCIA’s Risk Management & Insurance Committee is a multidisciplinary group of risk management professionals convened to draw on expertise and experiences of professionals dedicated to the cannabis community. Primary contributors for the first installment of the Insurance Manual include:
Committee Blog: Cannabis Auto Insurance – Best Practices, Claims Processes, and More!
by Jesse Parenti, Programs Director of Nine Points Strategies, Stephanie Bozzuto of Cannabis Connect Insurance Services, Matthew Johnson, Vice President of QuadScore Risk Services, and Helkin Berg, CEO of Strimo Members of NCIA’s Risk Management and Insurance Committee
If your company has an “auto exposure” such as delivery, distribution, or employees simply running company errands, your company needs a robust risk management program.
Managing a fleet is essential to ensure drivers are given the necessary tools to be safe and responsible while on the open road. Implementing a vehicle maintenance program is also a necessary component of fleet management.
Proper automotive risk management starts with driver guidelines on how you hire your drivers and what is required to qualify to be employed by your organization. Best practices on age, driving experience, motor vehicle reports, and training make for a great start. Even though your employees may think they are only delivering or transporting cannabis, they are commercial drivers, and they need to take that duty very seriously. Morbid as it may sound, death is not the worst thing that can happen…
Here are some best practices:
Drivers should ideally be at least 25 years old with five years of driving experience. For the best insurance pricing and experience, you should hire drivers that are between 35-55 years old. Note that commercial drivers over a certain age will face increased pricing from insurance companies much like their youthful counterparts. Keep that 22-year-old with four speeding tickets off your policy, even if they are the business owner’s relative!
Only hire drivers with squeaky clean driving records. Experienced drivers with a clean record are more likely to continue to drive this way when working for your organization. If you hire drivers with violations or points on their records, expect this level of driving to continue when working for you. Drivers don’t often change driving habits just because of their employment status. Note that age and driving records directly affect commercial auto rates.
Set up an Employee Pull Notice Program or Motor Vehicle Reportpull program through the DMV. A “pull program” ensures that you are aware of your drivers’ violations in real-time, whether the violations happen during or outside of work. Suppose a driver is out of compliance based on your insurance carrier guidelines. In that case, your insurer can deny a claim based on your driver’s record or violations that happened while employed by your organization, even if the violation occurred outside of work. If you are not monitoring your drivers, you would never be aware of these concerns or problems. Secured motor vehicle records (MVR) storage is also crucial to protect your employee’s personal information. Make sure you backup all your records in the cloud or a protected server network. Identity theft can happen quickly, and unprotected data will create cyber liability exposures if not protected correctly.
Take cell phone, texting, or distracted driving violations very seriously. Distracted driving is the #1 cause of death and accidents since 2012 and is increasing yearly as time goes on. The NHTSA reports that an estimated 1.6 million accidents in 2020 were caused by distracted drivers too busy eating, texting, smoking, etc., to keep their eyes on the road. Suppose one of your drivers has a distracted driving violation. In that case, you can rectify it by having them take a distracted driver class to understand the gravity of such infractions. Then put that driver on probation with consistent monitoring of their MVR for 18-24 months to ensure they don’t continue to have these violations.
Onboarding driver training must include how to drive defensively, what to do if you are held up for a robbery, and what to do if you are pulled over by the police. This training makes a world of difference when or if any of these take place. In addition to robust onboarding training, training needs to continue over time as safety never stops, and good practices always need to be reinforced.
Here are some examples of claims to give you an idea of what could happen to you:
A large distribution company hires a driver and has them complete some training in a large, empty box truck. This training helps the driver understand how to drive and brake with a(n empty) truck. The next day the driver goes out with a full load of cannabis flower and concentrates in their truck. The driver notices that the truck is handling differently than when it was empty. A wind picks up just as the truck is taking a turn. The truck rolls onto its side and totals the box on the truck, damaging the product inside. The company could have avoided this accident had they trained their driver in real-life experiences, with actual loads.
A driver is delivering cannabis to a customer’s home. While en route, the driver accidentally hits a pedestrian crossing a sidewalk on a poorly lit street. The driver did nothing wrong, but the accident still caused permanent disability to the man who was the head of the household, and the insurance company paid out over $7M. If the insured didn’t have the $10M in auto liability, they would have had to close their doors.
You and your employees can do everything right, but accidents can and will still happen. That is why culture, safety, and accountability are essential when working in the transportation and delivery space. If you don’t take this seriously, your company will pay the price. To avoid these costly mistakes, work with your legal team, insurance providers, and software vendors to ensure ideal policies, training requirements, and data storage.
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Nine Point Strategies is a national risk management firm specializing in all forms of commercial auto for the cannabis industry. We can help you with anything you need concerning hiring, training and maintaining all your required driver compliance you need to be a safe and profitable organization. Contact us to discuss how we can better protect your cannabis auto exposures.
QuadScore Insurance Services is the nation’s leading insurance provider for marijuana businesses. QuadScore offers comprehensive property & casualty solutions as well as a full suite of risk management services for large cannabis companies around the United States.
The Strimo™ team is comprised of industry veterans. We are both practitioners in cannabis and long-time experts in software. We have supported companies in rapid growth and deeply understand that your software needs to grow with you. Strimo is the leading enterprise cannabis SaaS platform.
Cannabis Connect Insurance is a specialty division of Bozzuto Insurance, an insurance firm serving businesses since 1978 and part of Acrisure, LLC the 4th largest insurance brokerage in the United States. We specialize in connecting cannabis business owners with custom built insurance programs.Cannabis Connect was founded on basic principles of honesty, integrity, and trust. We are actively involved in the cannabis industry on both a local and state level. We are involved in multiple cannabis associations and continue to remain informed on policy forms and legislative changes to ensure our clients best interests come first.
Equity Member Spotlight: iFlyWellness – David Rodrigues, CEO
This month, NCIA’s editorial department is reviving the monthly Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
Tell us a bit about you, your background, and why you launched your company?
I have been using cannabis for 20 years, and got into the industry in 2011, before METRC was implemented, and before adult-use legalization. I was working in cultivation, budtending, purchasing, and managing. At the time, I was seeing firsthand the products dispensaries were providing, and began developing a vision of what the San Jose community needed versus what was out there. Stepping back from my position at a successful dispensary, I made a choice to go all in on my visions and build a delivery service and lifestyle brand in San Jose. I created iFlyWellness for the people.
iFlyWellness delivery service will connect the legendary Humboldt County to the Bay Area. Offering a unique flower menu from Humboldt County to Indoor exotic flower, iFlyWellness will cater to the everyday smoker/user, specifically the people of San Jose. There are over 1.1 million people in San Jose, with a high percentage of cannabis users. Connecting the “farm to blunt” is the method behind iFlyWellness. Patients are currently buying jars at ninety dollars an eighth. The everyday consumer has struggles affording such medicine. The logic is to figure out a way for patients to consume top-tier flower at an affordable price.
What unique value does your company offer to the cannabis industry?
I know quite a few cannabis growers and will go straight to the source. This is the “farm to blunt” experience. The indoor cultivation side and the Humboldt side both make a supply chain connection from the Emerald triangle all the way to the Bay Area. This is really good medicine for the people.
What is your goal for the greater good of cannabis?
It’s about getting on the ground. Talking directly to the people in the community that you want to make a social impact with. I am working with Daniel Montero and Javier Armas of BALCA (Bay Area Latino Cannabis Alliance), and I am connected directly with Humboldt farmers and legacy growers.
Our vision is for the patient to feel a direct connection with the flower they are smoking. Big corporations in this industry fail to recognize that this industry has been here for over 100 years. They are looking at the industry as a money grab. You can make it as a small business owner, but it comes with many more challenges. Forming alliances among us and going directly to the people helps us face these challenges.
What kind of challenges do you face in the industry and what solutions would you like to see?
Capital is big and can dominate the industry. I am working right now with Javier Armas of BALCA to acquire a building and license in Oakland, CA. With the minimal amount of licenses the city of San Jose has to offer, if you don’t have deep pockets, it can be challenging applying for the same license that a multi-million dollar corporation is applying for.
Why did you join NCIA? What’s the best or most important part about being a member?
I joined NCIA through the DEI Scholarship Program to learn and network, as the cannabis industry is constantly changing and I need to stay up to date. When I was working for dispensaries in San Jose, I was networking a lot but representing someone else’s company, not representing my vision and dreams of connecting and catering to the everyday cannabis consumers. It’s time now to build my vision and with the strength of great associations like NCIA and BALCA, I’m confident it will happen.
Committee Blog: The Cure-All for Impostor Syndrome = Mentors
by Kimley Svendsen, Drive Talent on behalf of the Human Resources Committee
My dream as a child was to become a fashion designer. But there were many voices telling me this was not realistic, if I wanted to drive a nice car and live in a nice house. Step in line! While some people are able to ignore these messages and walk to the beat of their own drum come what may, I wanted to please those around me and continue the family tradition of academic achievement. The eventual result was being admitted to one of my dream schools as a graduate student.
Enter the Impostor Syndrome. According to the Oxford Dictionary, this is “the persistent inability to believe that one’s success is deserved or has been legitimately achieved as a result of one’s own efforts or skills.” I believe Impostor Syndrome can result from following someone else’s path versus your own, and/or achieving a position in life you believe you don’t deserve. By my mid-20’s, I had achieved an Olympic level of comparing myself to others, and feeling as if I were “playing the part” of a graduate student. I had the sneaking suspicion that an administrator in tweed would show up in class and say a mistake had been made (this didn’t happen by the way).
Re-enter Impostor Syndrome after 20+ years of twists and turns which bring me to today as the Founder of Drive Talent, a cannabis recruitment services business, for the past 5+ years. The tweed-clad administrator has been replaced with my peers and those I admire within cannabis. I don’t want to let them down, let my team down, or let myself down. Most days I can fight off the doubts that pop up, but the whisper is still there – “you don’t deserve this, someone else is faster/smarter/better than you, and you should hang it up my friend.”
Running a business is hard. Running a business within cannabis is REALLY hard! I imagine many of you out there entered the cannabis ecosystem for a variety of reasons – you worked within the space pre-state legalization, personally witnessed the plant’s benefits, desired an influence on unjust laws, wanted to be a part of a trailblazing industry, and/or saw the opportunity to profit. Most of these are true for me, albeit not quite the dream of designing for the runway. Still worth it!
Whether you are a founder, member of senior leadership or at the beginning of your career within cannabis, my best piece of advice to combat the Impostor Syndrome is to GET A MENTOR! Mentor #1 for me was my Grandfather who advocated for women to have access to the highest degree of education. Mentor #2 was a fellow graduate student who gave me rides to and from school in her beat-up Saab, and challenged me to have a creative vision for myself. Mentor #3 is my mentor today who encourages me to dream big. I have learned from him that I am not having a unique experience with Impostor Syndrome, I am not alone as a business owner, and my work can align with my dream of positively influencing the cannabis ecosystem. This is like medicine and reinforces my confidence and belief in myself on a daily basis.
There are formal and informal mentors, and those whose words of encouragement have stuck. Who are these people for you, and in what way have you served this role for someone else? Make this a priority and don’t be afraid to ask. The Mentor/Mentee relationship is beneficial for both parties, and can serve as a conduit to identify/reinforce your passion, capability, and confident following of your dreams.
Kimley Svendsen is the founder and CEO ofDrive Talent, a leading recruiting company that connects their clients with diverse talent within cannabis and other industries, and is a member of NCIA’s Human Resources Committee.
While marijuana has been around in Mexico since the 1600s, the real story begins in the 20th century during the Prohibitionist Era. After Mexico news outlets widely reported stories of cannabis users committing violent crimes, a cannabis stigma was created, resulting in Mexico banning the production, sale, and use of cannabis in 1920, followed by a ban of exports in 1927. The movement of cannabis was first regulated by the three U.N. conventions on narcotic drugs, beginning with the Single Convention on Drugs in 1961. The prohibition gave rise to the cartel’s involvement in the illegal cannabis industry in the ’80s, and these cartels have consistently supplied the U.S. market since. After the war on drugs significantly increased violence in Mexico and gave the cartels more power than before, Mexico began to alter its stance. In 2015, the country decriminalized cannabis use, and in 2017, legalized medical cannabis containing less than 1% THC. In 2018, the Mexican Supreme Court deemed the prohibition unconstitutional, and in December 2020, the U.N. Commission on Narcotic Drugs transferred cannabis from a Schedule 4 to a Schedule 1 drug under the Single Convention. As of now, Mexico is on the edge of legalizing recreational cannabis use. This bill, “The New Federal Law on the Regulation of Cannabis,” is awaiting approval by the Senate and then only needs to be signed by the President to be passed into law.
With a population of 130 million and over 10 million regular cannabis users, Mexico will generate $1.2 billion in annual tax revenues while saving $200 million annually in law enforcement and creating thousands of new jobs. One estimate has cannabis legalization bringing up to $5 billion to the economy annually. One issue Mexico will face will be keeping the cartels from transitioning to the legal cannabis market. While those with criminal records can’t obtain any cannabis license, cartels have a deep network, and Mexican officials can’t always determine whether someone is connected to a cartel. Mexico’s legislators believe the cartel will be forced to operate legally over time as they won’t be able to compete in the illegal market and keep as much power as they currently have.
There are also many questions regarding how Mexico’s cannabis legalization will affect the U.S. market. The USMCA, formerly known as NAFTA, currently does not include cannabis, raising the question of whether Mexican producers will be able to import cannabis into the U.S. for a much lower price than the U.S. can produce domestically. However, the U.S. will likely implement trade barriers to protect domestic companies. Currently, the U.S. places trade barriers on tomatoes in Mexico, and many see similar actions being placed on cannabis.
The United States will likely place a trade barrier on cannabis from Mexico to protect domestic companies
There’s no doubt that cannabis legalization in Mexico will create investment opportunities in the U.S. It mostly comes down to whether the U.S. creates trade barriers with Mexico regarding cannabis. If they don’t, the U.S. cultivation and manufacturing sectors will be hurt badly as Mexico can produce much cheaper. The absence of trade barriers will also hurt testing labs as cultivation moves out of the country and uses testing labs in that same country. However, U.S. companies with distribution networks, retail operations, or strong brands will benefit from Mexican legalization through lower costs of goods sold. One solution that would benefit U.S. companies would be legalizing interstate commerce in the U.S. without federally legalizing cannabis. This means other countries wouldn’t export finished products or raw material with THC above 0.3% into the U.S., and the U.S. industry would develop and consolidate. Once the U.S. federally legalizes cannabis, they must create tariffs or some trade barriers against all the developing countries legalizing cannabis, or the U.S. companies will suffer.
Companies are also greatly affected by banking laws. Currently, companies touching the flower in countries where it is not federally legal cannot access regular banking and can’t list publicly on the NASDAQ or NYSE. However, Canadian companies touching the flower can list in the U.S. since it is federally legal in Canada. These laws mean companies operating in Mexico will also be able to list in the U.S publicly. However, the SAFE Banking Act recently passed the House of Representatives in April 2021 and is up for debate in the Senate. Passage of this act would grant banking access to cannabis companies touching the flower and open the door for these companies to list in the U.S publicly. This would create a large flow of money into U.S. cannabis companies and allow them to scale at a much quicker pace than previously available. One important thing to note is that the large U.S. stock exchanges are technically able to accept cannabis companies’ listings if they meet the exchange requirements. However, they don’t accept them to avoid punishment from the federal government. Therefore, as the government moves towards allowing these companies federal banking access, the main question regarding U.S. companies is raised. In absence of government pressure, will these exchanges allow U.S. companies to list and access their own public markets?
The SAFE Banking Act would reduce risk for cannabis companies transacting with only cash
Overall, companies and investors looking to take advantage of the booming cannabis market need to stay up to date on the fast-changing cannabis legalization process in many countries. Those that truly understand it will position themselves to benefit from what is projected to be one of the fastest-growing industries over the next decade.
Ms. Della Mora is the Co-founder of BLC, a financial advisory and investment firm based in Los Angeles with satellite offices in Houston, New York, London, Hong Kong, and Melbourne. During her tenure at BLC, she successfully invested, assisted in the capitalization, and helped business develop small cap oil companies in Kentucky, Texas, Louisiana, Illinois, Colorado, California, Wyoming, North Dakota, and Alaska. She has also structured oil & gas partnerships in several U.S. states, and in Ecuador, Central America. Ms. Della Mora has been involved in many LNG (Liquid to Natural Gas) projects in the U.S., as well as many commodity trades worldwide. She has personally advised also Chinese conglomerates in their U.S. oil & gas investments.
Black Legend Capital is a leading Merger & Acquisition boutique advisory firm based in California with offices worldwide. Black Legend Capital was founded in 2011 by former senior investment bankers from Merrill Lynch and Duff & Phelps. We provide M&A advisory services, structured financing, and valuation services primarily in the cannabis, technology, healthcare, and consumer products industries. Black Legend Capital’s partners have extensive advisory experience in structuring deals across Asia-Pacific, Europe, and North America.
Member Blog: The Hidden Gem of Licensing and Endorsement Deals in Cannabis
Sitting here on July 14, 2021, the Senate Majority Leader of the United States Chuck Schumer just introduced legislation to (among other things) federally legalize cannabis. Yet, despite the Senate’s official entrance into the path to legalization, many states, businesses, and importantly here, athletes and celebrities, or “talent,” continue to behave as if legalization has already occurred. Side note – it has in many states!
Talent throughout the country have engaged in a variety of licensing and endorsement deals within the cannabis industry, ranging from Martha Stewart, Keith Haring, Bob Marley, Seth Rogan, Berner, Travis Scott, Rick Ross, “Sugar” Sean O’Malley, Jonathan Adler, to Gary Payton. A common theme among talent newly entering the space seems to be a default to the plant itself, i.e., partnering with cannabis producers to either endorse or license intellectual property (“IP”) to create cannabis strains and products. Here, I would like to first describe what licensing and endorsement deals are and then discuss a hidden gem of the cannabis licensing and endorsement space. That is, talent partnering with cannabis ancillary businesses, meaning, businesses that sell cannabis accessories and products but do NOT ‘touch the plant.’
Before I dive into a discussion of cannabis accessories, it is important to quickly outline “licensing and endorsement deals.” At a high level, a licensing deal is the process of an individual granting another party the right to use his or her name, image, and likeness, for a particular purpose, in exchange for certain consideration (payment). For example, publicly-traded cannabis accessory distributor Greenlane (NASDAQ: GNLN), where I serve as the Associate General Counsel, has remitted consideration to the owner of the artist Keith Haring’s IP, to use images of his artwork on a line ofsmoking accessories. A licensing deal allows an owner of IP to capitalize on its value by finding the right partner who can harness the IP in a way to create a profitable outcome. It allows an IP owner to find a partner with the production and distribution capacity and operational know-how that an IP owner likely does not possess. In a licensing deal, the end consumer is often under the impression that the end product is coming directly from the IP owner, which can add huge value to the talent’s brand; whether the talent is alive or deceased. This perception for the end consumer can be different with endorsement deals where there is usually a clear delineation between the talent and brand.
An endorsement deal is where talent is used to create awareness for a particular product or service; this can be seen in commercials, Instagram or Twitter posts, and public appearances. Unlike a pure licensing deal, an endorsement deal will commonly make it clear that the product being endorsed is not coming from the talent directly, but that he or she is merely promoting the underlying product in exchange for consideration. Nevertheless, despite the distinction, licensing deals and endorsement deals often merge into one and the same. For instance, Greenlane’s cannabis accessory house brand and retail arm Higher Standards did a licensing and endorsement deal with UFC MMA fighter “Sugar” Sean O’Malley. In this deal, Higher Standards secured a license to use Sugar Sean’s IP to create alimited-edition water pipe and promote this water pipe using his IP on all of its promotional mediums. As part of the deal,Greenlane also caused Sugar Sean to promote the Higher Standards brand on his social media platforms through a select number of posts and mentions. This is a prime example where talent and brands will often dip their toes into a deal that incorporates both a licensing and endorsement component.
So, now that I have established what a licensing and endorsement deal looks like, I want to shift to a discussion of the benefits of working with cannabis accessories. For clarity, cannabis accessories can include rolling trays, roach clips, rolling papers, vaporizers, water pipes, jars, grinders, lighters, packaging, and in certain cases, clothing. So, why should talent focus on licensing and endorsement deals with cannabis accessories?
Cannabis accessories can allow for a unique form of creative control for talent. Talent can create a product from scratch, like an ashtray, jar, or water pipe, and have a direct impact on the structural design. Additionally, accessories can be sold in a plethora of different locations. Unlike cannabis products, accessories can be found in department stores, headshops, smoke shops, convenience stores, clothing stores, and upscale interior design boutiques. In addition to the broad array of available doors, accessories can also allow certain talent to enter the cannabis space in a way that more closely aligns with their primary non-cannabis-focused brand. A great example of this is Greenlane’s licensing deal with iconic designer Jonathan Adler. It would be impossible for Jonathan Adler to partner with a plant-touching product and still be able to sell those products in his stores throughout the world. By partnering with Greenlane, Jonathan Adler is able to enter the cannabis space while maintaining his traditional brand and his ability to sell theseproducts in his interior design boutiques.
An additional appeal of the cannabis accessory space is timing, flexibility, and speed. While talent could quickly endorse an already developed and cultivated cannabis strain or other plant-touching product, the process could be timely. In contrast, to go back to the Sugar Sean example, Greenlane and Sugar Sean were able to move swiftly and nimbly to promote a line of water pipes for a launch in direct correlation to an upcoming fight. The deal moved quickly and highlighted the maneuverability and flexibility of working with accessories. Often, a template or mold for a product is already developed, with the talent’s unique branding and direction the last piece of the puzzle. For plant-touching products, talent may want to be a part of the cultivation process; focused on taste and effect on consumers. This process will usually take a bit more time and can present far more variables and regulatory concerns and limitations.
Ultimately, there are fascinating and innovative deals to be made for both plant-touching and non-plant-touching products, but moving forward, I believe the hidden gem of cannabis endorsement and licensing deals is with the non-plant-touching cannabis accessories.
Dan Shapiro is the Associate General Counsel at Greenlane Holdings, Inc. (NASDAQ: GNLN), one of the largest global sellers of premium cannabis accessories and CBD products. Prior to joining Greenlane, Dan worked at CAA in the Sports Business & Legal Affairs division. Dan is the Founder and Inaugural Chair of the Cannabis Division of the American Bar Association Forum on Entertainment and Sports Industries and a member of the National Cannabis Industry Association’s States Regulations Committee.Dan is a member of the New York Bar and Authorized House Counsel in Florida, and holds a JD from Cardozo Law School where he served as the President of the Cardozo Sports Law Society, and a BA from The George Washington University.
Member Blog: Does Your Cannabis Brand Need Social Media? Yes, But Not For the Reasons You Think
Every cannabis brand needs social media. But, the reasons to be on social media, and how you should approach your accounts might surprise you.
Social media is a powerful tool for all businesses today. Even in the cannabis industry, where most paid advertising opportunities – including paid social – are off the table.
It’s an effective way to communicate with customers directly. Social media lets your cannabis brand or dispensary start meaningful conversations – it’s a place to develop and nurture a community. But should you look at social media as a primary business driver? Probably not; hear me out.
Five years ago, when I started managing social media accounts for cannabis brands, organic engagement wasn’t easy, but it was easier than it is today. Marketers (like me) remember the era of chronological Instagram feeds and simplified Facebook algorithms fondly. Five years ago, getting organic attention from your followers was more straightforward. It was also easier to build an audience quickly.
Strict regulations are a constant battle for cannabis businesses marketing on social media. We’re violating every platform’s terms of service and community guidelines just by being there. Every cannabis brand wants social dominance. I’m here to deliver unfortunate news; social media dominance is off the table for most of you.
Today, you can only expect to reach about 3%of your audience on most social media platforms. And that’s if your content is excellent. But even with amazing content, algorithms are your enemy, and hashtags only get you so far.
It can feel like an impossible challenge. We’re tasked with bolstering brands but walk a tightrope of rules to keep posts and accounts from getting the boot.
Do cannabis brands still need to be on social media? Yes. Here’s why.
You can access a limitless direct-to-consumer digital platform if you can manage to grow and maintain a social media following. But, of course, it’ll take time to build an engaged community (for many of you, it’ll take years of hard and consistent work), and you need to be realistic – don’t put all of your cannabis marketing eggs in the social media basket; there are other ways (email and programmatic advertising for example).
Still, social media is a business necessity today, just like printer cartridges or desk chairs. You must be there – even if the task is seemingly impossible.
What makes excellent social media content?
Every marketing “expert” on the internet will tell you the key to social media success is excellent content. And that’s true. But, what makes for awesome content is relatively subjective – it’s not for you or me to decide. So, who gets to decide what makes terrific content? Your customers, that’s who.
How do you determine if your customers think your content is excellent? They’ll reward you with engagement. And engagement is virtually the only thing almighty social media algorithms care about.
Maybe your customers love ridiculous memes; perhaps they prefer higher-brow lifestyle content. If you run a dispensary, your customers might love seeing their favorite budtenders highlighted on your feeds. If you’re a cultivator, your customers probably think drool-worthy strain content is excellent (be careful, Instagram is advanced enough to find flower images, and that violates TOS and community guidelines).
Here are a few social media post types you should consider:
Expert Budtender Recommendations
Cultivation Behind-the-Scenes
Aspirational Lifestyle Imagery and Content
Humorous Memes for Cannabis Enthusiasts
General Cannabis Education
Product Education
Consumption Tips and Guidelines
You need to deeply understand your customers (that’s why we’re persona development sticklers) and craft a content strategy explicitly designed for engagement. Of course, I’m vastly oversimplifying this process – it takes time and a lot of testing to determine what will work best for your cannabis brand. But the results are often worth the work. Let your customers tell you what they want.
Even with excellent content, you need to be realistic.
I’m going to break some hard news to you – even with genuinely excellent content, you can still really only expect to reach around 3% (as I mentioned earlier) of your total audience. So whoever told you that organic engagement on social media is easy lied to you.
Most people think there’s one overarching algorithm controlling what we see on our social media feeds. But, in the case of Instagram, for example, several algorithms work together, making tiny decisions in real-time to determine the posts you see.
Adam Mosseri (head of Instagram) talks about how their algorithms work in a recent blog:
“One of the main misconceptions we want to clear up is the existence of “The Algorithm.” Instagram doesn’t have one algorithm that oversees what people do and don’t see on the app. We use a variety of algorithms, classifiers, and processes, each with its own purpose. We want to make the most of your time, and we believe that using technology to personalize your experience is the best way to do that.
When we first launched in 2010, Instagram was a single stream of photos in chronological order. But as more people joined and more was shared, it became impossible for most people to see everything, let alone all the posts they cared about. By 2016, people were missing 70% of all their posts in Feed, including almost half of posts from their close connections. So we developed and introduced a Feed that ranked posts based on what you care about most.
Each part of the app — Feed, Explore, Reels — uses its own algorithm tailored to how people use it. People tend to look for their closest friends in Stories, but they want to discover something entirely new in Explore. We rank things differently in different parts of the app, based on how people use them.”
Instagram wants to personalize content for users, so it’s constantly making small decisions to reach its goal. Your job (and ours, as marketers) is to understand our customers deeply enough to create unique personalized experiences (I prefer to use the word experience over content in this scenario). Still, the algorithms pose a challenge which is why you need to understand that it’s going to take a lot of time, a lot of trial and error, and more content than you think you can possibly create in a lifetime to build and manage a loyal – and engaged – community.
It’s not impossible, but it’s not easy – many of you will fail. But still, you must be there because your customers expect you to show up for them in the places they hang out digitally. Of course, it doesn’t hurt to have the support of an experienced social media marketing team.
Aaron isHybrid Marketing Co‘s Content Director, and he loves to write blogs. He’s written so many blogs that he’s lost count. And beyond his skills as a copywriter and storyteller, he’s an obsessive reader and researcher. Aaron writes on subjects ranging from cannabis to collaboration, social equity to HR software, interior design to cybersecurity. His words attract, engage, educate, and convert. Btw, Aaron hates the phrase “content is king” (even though content is king – and queen).
Hybrid Marketing Co is a Denver-based branding and marketing agency that specializes in building custom strategies that supercharge growth and drive revenue. Working with brands and businesses across the U.S. and Canada, Hybrid’s partners run the full-spectrum of the cannabis world including dispensaries, manufacturers, cultivators, and ancillary businesses. Visithybridmarketingco.comto learn more about the Hybrid approach.
Member Blog: Why Cannabis Accessories are the Future of Corporate Gifting
Cannabis, CBD, and hemp companies are giving out cannabis-themed promotional gifts – but they’re not the only companies to follow this trend.
The stigma against cannabis is slowly disintegrating. And the more mainstream cannabis gets, the more companies are establishing themselves as open-minded and unique by using cannabis as a part of their marketing and business strategy.
A decade ago, cannabis and hemp were still niche topics. Few people outside the industry could’ve predicted that we’d now be living in a world where cannabis was so widely accepted. CBD can now be found in most health stores, there’s bipartisan support for cannabis legalization, and the world’s biggest celebrities have their own CBD and cannabis lines.
While we still have a long way to go in terms of breaking down stigma and advocating for reasonable cannabis laws, it’s clear that we’re getting somewhere. One thing that demonstrates this is the fact that many companies are aligning their brands with cannabis – even those that aren’t in the industry.
CBD, in particular, is gaining more mainstream interest. This popularity is partly because CBD is non-intoxicating and doesn’t carry the same level of stigma. As a result, health stores and pharmacies -– including chains like Walgreens and CVS – are selling CBD. Even Sephora, one of the U.S.’s most popular beauty stores, now stocks CBD-infused skincare products.
It’s not just huge corporate businesses that are embracing cannabis: smaller businesses are, too. At-home beauty spas use CBD-enriched serums. Local health stores stock CBD oil. Little bakeries are offering edibles. Small clothing companies are creating sustainable garments using hemp. While this proximity to cannabis might’ve been shunned years ago, these businesses are now simply keeping up with demands, staying on-trend, and experimenting with the now well-known benefits of cannabinoids.
It’s clear that, as our society moves away from cannabis stigma, cannabis is becoming a signifier for open-mindedness. Brands that embrace cannabis, CBD, and hemp products show that they’re in touch with the latest trends and informed about the science-backed benefits of these products. This establishes those companies as modern, progressive, and youthful.
As a branded merchandise company, we know that corporate gifts, promotional items, and branded apparel say a lot about a company. When someone orders branded goods for their business, they choose items that align with their business’s values, brand, and target market.
Just as with regular gifting, corporate gifting says a great deal about the giver. When you give someone a gift, they’ll think of you whenever they see or use it. The same goes with corporate gifting and branded items: companies give out items that they want us to associate with their brand. If you want to know how a company sees itself, take a look at what they’re willing to put their name on.
As such, branding merchandise companies, like our own, have access to interesting insights. We can tell what’s trending based on what the most innovative and exciting brands are gifting their clients, staff, and partners. Gift-giving is something of a litmus test when it comes to industry trends.
And what’s trending now is cannabis. More and more companies – including those outside of the industry – are excited to put their names on cannabis-related items, such as grinders, storage products, and rolling papers.
When we decided to establish a category for our cannabis-specific merchandise, we expected cannabis companies to be our main clients. We didn’t expect companies outside the industry to be interested in those same items, but we were wrong.
It seems to be that more and more brands want to align themselves with the cannabis industry, even when they don’t directly offer cannabis-related goods or services. Edgy new clothing companies and innovative start-ups alike might use cannabis-specific promotional items to show that they’re forward-thinking companies that rebel against outdated, traditional concepts.
The other side of gifting is that you expect the recipient to actually use their gift. This is why time-tested promotional items, such as branded pens and tote bags, continue to be brand favorites. The more often someone uses your gift, the more likely they are to think positively of you, so it makes sense to choose functional items instead of white elephants.
In the same way, the popularity of branded cannabis accessories is a reflection of how widespread and accepted cannabis use is. Nowadays, cannabis use is tolerated more than ever before, and CBD is a household name. Companies that use cannabis-related promotional items are saying something about their target market: their intended audience is cool with cannabis.
Two decades ago, young starlets who were “caught” using cannabis were the subject of scandal. This year, Academy Awards nominees were given a compensatory gift bag that included luxury cannabis vaporizers. Part of the assumption of giving gifts here is that people will be excited to use what they receive, and the exact same principle applies to promotional items.
Up until recently, you’d never have seen CBD-infused items on a Mother’s Day gift guide. But in 2021, the world’s approach to cannabis and hemp is far more permissive, especially since more people are now informed about the potential health benefits of cannabinoids. We’re at the point where cannabis and CBD items aren’t just something you’d buy yourself: you can gift it to others because you think they’ll like it, too.
In many ways, corporate gifting and promotional merchandise can tell us a lot about branding trends. The growing popularity of cannabis-specific branded items is a reflection of how society is becoming more and more tolerant of – and excited about – using cannabis, hemp, and CBD.
The fact that this once-disparaged plant is slowly being embraced by individuals and businesses alike is encouraging. It shows us that the stigma is slowly fading away – a sign that the industry is slowly gaining more and more support.
Dan Broudy is the CEO of rushIMPRINT, a marketing supply chain firm providing products and programs that stimulate sales, motivate employees, and strengthen corporate identity. rushIMPRINT serves companies and organizations throughout the USA and Canada.
As a finance and marketing expert with over 20 years of experience in the industry, Dan realizes the importance of having a recognizable brand. That is why he takes great pride in providing cost-efficient branded solutions using state-of-the-art technology. rushIMPRINT creates branded merchandise for the cannabis industry, such as grinders, storage solutions, rolling papers, personalized lighters and more – a unique offering for a growing industry. In addition, rushIMPRINT offers apparel, promotional products, signage, business cards and brochures to help you grow your business.
His current goal is to partner with dispensaries, distributors, labs, growers, cultivators, and vape shops to help them scale their businesses. Dan is excited to get involved in this revolutionary industry by assisting innovative cannabis and hemp brands.
Dan has an undergraduate degree in Psychology from Washington University in St, Louis. He also holds an MBA in Finance and Marketing obtained from the University of Miami Herbert Business School and is a Certified Franchise Executive (CFE).
Dan’s visionary perspective, enthusiasm, and exceptional organizational skills have earned him opportunities to work with brands such as European Wax Center, Blaze Pizza, TCBY, and Amazing Lash.
Member Blog: Cannabis Compliance – 6 Tips To Avoid Dispensary Fines
Cannabis Compliance is one of the things to which every cannabis dispensary must pay attention. Not only does compliance ensure that you have the legal right to carry out your cannabis-related operations but it also helps keep your business from unnecessary fines and sanctions.
The U.S. Food and Drug Administration (FDA) has stipulated various regulations for cannabis-derived products at the federal level. In addition, there are regulations at the state level. Violating any of these regulations can land your cannabis business in trouble that could potentially lead to revoking your license.
Also, people generally have greater trust in regulation-compliant businesses, so compliance is healthy for your business reputation. It is important, therefore, to structure your business operations to align with the cannabis dispensary guidelines and regulations operational in your area. In this article, we will cover 6 tips and tools to help you keep your cannabis dispensary from incurring any fines or lawsuits, let’s dig in!
1 – Digitization of licenses and renewal
In an industry as critical as cannabis dispensing, unauthorized operations constitute a serious offense and may attract severe penalties. The reason should be obvious—cannabis and its products can pose a raft of risks when handled by the wrong people.
This is why your dispensary must be properly licensed by the appropriate government body to be fully authorized for cannabis operations. Your cannabis business is at the risk of heavy fines, suspension, or even total shutdown if you operate without a license.
Different states may have different requirements for obtaining dispensary licenses. There may also be local laws and regulations within the state. You need to ensure that you discover and comply with all the requirements applicable to your locality.
For instance, the State of Colorado requires that employees in the cannabis industry must possess a MED (Marijuana Enforcement Division) license. This means that if your dispensary is in Colorado you not only need to get licensed as a business but each of your employees must also obtain licenses.
You must also ensure that your business license and those of your employees (where applicable) are up to date. The requirements for licensing evolve with changes in cannabis regulations and you will need to stay abreast with information about license requirements in your area in order to maintain your cannabis compliance.
Tracking your licenses and their renewals can be quite a task. But you can save yourself hassle and stress by using a digital HR system to store and manage your licenses.
With HCM software, you can manage your employee profiles and ensure that every worker has the necessary licenses to work in your company. This way, you minimize the risk of operating without a license and violating cannabis compliance regulations.
The software also lets you store and track your licenses and set up reminders to alert you when a license is coming due for renewal. This feature makes it easy for you to maintain up-to-date licenses and renewals.
2 – Use state traceability with a seed-to-sale integrated POS.
One of the major concerns in the wake of the increased legalization of cannabis is the ability to monitor the product from seed to sale. From the top of the production and supply chain to the bottom, traceability is crucial to cannabis compliance.
Monitoring and tracking every single step of this supply chain helps to ensure that cannabis and its products do not fall into the wrong hands — and this goes a long way to ensuring that the product is not abused in any way.
Cannabis and its products can be exposed to contamination with toxic chemicals and other harmful substances via pests or unhygienic processes. Such contamination may pose serious health risks if not prevented or properly managed. With well-detailed traceability, you will be able to track each step to be sure all necessary safety measures are in place.
Your license proclaims that you can be trusted with handling a product as sensitive as cannabis. One of the ways you can demonstrate this is by accurate accountability — and this comes naturally with good traceability. You should be able to give a proper account of every single cannabis product offered by your dispensary in case of audits or investigations.
Implementing adequate traceability is not as difficult as you might think. Compliant POS software that has this feature enables you to automate traceability with relative ease.
This type of software is integrated with the required traceability systems such as Metrc, BioTrackTHC, and Leaf Data Systems. With these, you can rest assured that your data reporting complies with the requirements of the U.S. government.
3 – Time clock software that uses facial recognition technology
Staying compliant in the cannabis industry requires that you commit your operations to qualified employees. Given that cannabis is a highly sensitive commodity and can easily be abused, you must establish a means of regulating who gets involved in your processes.
A time clock softwareproduct will help you keep track of your employees, their clock-ins, breaks, meal times, and other important indices. You can restrict and regulate who gets access to what, where, and at what time.
For instance, an underage person might attempt to clock in for a friend and get involved in your cannabis business operations. Also, chances are that someone in your company might attempt to punch in for a shift when it’s not their time.
These buddy punching practices can sometimes land you in serious compliance violation trouble. Using software with advanced face recognition technology will help you control unauthorized employee clock-ins by granting access only to the right person in the right place — so you can be sure you are staying compliant as your workers have minimal chance of violating labor codes.
Time clock software not only protects you from cannabis compliance risks but also from violating other laws that might lead to severe consequences. For example, violating the California labor codes — part of the laws in California — can lead to a lawsuit that may eventually cost you a fortune.
The California labor code provides that employees are entitled to a 30-minute meal break per five hours of work. This means an employee can potentially sue you with aPAGA lawsuitclaiming that they have been deprived of meal breaks — a violation of a labor code. As trivial as this may sound, the lawsuit may eventually attract serious penalties to your business.
In this scenario, you can avert such lawsuits by providing proof that the employee clocked in and out for their meal breaks so gathering such evidence won’t be an issue. You can also automate your payment system to sort out necessary employee payments to ensure you stay compliant.
4 – Select POS software with purchase limit alerts and built-in ID
As part of cannabis regulations, different states in the U.S have different purchase limits. This means that you are not legally allowed to sell more than a stipulated amount of cannabis and its related products to a customer within a stipulated time.
For instance, both medical and recreational consumers can only purchase one ounce of cannabis per transaction in the state of Alaska. The limits are different in California where medical cardholders are allowed up to eight ounces per day, while recreational buyers are constrained to just one once daily.
If your dispensary does not pay attention to these purchase limit regulations, there is a high risk that you will be found to be violating the law and face dire consequences. Since it cant be difficult to manually track transaction limits, you can leverage POS software to set up purchase limit alerts.
Using POS compliance technology provides you with this very important feature. You can customize your system settings to alert your dispensary whenever a transaction goes beyond the stipulated purchase limit for a customer so, it becomes easier to set up your system to maintain your cannabis compliance anywhere you are in the United States.
Using a system with built-in ID features can also help you combat looping. Looping occurs when cannabis buyers purchase up to their limit, lay it off somewhere, and return for another purchase. It is usually done as a way to bypass the transaction limits.
With the built-in ID feature, you can link a customer profile to the transactions carried out by that customer. That way, you can easily detect the number of products a particular registered customer has purchased and set purchase limit alerts on their profile. So, no matter how many times they come, you will not be able to sell more to them if they have already reached their limit.
5 – Create customizable clock-in surveys
Clock-in surveys can help you ascertain some important details that enable you to maintain a compliant working environment. You can customize your clock-in surveys to obtain different information from different employees for different analyses and purposes.
For example, you can customize a clock-in survey to confirm that a new employee understands and remembers the compliance regulations applicable in your company. You can automate the survey to run for an employee’s first week at work to help them get accustomed to the regulations.
You can customize another clock-in survey to ascertain that your employees are up to date with the most recent legislative changes in cannabis compliance rules. This kind of survey can be automated to run at intervals, say once every 3 months.
Such clock-in surveys help you ensure that you leave nothing to assumption or chance. It goes a long way in keeping the consciousness of cannabis compliance very much alive in your dispensary.
6 – Hire a compliance manager
Given how important compliance is in the cannabis industry, it makes sense for you to prioritize ensuring that your dispensary is as compliant as possible. One of the most effective ways to do this is by hiring a compliance manager.
Notwithstanding, it is great to automate your operations to ensure compliance, it is also not a bad idea to employ a compliance manager to oversee your compliance-related issues.
Part of what a compliance manager does is to help you develop, implement, and review your internal operational policies to ensure they match the current compliance demands. In case any changes are made in compliance regulations in your area, your compliance manager will be devoted to enforcing those changes to keep your dispensary from violating the new rules.
Stipulating policies and regulations might not be sufficient. You may need someone who is committed to enforcing these policies among your employees. This is where employing a compliance manager can pay off.
With a compliance manager in place, you can focus on your business, its growth, and development while you can rest assured that you are not at risk of dispensary fines as a result of violating cannabis compliance regulations.
Tommy Truong is the Director of Partnerships at KayaPush; the cannabis software helping dispensary owners manage their employee HR, scheduling, and payroll. KayaPush also integrates with leading dispensary POS systems.
Tommy loves hot sauce, fried chicken, and running with his Boston terriers.
Member Blog: How Cannabis Dispensaries Can Navigate The METRC System
Cannabis dispensary owners must bear in mind that this industry operates under strict laws and regulations that set their business apart from conventional retail operations. State governments must balance public health and safety with the business needs of the regulated community, and that requires complete tracking of all marijuana products from seed to sale. Most states have already switched to METRC, the largest traceability system helping dispensaries from coast to coast stay compliant with the law. The goal of METRC is to easily retrace the steps from sale to seed and facilitate transparency in the legal cannabis industry. This post will help you understand better why METRC is required, how it benefits everyone, and how can you navigate the system while using the right technology to stay compliant.
What is METRC & Why it is Needed?
Marijuana Enforcement Tracking Reporting Compliance (METRC) is a cloud-based, state-mandated platform used by 15 states in the U.S. It facilitates real-time tracking and tracing of cannabis plants and products from seed to sale. METRC was first adopted by Colorado and early reports in 2014 indicated that this regulatory monitoring technology allowed for accurate quality control and ensured that the safety of the end consumer was prioritized.
In all METRC states, cannabis stores and dispensaries must use the system either directly or integrate it with their POS. All data about your dispensary is safely stored in the cloud and is only accessible by you or the state regulatory authority. State regulatory authorities use data inconsistencies in METRC to detect any diversions from the mandated regulations and if they find any discrepancies, they could conduct an investigation and impose hefty fines.
How to Prepare for METRC?
To gain access to the METRC system, all employees working at your dispensary must get certified. The process involves training, studying the terminology and workflows, and then taking a 40 questions multiple-choice test. METRC uses RFID tags as unique identifiers to recognize and monitor all transactions, these are not reusable and must be purchased in batches or bulk by dispensaries.
Every dispensary must incorporate its own solution to work with METRC. One can navigate the system manually but it is a risky and time-consuming process, as it involves countless hours of data entry, auditing, and reconciling processes to deal with the errors that inevitably pop up. The most convenient way to implement METRC is to automate as much of the process as possible. Investing in a robust point-of-sale solution that integrates seamlessly with METRC will ensure complete compliance with state regulations.
What are the Daily Obligations?
METRC’s cloud-based software requires only an internet connection and computer or tablet to access and use it, and an advanced POS system can automate the whole process for you. METRC tracks all plants and products with Radio Identification Tags. The plant tag is used to track each plant from its immature phase through to the harvest, while package tags are available for harvest batches or packages of one kind of product. All these activities must be recorded by dispensaries and reported to state regulatory authorities on time.
METRC charges $0.45 per plant tag and $ 0.25 per package tag. The tags can be ordered directly from METRC’s online software system, and are custom-printed for each dispensary. These can not be returned once the printing process has begun, are non-refundable, and cannot be reintroduced into the supply chain. Recreational cannabis plant tags are blue while medical marijuana plant tags are yellow.
Manual or Automatic Reporting?
METRC is simply a reporting tool – an application that allows you to send data to the state to maintain compliance. In most states, reports about all activities must be submitted to METRC no later than midnight on the day they occurred. A cannabis-specific POS can facilitate reporting to METRC while providing a user-friendly interface. To get the best compliance solutions, look for a POS that offers 2-way integration. This ensures that reports are sent to METRC in real-time, manifest intake is automated, and inventory adjustments are automatically synced with the traceability system.
Manual reporting will require you to log in to your online METRC account at the end of every business day to enter all data from every single transaction and activity that occurred. This is a time-consuming option that can also result in errors, increasing the risk of compliance infractions, fines, or worse, loss of retail license. Automated reporting with a cannabis-specific POS solution will make your life easier as it integrates seamlessly with METRC and automatically sends all your inventory adjustments and sales transactions as they occur in real-time. Also, if there are ever any connectivity issues, all saved data automatically sync once you are back online.
METRC has standard operating procedures in all states, and dispensaries don’t have a choice but to comply with them. But dispensary owners do have the option of selecting the right POS system that can help their employees navigate the METRC system more efficiently. Download your free copy of ‘A Complete Guide to METRC Compliance for Marijuana Dispensaries’ by Cova, to learn in-depth about the different levels of POS integrations with METRC, how to work best with the system, and state-specific METRC differences.
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.
In solutioning the POS platform, Cohen & the Cova team have met with over 1,900 operators and leveraged expert knowledge to provide retailers the support they need to get a license, pass inspection, launch a store, and improve operations. Cohen leads seminars on retail technology, compliance, business operations, and cannabis banking laws at the industry’s largest events, including the NCIA and MJBizCon. As Cova has become the predominate thought leader for cannabis retail tech, Cohen has established himself as a leading voice educating cannabis entrepreneurs as they build their own successful brands.
Committee Blog: The Asset We Wish We Knew Before 2020 – HACCP
Read on for insight and guidance for the vitally important topic of preventing, eliminating, or reducing microbial growth in cannabis edibles and packaging.
It all starts with the HACCP (Hazard Analysis Critical Control Point) Principles. Gather your team to share the five preliminary steps of HACCP and develop a plan (figure 1). This management system was launched by Pillsbury along with NASA and the U.S. Army for food safety in space exploration in the 1960’s. Quality, safety and efficacy is obtainable and sustainable with the HACCP discipline.
The objective is to PREVENT packaging from being a failure point and inhibit microbial growth in edible products. We know moisture (water activity), temperature, pH, and oxygen levels are primary microbial growth drivers.
HACCP is an asset, not an expense. Food is medicine for some, and cannabis products are medicine for many. Resin cannabis products (RCP) must be safe, consistent, and reliable products continuously. To generate those results, learn the HACCP mindset. Practice being an advocate with HACCP discipline displaying the actions written in the programs. It’s a system for cannabis safety that encourages operations to have Emergency and Business Continuity plans before disruptive events occur, e.g., natural disasters, pandemics, etc.
Resin cannabis product – Any product, whether finished or a work in progress, containing or comprised of cannabis flowers or resins or both and includes, but is not limited to, the cannabis flowers and resins themselves, extracts/concentrates/derivatives thereof, and preparations therefrom.
And can be further classified as Adult-Use or Medicinal-Use and subclassified as Topical-Use.
Creating such a plan is important because exposure to microbes may result in allergic symptoms such as sneezing, coughing, wheezing, nasal congestion, and watery or itchy eyes. Consumers using cannabis products as medicine, such as cancer patients on chemotherapy, are even more susceptible to harm caused by microbes. Thus, it is critical to ensure your products do not have microbial growth.
Effective HACCP management system ensures control. Empower your team through education and training on discipline of HACCP. Take the infused gummy recall from February 2021 as an example where cross-contamination, improper employee hygiene, and package permeability were failure points that led to loss of control. Lack of control during transport of the initially sterile packaging also contributes to contamination. Personal clothing worn by team members or visitors are also known sources of pathogenic fungus.
Best practice is to address preventive controls and reducing/mitigating risks. For example, consider installing two-way humidistatic control devices in packaging, such as desiccant packs, to maintain water activity (Aw) in acceptable ranges to mitigate microbial growth. Reducing moisture prevents powdery mildew caused by Golovinomyces Cichoracearum (figure 2).
A great resource to mitigate risks can be found in the ASTM D37; Standard Guide for Cleaning and Disinfection at a Cannabis Cultivation Center; Aw ASTM Standards for Cannabis Flower: D8196 – Standard Practice for Determining Water Activity in Cannabis Flower; and D8197 – Standard Specification for Maintaining Acceptable Water Activity Range for Dry Cannabis Flower.
Sanitary environments are critical from seed to sale.
Figure 2, Right. Powdery mildew development on leaves, stems, and flower buds of Cannabis sativa, caused by Golovinomyces cichoracearum. 2
Use the principles of HACCP to guide and maintain the integrity of your work. Each principle builds on the next to create a solid foundation to build and operate a safe and consistent management system. Establish storage conditions in your control and transport; determine the temperature and humidity for each product type (gummies do not tolerate heat, and certain ingredients are sensitive to humidity which could change the potency). This includes evaluating the stability of each of the ingredients when in final product form (how long do they remain potent).
Depending on the ingredients used, i.e., the formulation, gummies can take on or reject water. Most typically let out the water, then that water has nowhere to go (trapped in the packaging), and the product molds. This is why commercially produced gummies are coated in wax, literally to trap the water inside the product. Inadequate gummy formulations lead to water permeability; change in cannabinoid content is the least of the concerns.
General chapter 659 on Packaging and Storage requirements published by the USP (United States Pharmacopeia and the National Formulary, USP–NF)is a great resource. Though not all cannabis products may be for the medical market, using the standards of excellence from the USP is the best way to minimize product failure and help ensure consumer safety. Packaging 659 states that packaging materials must not interact physically or chemically with a packaged article in a manner that causes its safety, identity, strength, quality, or purity to fail to conform to established requirements.
Empower your cross-functional team to apply and implement HACCP through your organization. In doing so, you will have the discipline and tools to mitigate risks and prevent costly downtime. Your consumers benefit by having safer, consistent, and quality products. Finally, collect the data and share the story. We all need to drive improvement and produce safe consistent products for our consumers. HACCP systems are a tried-and-true tool to achieve this.
Please note that prerequisite programs such as current Good Manufacturing Practices (cGMPs) are an essential foundation for the development and implementation of successful HACCP plans. This article is intended to level up your current manufacturing processes and mitigate your exposure to potential recall or unsafe products in the marketplace.
The state of Nevada has always been a unique place to do business. Not only is its economy fueled almost entirely by tourism, but its population is located almost exclusively within a few key urban centers. These factors influence nearly every type of business opportunity in Nevada – including cannabis.
While Nevada’s economic and geographic constraints are unique in themselves, the type of tourist industry found here is one of a kind. Las Vegas is famously known as “Sin City.” It is a place where people flock from around the globe to indulge their vices, such as gambling and clubbing.
As a microcosm of Nevada itself, the Nevada cannabis industry has its own set of challenges and opportunities.
Overview of the Nevada Cannabis Industry
Nevada boasts both medical and adult-use cannabis markets. The state voted to legalize medical cannabis back in 2000, although their first medical dispensary did not open until 2015. While the medical cannabis space in Nevada began with a crawl, the adult-use industry has been quite different.
Nevada voted to legalize adult-use cannabis in late 2016, with the first adult-use dispensary opening mid-2017. Nevada has both medical and recreational dispensaries, although certain stores service both customer bases.
One of the more exciting facets of the Nevada cannabis market has to do with home cultivation. Its unique program allows people 21+ years old to grow at home if they live more than 25 miles from a dispensary. Nevada put these rules in place to accommodate citizens living in rural areas who cannot access dispensaries.
Since Nevada’s legalization, cannabis has become a big business. Here are some statistics for the 2019-2020 fiscal year in the Nevada cannabis industry:
Total Sales: $684,959,149.00
Cannabis Taxes: $105,180,947.00
Licensing & Application Fees: $5,212,557
Nevada sales are ahead of other new adult-use recreational markets such as Illinois and Massachusetts to put these numbers in perspective. Nevada falls short compared to more established industries such as Colorado and Washington, but it holds promise for massive growth.
What is Unique About the Las Vegas Cannabis Market?
The tourism industry in Las Vegas makes for a unique market. Adult-use market regulations coupled with the global renown of the city lead to an environment where out-of-state visitors greatly influence cannabis sales.
The structure of a cannabis market directly influences business opportunities. In medical cannabis, qualifying conditions and patient counts dictate potential market growth. Conversely, adult-use markets are only limited by people’s age.
The interesting thing about the Las Vegas market is that anyone over 21-years can legally purchase cannabis – this includes out-of-state visitors. According to the Las Vegas Conventions and Visitors Authority website, the city saw 42,523,700 visitors in 2019 alone. These people spent over $10 billion in Las Vegas that year. Within these billions of dollars in tourist money lies an excellent opportunity for adult-use operators in Nevada.
Another fact worth noting is that people flock to “Sin City” to partake in activities inaccessible in other U.S. states. Cannabis fits nicely into this package of taboo activities that can only be done in Las Vegas, NV.
Is it Hard to Open a Cannabis Business in Las Vegas?
While the tourist money in Las Vegas makes for a very intriguing adult-use market, it is not easy to acquire a cannabis business license. Unfortunately, Nevada has put a cap on the number of licenses available in the state, making it much more difficult to enter than other adult-use states like Colorado.
There are five types of business licenses in the Nevada cannabis industry:
Cultivation Facility
Distributor
Product Manufacturing Facility
Testing Facility/Laboratory
Retail Store
It’s worth noting that both the medical and adult-use markets offer these same business licenses. Similarly, the licensing cap in the state includes both verticals.
As of early 2021, the state of Nevada awarded 132 dispensary licenses. However, these licenses did not go to 132 different operators. Certain businesses acquired multiple licenses, with some able to open as many as seven retail stores. While Nevada has issued 132 retail licenses, there are only 80 dispensaries operational at this point.
The licensing situation in Nevada is frustrating for local investors and outside interests alike. Namely, because studies show that the Nevada economy could support as many as 1,283 more dispensaries than it has issued licenses for. Aggravation mounts with a lack of expansion opportunities in the area.
The state of Nevada only accepts additional cannabis business license requests during “application periods.” These short windows are scheduled by the Nevada Cannabis Compliance Board and stay open for just ten days. However, there has not been an application opportunity since 2018, and it doesn’t appear there will be one anytime soon. As such, it appears that plant-touching opportunities in Nevada are limited to current license holders.
Where is the Most Opportunity in Nevada Cannabis?
While many believe there is ample room for new players in the Nevada cannabis market, the state does not agree at this point. As a result, if you are looking to get involved in the Nevada industry, you are well-advised to look into ancillary business models instead of plant-touching businesses.
With such promise in the Nevada market, you can rest assured that those cannabis companies that have won licenses will be extremely busy. Ancillary operators can take advantage of this climate by developing models that operate in the business-to-business (B2B) vertical. To help plant-touching companies in Nevada, both product-based and service-based ancillary businesses could prove profitable. Examples of product-based companies include business management software and cultivation technology, while service-based businesses work in marketing, staffing, and consulting.
Opening an ancillary cannabis company in Nevada gives you the ability to enter the market by circumventing the licensing process. Even more, you don’t have to worry about application fees, compliance mandates, and other stressors faced by plant-touching companies. You also have the option to operate across state and national borders if you so desire.
Summary
There is no doubt that the Nevada cannabis industry is one-of-a-kind. While there is a good deal of excitement surrounding the market, many feel it hasn’t even come close to reaching its potential. To this end, the adult-use market in Nevada was only 1.5 years old when the COVID-19 pandemic struck. The financial blow of the pandemic was cataclysmic in Las Vegas, as the tourism industry dropped to 50% below average in 2020.
With the pandemic on the downswing in 2021, there is an unmistakable air of excitement across the globe. Some economists feel that we are about to enter a new “roaring 20’s” period, where people celebrate by spending travel money that was unusable during COVID-19. With this celebratory outlook on the near feature, there is no doubt Sin City will see its share of visitors. With the casinos and hotels full again, maybe we will finally see what the Nevada cannabis market can really do.
Dr. Monaco is the Director of Laboratory Operations for CLS Holdings’ newly opened approximately $4 million laboratory, and is responsible for all day-to-day operations inside the North Las Vegas facility. Dr. Monaco brings over 8 years of licensed & regulated cannabis experience, starting back in 2012 when medical marijuana first opened in Arizona, he has held numerous positions, with escalating responsibilities year over year. He graduated from the University of Arizona College of Pharmacy, in Tucson, Arizona, with a Doctor of Pharmacy in 2010.
Member Blog: Eradicating Pesticide Use in the Cannabis Industry – Without Sacrificing Crop Quality
One of the direst, yet infrequently discussed, issues in the cannabis industry is the lack of federal guidelines regulating pesticide use. Despite the adult-use cannabis market consistently expanding on a state-by-state basis, as long as the crop remains illegal on the federal level, much-needed national oversight will continue to be limited.
The more states that legalize under a national prohibition, the more varying and convoluted state-by-state crop management regulations may become. Meanwhile, without standards firmly set in stone across the country, some cultivators have turned to hazardous chemicals to control pathogens and preserve their crop yields. Such cultivation solutions can compromise the safety of staff, the environment and, of course, the consumers.
Health Hazards of Pesticides in Cannabis
Even when shopping at a licensed adult-use or medical dispensary, consumers today still cannot be 100 percent confident that the cannabis they are purchasing is completely safe and free of contaminants and unwanted components, such as pesticides, harmful microbials, heavy metals, and solvents. Emerging research from Colorado State University shows that contaminants in cannabis, including pesticides, “are imminent threats that directly impact public health and wellness, particularly to the immunocompromised and pediatric patients who take cannabis products as a treatment for numerous human disorders including cancer patients and those suffering from epileptic seizures.” With many consumers turning to cannabis for its health benefits, and because it’s a natural alternative to heavily processed pharmaceuticals, the cultivation process should honor cannabis’ medical use by being as safe and accountable as possible.
The pesticide issue is compounded when we think about how cannabis is often consumed: through inhalation. Additional research has shown that nearly 70 percent of the pesticides used in cultivation remain in the cannabis flower that consumers smoke.
Even when these same pesticides are permitted in other types of American agricultural industries, this is a global anomaly. More than 25 percent of pesticides used in the U.S. are banned in other countries.
Moving Towards a Pesticide-Free Flower
So how do we work towards a pesticide-free cannabis industry? Licensed businesses, regulators, and consumers need to band together to set standards and guidelines for pesticide use across each legal state, and eventually on a federal level.
In 2020, Arizona took a page out of Oregon’s playbook by establishing a regulatory agency and adopting Oregon’s standards for limiting pesticide use in cannabis, setting a prime example for inter-state collaboration and accountability. Measures also need to be taken to lower the cost of testing cannabis products for pesticides and contaminants. And, of course, we need to embrace more sustainability and environmentally-minded education, and emerging technologies.
While testing does not necessarily prevent contaminants during the grow process, frequent, reliable, and standardized testing can help ensure contaminated products don’t make it to market. Unfortunately, testing requirements continue to differ by state, with some being more lenient than others. For instance, certain states only test for certain types of microbials, while others allow companies and cultivators to cherry-pick samples. This makes it easier for companies’ products to meet compliance, however, doesn’t ensure that the final products available for purchase will be safe for the consumer. Looking ahead towards inevitable federal legalization, testing requirements need to be uniform across all legal markets.
However, cultivators shouldn’t wait for federal oversight to hold themselves to the highest possible standards. There are inexpensive testing procedures currently available that cultivators can adopt before sending their cannabis products to the lab, which can help to better ensure what they are doing is working and catch a problem before it starts.
There are also non-toxic crop management technologies available now, and in addition to seeking out vendors offering innovation-driven solutions to replace conventional pesticides, cannabis companies and their cultivators can embrace simple, preventative measures to minimize outbreaks of bio-contaminants. This includes controlling humidity at the grow site, plant spacing, adequate air circulation, and implementing a strict chain of custody throughout the supply chain. Successful prevention mitigates the temptation to turn to potentially toxic pesticides to eradicate contaminants.
While federal legalization looms, it likely won’t happen this year. Therefore, state regulatory agencies should continue to be prepared with comprehensive outreach plans to communicate their pesticide and testing regulations to cultivators and their companies, ensuring that industry participants are fully informed. Planning and communication also sets the stage for the industry to have tried and true standards already in place by the time federal legalization does come to fruition.
The good news is the cannabis industry has the potential to lead a paradigm shift towards a safer agricultural sector as a whole. In years past, the amount of information shared between cannabis and other agricultural industries was limited, cutting cannabis cultivators off from reliable best practices for cultivation and crop management. However, this is changing quickly. Cannabis is also pushing the envelope towards more sustainable practices, with more cultivation sites moving indoors and into greenhouses, complete with LED lighting and additional sustainable practices. Cannabis cultivators are becoming more cutting-edge and setting an example for the broader agricultural community. The industry should continue these forward-thinking approaches by embracing pesticide-free solutions on a broad, scalable level.
Carlos Perea is the CEO and Co-founder of Terra Vera, an agricultural technology company offering innovative solutions to replace conventional pesticides and increase product safety and consumer confidence within the agriculture industry. Carlos is a serial entrepreneur with a focus on the intersection of technology and social impact. Prior to founding Terra Vera, he formed MIOX Corporation, a technology company that treats water in a variety of applications and is distributed in over 30 countries. He is active as an advisor and board member with several early stage companies and social enterprises including YPO, where is he an active board member. Carlos has an MBA from the Stanford Graduate School of Business, and an BS in Mechanical Engineering from the University of New Mexico.
Committee Blog: Re-thinking Cannabis Track and Trace Models — A Sustainable and Scalable Approach
by NCIA’s State Regulations Committee Contributing authors Jennifer Gallerani, Tim Gunther, Elise Serbaroli, and Erin Fay
The COVID-19 pandemic and subsequent recession powerfully demonstrated that the cannabis industry is providing essential medicine and products to countless Americans, as well as creating jobs and tax revenue. Retail sales of medical and adult-use cannabis in the United States were on pace to eclipse $15 billion by the end of 2020, and if you include ancillary products and services, the industry is estimated to reach $68.4 billion in 2021. The U.S. cannabis industry is experiencing rapid job growth, boasting an estimated 300,000 full-time jobs in 2020. Those numbers are expected to almost double by 2024. Over the next four years, the industry is expected to add nearly 250,000 full-time equivalent positions. By comparison, roughly 271,000 people currently hold beverage manufacturing jobs. These numbers demonstrate with sureness that the U.S. cannabis industry is on a high-growth trajectory, which makes it imperative that the market operate under a practical regulatory framework that benefits both regulators and operators.
Most states that have approved some form of legal cannabis sales (medical and/or adult-use) have also selected a single, mandated technology platform that all operators must use to track and trace their cannabis seeds, plants, and end products. Some iterations of the current track and trace model — which is primarily centralized approach — sets businesses, employees, and regulators up to fail. Of course, it also further limits the competitiveness of the regulated market with the unregulated market, and the ability for policymakers to be confident that cannabis consumers in their states are obtaining taxed, tested, and regulated products.
Local governments are missing out on tax revenue, and businesses (both large and small) are forced to spend unnecessary resources on a system that is fundamentally flawed. The centralized model, contracting with one specific software provider, and mandating operators to use that software provider in order to stay compliant, is wreaking havoc on the entire U.S. cannabis industry and is not sustainable for a federally-legal and global supply chain.
As a team, the National Cannabis Industry Association’s State Regulations Committee’s Technology and Compliance Subcommittee has spoken to regulators, operators, and international technology providers in the interest of presenting a practical track and trace solution to benefit the industry as a whole. This is the first blog in a series that will highlight the issues that cannabis operators and regulators are facing because of the current centralized state-mandated track and trace model. We propose that the U.S. cannabis industry operate under a more practical framework that has a higher probability of success for regulators and cannabis businesses through slight changes and improvements based on proven best practices.
The History of Track and Trace in the U.S. Cannabis Industry
Track and trace systems serialize assets to identify where assets are (track) and to identify where assets have been (trace). Track and trace is not something new. It is the globally acknowledged standard for product movement and reconciliation in both the Pharmaceuticals and Consumer Packaged Goods (CPG) industries. A secure track and trace system combines material security and information security elements to confirm assets are legitimately produced and sourced, following a pre-defined and auditable path.
As the regulated cannabis markets started to take shape and mature in 2012, one of the driving factors that shaped the need for a track and trace system was the 2013 U.S. Department of Justice Cole Memorandum (Cole Memo). The Cole Memo indicated for the first time that the federal government would only intervene in states that failed to prevent criminal involvement in the market, sales to youths, and illegal diversion to other states.
The first four states to legalize adult-use cannabis were Colorado, Oregon, Washington, and Alaska. All four of these states instituted a market-based licensing system to regulate the commercial activity of cannabis sales. The intentions of the newly instituted policies were two-fold: protect consumer health and minimize diversion, both of which align with the core principles of the Cole Memo. To meet these intentions, the states instituted procedures for inventory control and tracking documentation using a state-mandated centralized model, in an effort to create a transparent and controlled system of oversight within the cannabis industry.
As the industry has developed over the years, most states that have approved some form of legal cannabis sales have selected a single mandated technology platform that all operators must use to track and trace their cannabis seeds, plants, and cannabis products. As shown in Figure 1, the majority of legalized states have chosen METRC as their exclusive contractor of track and trace services.
A Scalable and Sustainable Track and Trace Solution
The legal cannabis market has changed significantly since 1996 and it is important for the industry to re-evaluate the intention and implementation of track and trace. Regulatory bodies contracting with one track and trace technology provider and mandating operators to use that specific provider in order to stay compliant is problematic for many reasons. Time has shown that the current centralized model is fiscally irresponsible and ultimately counterproductive, with significant negative externalities, including ethical concerns such as anti-trust issues. Most recently, an Oklahoma cannabis operator (seeking class-action status) initiated litigation against the state’s Medical Marijuana Authority (OMMA), alleging that the state exceeded its authority by requiring licensees to pay for a state-mandated track and trace program, and that the state’s contract with METRC creates an unlawful monopoly, among other claims.
To provide an analogy, let’s think about how businesses are required to report taxes. The IRS sets out certain rules and every business must report their income and assets according to that framework. Technology providers (such as TurboTax, Tax Slayer, H&R Block, etc.) have built scalable products to support businesses in reporting their taxes. The IRS does not mandate that businesses use one single specified software in order to report their taxes. Doing so would kill competition, introduce a monopoly, and eliminate any incentive for the technology providers to improve their product. By the IRS allowing free competition over the realm of tax preparation and processing software, the public benefits from the technology companies being incentivized to update and improve their software features and benefits.
The centralized model is crippling the entire industry as system failures are occurring on a more frequent basis, and its after-effects are causing a more detrimental and wide-ranging impact as the industry grows at an exponential rate. Most recently, METRC’s integration functionality (how third-party business operations software communicates to the state’s system) was down for more than fourteen days in California, causing significant problems in the nation’s largest cannabis market. One software provider and its tag-producing partners are benefitting, while setting industry regulators and operators up to fail. One software provider cannot meet the current or future needs of regulators and operators, especially not on a national level. Meanwhile, there are many excellent software providers that specialize in track and trace. The free market should determine the most efficient and user-friendly approach to allow businesses to stay compliant and accurately report to the appropriate regulatory authorities.
By leveraging the knowledge and experience the industry has gained over the last 20 years, we can incorporate best practices from other industries’ and other markets’ track and trace systems, and set regulators and operators up for success.
Join us as we dive deeper into the issues surrounding compliance and track and trace in the cannabis industry. Our multi-part blog series provides an in-depth look into the technical shortcomings of the current centralized approach and provides a roadmap for implementing a distributed model approach. Some of the disadvantages we will cover in the subsequent posts include:
Impact of System Failure: The current centralized model provides a single point of failure: if the system goes down, all licensee operations must stop operating entirely. In some cases, operators may manually record activity during a system failure, and then manually enter the activity when the system resumes. This introduces a high risk of human error. No backup system or alternative means of recording through the use of technology exists since the state relies on only one system.
Challenges with Scalability: The history of performance with centralized track and trace systems demonstrates that there are significant challenges in scalability because of multiple system failures and shutdowns. The system would benefit from a more advanced track and trace capability, specifically with its API (Application Programming Interface). Many times it is not the technology of the licensee system, but the technology design of the state-mandated systems.
Fiscal and Environmental Impacts: Licensees are required to purchase plant and product tags from the single state-mandated vendor, which creates a fixed price system that is typically not in favor of a licensee. It is also creating a sustainability issue in the industry, as the plant and product tags are single-use. More operators are speaking up about the waste it is generating in our cannabis industry.
Interested in joining us in establishing an effective and scalable track and trace framework for regulators and operators in the legal cannabis space? Click here to stay updated on the State Regulations Committee, and the efforts that it’s Technology and Compliance Subcommittee are taking to improve and advance track and trace nationally. Let’s close the informational gap between operators and regulators, and help the entire industry move forward together.
Stay tuned for the next two blog posts in our multi-part series!
Committee Blog: Future-Proofing Cannabis Manufacturing Processes – Part 2
by NCIA’s Cannabis Manufacturing Committee
Despite prohibition, the cannabis industry is not behind the curve of sustainability progress. While other industries were inventing modern Cloud-based quality control/distribution systems and making stuff out of plastic, cannabis producers were maximizing yields per watt and creating stronger concentrates in attempts to get the most out of their value streams while staying under the radar. Now all industries are racing towards a more sustainable future and the cannabis industry has the opportunity to show that it can be a good example, even a leader in sustainability. Regardless if it is in preparation for competition or regulation, now is the time to start building more sustainable, energy-efficient, and overall lower footprint businesses.
As the manufacturing branch of the cannabis industry paves its way into the future, the processes involved need to be made environmentally sustainable and best practices need to be shared and standardized to ensure product safety and industry longevity. Collecting and sharing data from manufacturing facilities is the ideal way to achieve these sector goals.
Environmental sustainability is a multi-discipline effort. Experts in engineering, emissions, air quality, worker health and legal matters should be relied on for educating and guiding businesses into a more sustainable future.
The Data Vacuum Is Holding Back Environmental Sustainability Advancements
While cultivation is one of the main focuses of the cannabis sustainability effort, manufacturing procedures are also prime targets for sustainable advancements. Due to the nature of the organic chemical processes used to produce consumables, some of the materials and practices could have a negative impact on both worker and environmental health if not addressed and handled properly. As a best management practice, regulated cannabis manufacturers typically operate closed-loop systems, which greatly reduce certain dangers, but this can require other more energy-intensive systems. As these relatively new processing techniques are being pioneered, we need more data to understand how they can be made more efficient and sustainable. For various reasons — such as intellectual property concerns — advancements in sustainable practices are often not shared and therefore not visible to potentially become a standard process that ensures product and consumer safety.
Cannabis Science Outpacing Regulations
The scientific improvements for manufacturing cannabis into consumer products in high demand have outpaced regulations. From process design and equipment to processing material sourcing, the manufacturing branch of the cannabis industry has much to offer the future of sustainable cannabis products. In many jurisdictions today, regulators have hastily opted for vertical, prescriptive regulations which have left many manufacturing operations without the leeway required to innovate more sustainable process strategies. Even more businesses with the legal leeway simply do not want to push the envelope in today’s regulatory climate. More forward-thinking, regulation-savvy equipment manufacturers have begun focusing on lower energy-use in their newer products as a selling point. The industry as a whole could be making progress much faster if regulators focused on performance standards for manufacturing facilities.
Strategies inspired by building and process heat recovery offer dozens of basic possibilities when it comes to implementation in a cannabis manufacturing facility. Using the energy released during solvent condensation for solvent evaporation is a prime example. Connecting liquid-cooled equipment with the building’s central plant system is another. These are big ideas that could be implemented in different ways with different efficiencies. Intelligent use of insulation, exhaust recirculation, odor mitigation, ventilation minimization, demand-control ventilation for providing makeup air, etc. could also make significant differences. Data collected from actual operating facilities experimenting with different strategies will be the best guide going forward in determining what the best energy saving strategies are.
Cannabis Extraction Processes and Air Quality
In an effort to prevent unnecessary Volatile Organic Compounds (VOC) emissions it is important to maintain proper solvent transfer and storage, perform extraction equipment inspections, and ensure a maintained inventory and handling of solvents on site are a part of a facility’s standard operating procedures. Best practice for extraction and post-processing dictates the use of butane, propane, CO2, ethanol, isopropanol, acetone, heptane, and pentane as solvents to encourage safe consumer products.
Carbon filtration is also the best management practice for controlling cannabis terpenes (VOCs) and odor emissions. It is important to install properly engineered molecular filtration systems (aka carbon scrubbers) that are sized appropriately for a facility’s ‘emission load’ and don’t exceed the maximum cfm rating for air circulation through the filter. To prevent VOC and odor breakthrough, it is imperative to inspect and conduct regular maintenance of HVAC systems and carbon filters. A standardized method for measuring the lifespan of carbon is by using a Butane Life Test, which equips manufacturers with the data to know how to manage their carbon replacement schedule effectively, minimizing unnecessary carbon waste. Additionally, processors can conduct air sampling to detect and measure VOC and odor levels in their facilities and the data can be used to validate the impact of control technologies further protecting worker and environmental health.
Proper VOC and cannabis odor control from manufacturing processes helps reduce community odor complaints and improve neighborhood relations. It also improves public and environmental health by reducing local ozone concentrations. Proper emissions control when running cannabis manufacturing processes and handling chemicals helps to shift the industry at large toward sustainable and environmentally conscious business practices.
Preparing Your Business for the Next Stage
Cannabis manufacturers are seeing big changes on the horizon. Increased legalization brings increased competition and inevitable M&A activity. Whether a business aspires to compete on the world stage or to be acquired in one of the coming green waves, there are actions that can be taken today to help cannabis manufacturers maximize their value to both customers and potential acquirers.
One of the most important assets a company can have — both to compete effectively and to attract purchasers — is intellectual property. Intellectual property, or IP for short, is the term for an intangible asset that has been afforded certain legal protections to solidify the asset into a commodity that can be bought, sold, and licensed. IP can have a negative connotation in some circles, mostly resulting from misconceptions in the law but also rooted in IP abuses by unscrupulous “trolls.” In reality, IP is an important tool to help companies protect their hard work and, when properly deployed, intellectual property can increase transparency into cannabis manufacturing processes and open new avenues of scientific advancement.
Intellectual property broadly covers a number of different types of rights. Patents protect new inventions like processes, machines, compositions of matter, ornamental designs, and plant genetics. Patents can grant relatively broad rights to these ideas, but with substantial additional costs and scrutiny.
Similarly, copyright can protect creative works, like writings, drawings, and sculptures. But many do not recognize that copyright can also protect compilations of data that have been creatively selected or arranged. Data and algorithm copyrights are relatively nascent, but they promise to play a large role in the intellectual property landscape of the future cannabis industry.
Another sect of intellectual property, trademarks, is all about protecting a brand: the names, logos, slogans, and overall look that tells customers that a good or service is from a particular company. Federal trademark registration is unavailable for federally illegal goods and services, but that does not mean that federal trademark protection is unavailable to cannabis brands. Many companies are using the zone-of-expansion doctrine baked into federal trademark law to set up registrations on related legal products (smoking/vaping devices, clothing, and even CBD edibles) that can be expanded to cover THC products when federally legal.
The nuances and requirements of these property rights — along with other IP rights like trade secrets and trade dress — are highly fact-specific, so involve a good IP attorney to guide your strategy from the start.
Towards A More Sustainable Future
Now is the time to start building more sustainable, energy-efficient, and overall lower carbon footprint businesses and the emerging legal cannabis industry is well-positioned to be the leader. If manufacturers are incentivized to safely share processing data directly or through emerging data collection and tracking platforms, the industry will make major advancements towards more environmentally sustainable practices. Environmental impact areas, such as air quality, energy, water, soil waste, and community all need to be considered by the manufacturing arm of the cannabis industry. Regulators can help push the industry forward by reducing negative impacts in these areas though focusing on performance standards for manufacturing facilities and their processes. Lastly, understanding that IP, including trademarks, can in fact increase transparency into cannabis manufacturing processes and open new avenues of scientific advancement will help position operators for M&A activity coupled with proper legal representation. These factors work together to protect the environment and communities, as well as future-proof manufacturing operations setting up the rest of the cannabis industry for longevity and federal legalization.
The Agricultural Improvement Act of 2018 (the “2018 Farm Bill”) helped to further define the pathway by which “hemp-derived” ingredients can be legally incorporated into food. Since then, hemp-ingredient companies have materialized selling purified cannabinoids that are found naturally-occurring in hemp. Despite the young market, these companies are facing difficult times as the buyers for these ingredients are few and manufacturers mostly compete on price. The GRAS path offers a route out of this conundrum.
What is GRAS?
The Generally Recognized as Safe (GRAS) for food-use pathway was established by the 1958 Food Additives Amendment to the Federal Food, Drug, and Cosmetic Act (FD&C Act). It delineated how substances that are GRAS for their defined conditions of use in food are different from food additives.
Others have previously delved into why firms might consider pursuing GRAS notifications and/or New Dietary Ingredient Notifications (NDIN) independent of hemp and hemp-derived ingredients so I will refrain from wholesale repetition. Two key points on specificity are nonetheless worth repeating: 1) a substance is deemed GRAS for a specific use under specific conditions and 2) a GRAS notification is specific to the company filing the notification.
Why GRAS?
There are a number of practical reasons why firms that produce cannabinoids would seek to pursue the GRAS pathway. Here are five:
Market Expansion
Currently, firms that produce purified hemp cannabinoids are mostly selling their wares to businesses operating in state-regulated delta-9 tetrahydrocannabinol (THC) markets or to operations that may not be in full-compliance with dietary supplement regulations. Almost all firms that produce food products, including beverages, and most dietary supplement manufacturers, will not use ingredients that do not have a history of use in food or that cannot be legally marketed.
For ingredients such as purified hemp cannabinoids that do not have a history of use as articles used for food, the only way to open-up the food, beverage, and dietary supplement markets is via the GRAS/NDIN pathways.
Safety Demonstration
An integral part of any GRAS dossier is the basic demonstration of acceptable risk (cf. safety) for the named substance and impurities. This includes any byproducts that may be introduced by the manufacturing process. Whether one is interested in pursuing a GRAS Notification for submission to FDA or for a self-affirmed GRAS conclusion, the process involves an evaluation of safety for the conditions of use (e.g. serving size, no-observed adverse event level, etc.).
Beyond the ethical necessity of understanding the hazards of a product meant for human consumption, pursuing GRAS helps protect a firm from product liability in the event that harm is created. But more importantly, GRAS helps guard against product liability by seeking to prevent the potential hazard in the first place. That is always good for business.
Avoiding Drug Preemption
FDA has described in numerous forums, including the Administration’s own website, why it has concluded that cannabidiol (CBD) cannot be used as an ingredient in food or dietary supplements. The key is section 201(ff)(3)(B) of the FD&C Act. This section disqualifies an ingredient from use in food or dietary supplement products if the ingredient is 1) an active ingredient in an approved drug or 2) if substantial clinical investigation of the substance as a drug has been conducted AND made public.
While the situation remains unclear for CBD, the only way to avoid a similar murky situation for other cannabinoids (e.g. cannabigerol, CBG) is for those ingredients to be marketed as a food or dietary supplement prior to the public disclosure of clinical trials directed at the development of that substance as a drug.
It is FDA’s position that “legal” marketing entails more than simple inclusion of the substance in marketed products — the substance must have been the subject of GRAS, food-additive, or NDIN pathways, if required, to be legally marketed. To that point, FDA is highly unlikely to conclude that legal marketing includes the marketing of products in state-regulated cannabis systems while THC remains federally illegal.
Side-Stepping Price Wars
The nascent hemp-derived ingredients market is experiencing significant downward price pressure. The reasons are simple. There is currently more supply than demand (see #1 above) and all commercial offerings are essentially generic.
The GRAS pathway is a mechanism out of this me-too trap. A GRAS cannabinoid would be a premium ingredient by virtue of GRAS status alone. Premium ingredients command premium prices. And the types of sophisticated customers that firms like to do business with do not mind paying premium prices for compliance.
Regulatory Intelligence
While we wait on FDA to draft regulations for manufactured hemp-derived products, it is difficult for businesses to make decisions about what products to pursue. Some firms may not care about internal FDA thinking for hemp-related issues like delta-8 THC or proposed New York State in-process hemp material THC limits of 3%, because they are going to seek to exploit the here-and-now.
For forward-looking firms, engaging with FDA through GRAS or other regulated ingredient pathways can help illuminate what lay around the bend. Effectively navigating bends in a fast-paced, regulated marketplace can be the difference between knowing when to brake… and going broke.
How GRAS?
There are a few ways to go about this, but simply asking the question within your company and with your legal and regulatory counsel will help generate more of a groundswell. There are a few hemp- and cannabinoid-specific intricacies that must be navigated in practice, including FDA’s own policies on hemp. But there is no reason why this cannot be done.
EAS Independent Consultant, Brad Douglass, Ph.D., evaluates FDA and FTC compliance of dietary supplement materials including review and audit of dietary supplement labels and labeling. He is experienced in multiple technical, quality, and formulation roles in the dietary supplement and cannabis industries which lends perspective not only regulatory requirements but also the realities of real-world business. Brad’s previous positions include VP of Regulatory Affairs and Director of Advanced Botanical Strategy at the Werc Shop in Los Angeles. He has a doctorate in Organic/Medicinal Chemistry from USC. EAS Consulting Group, a member of the Certified Group of companies, is a global leader in regulatory solutions for industries regulated by FDA, USDA, and other federal and state agencies. Our network of over 150 independent advisors and consultants enables EAS to provide comprehensive consulting, training and auditing services, ensuring proactive regulatory compliance for food, dietary supplements, pharmaceuticals, medical devices, cosmetics, tobacco, hemp and CBD. easconsultinggroup.com
If you represent a firm that creates hemp-derived cannabinoids, are a regulator that has responsibility over products that incorporate non-THC cannabinoids, or are just an interested reader that has been intrigued by this blog post, do not hesitate to reach out to me at bdouglass@easconsultinggroup.com.
Member Blog: How Cannabis Legalization In Minnesota Can Further Equality
Medical cannabis hasn’t always had a smooth go in the United States. Thankfully, as time has slowly started to change and viewpoints have shifted, cannabis legalization is finally gaining traction state-wide. While this is an incredible feat for so many different reasons, many states see long-term benefits of cannabis legalization much further reaching than anyone could have imagined.
Today, we’re talking about how cannabis legalization in Minnesota may actually help further equality and break down barriers that have long been deeply rooted. Let’s get started.
FIRST GLANCE:
Cannabis has a rocky history in the United States, with most negative stigma being racially charged.
This ideology lasted for decades until some states started decriminalizing and legalizing medical cannabis in the 80s and 90s.
Now, as cannabis legalization spreads, the divide between white Americans and POC in the industry is more prominent than ever.
Legalization can help further equality in states like Minnesota, but it requires holistic change from within communities.
With legalization may come fewer victimless crimes, resulting in lessened police presence, effectively leaving targeted communities feeling safer and more comfortable.
By supporting local Black or minority-owned dispensaries and working with local organizations, cannabis equality may progress in the ways that community members need — but the change will start with you!
Cannabis’s Rocky History
Quickly, it’s essential to understand the tumultuous history behind marijuana and just how far we’ve come as a society. However, seeing this rocky past also helps illuminate how much further we still have to go.
The cannabis plant has existed for millennia on planet Earth. Its therapeutic benefits have supported civilizations in spiritual, religious, and medicinal ceremonies across the globe. As this idea spread to Western societies, the plant was, at first, welcomed with open arms. At the start of the 20th century, all of this changed entirely in the United States.
During the Mexican Revolution from 1910-1920, many Mexican citizens fled their war-torn home country in search of a safer, more promising future. With this, the U.S. saw an influx of Mexican immigrants.
Throughout Mexico, enjoying cannabis for its recreational effects wasn’t a new idea. So, when citizens began migrating North, they also brought more normalized recreational cannabis use. At first, for those in the U.S. who already adored cannabis, this was incredibly exciting. But, for many in positions of power, class, and wealth, this type of cannabis use wasn’t going to fly. Thus came the Reefer Madness film and decades-long racially charged cannabis persecutions.
The Impact of Legalization and Equality
It took way too long, but the United States finally started getting on board with cannabis decriminalization and legalization back in the 80s and 90s. With this, the exposure to cannabis science became more extensive, and it was easier to see that the plant did (and still does) have some serious medicinal benefit. Seeing these facts caused a lot of opinions to change, resulting in an almost domino-like effect of cannabis legalization across the country.
Now, 36 states have legalized medical cannabis, allowing more people than ever access to the precious plant they love. But has this legalization impacted the people most disproportionately punished? Not really.
Still today, we see Black men arrested for cannabis crimes at disproportionately high rates, even though cannabis is legal in most states across the U.S. If anything, these legal changes have made the divide all the more evident, allowing the country to see just how horrific the cannabis industry can be for people of color. At the same time, it simultaneously celebrates white American consumers. This may help boost PR for big business, but it doesn’t help local (black-owned or otherwise) businesses on the ground. Legally or economically.
So, what can we do to change this? How can cannabis legalization help to further the progress we’ve made?
Legalization in Minnesota: How To Further Equality
I know, it sounds like we’re a bit cynical, but it’s crucial to bring up these divides before discussing how we can move further. The country often loves to praise all the beauty that the cannabis industry brings, forgetting the intense harm it has caused so many communities.
Let’s talk about Minnesota, for example. In May, it looks as though the state is going to vote to pass adult-use cannabis use. If this happens, here’s what could potentially occur in terms of furthering equality — but, at the end of the day, this change is up to you.
Realistically, the legalization of cannabis should help reduce the number of victimless crimes in the area, helping the community feel more at ease. With this, you would also expect a lowered number of consistent police presence in areas where cannabis use was a previous “problem.” Often, when communities of color experience increased and frequent police presence, this does not provide a sense of safety. Typically, it provides the opposite. Thus, legalizing cannabis in places like Minnesota may be able to create an environment that not only feels safer but feels more accepting of all residents. Feeling safe is great for business, big and small – but especially small. Reduction of victimless crimes and less police presence could really boost the state economy, and additionally enhance everyone’s sense of community and unity.
Furthering equality through the legalization of cannabis can be done, but the work goes much deeper than just on a legal level. As we’ve seen, just because the law says one thing, that doesn’t mean it applies to all groups of people. So, once legalization happens in Minnesota — or your state — the next steps are in your hands.
What’s Still Left To Do
Take the time to research Black and minority-owned dispensaries in your area and support these shops.
See if you have any local cannabis equality organizations that specialize in helping those who have been wrongly affected.
Educate others on the history of cannabis and why the subject can still be painful for POC.
With this, you’ll also understand how legalization is not an end-all-be-all solution. If we want to erase cannabis’s racially charged stigma, the answer is holistic: it starts with a community.
Mell Green is a content creator who believes that cannabis can help anyone achieve a life-enhancing experience. Her participation in the advocacy of the plant for the last several years has not only allowed her to create solid relationships with the world’s leading cannabis companies, but it has also helped her to educate and spread awareness on the power of alternative medicine.
CBD Oracle is a California-based online magazine dedicated to cannabis and CBD education. The company has made it its mission to provide specialized, expert advice to those who need it, publishing detailed, informative, and entertaining articles, guides, and reviews, all backed by the latest scientific studies and research.
Member Blog: How To Choose A Point Of Sale System For Your Cannabis Dispensary
The Canadian cannabis industry has witnessed great success since federal legalization in 2018. In the United States, 35 states authorize the use of medical cannabis, and 15 of them allow recreational marijuana consumption. Potential dispensary owners should bear in mind that the cannabis industry operates under strict laws and regulations that set this business apart from conventional retail operations. A robust point-of-sale (POS) system is one of the most important tools that a dispensary owner must invest in. However, it’s also crucial to remember that not all POS systems are created equal, and a cannabis industry-specific POS will always be a better choice than a generic POS. Following are some of the most important criteria that you should consider when selecting a cannabis POS:
Product Design and UX
A cannabis-specific POS created specifically to address the nuances and pain points of cannabis businesses is your best bet. A well-designed system helps you quickly process actual sales and facilitate better inventory management. An intuitive and easy-to-use system boosts the performance of your budtenders by making product information and customer data available to them on the fly, thus elevating the overall customer experience as well.
Compliance and Traceability
Compliance is the number one administrative burden dispensaries have to deal with because of the stringent laws and scrutiny the cannabis industry has to undergo. A well-executed cannabis-specific POS system empowers owners to stay compliant at every stage of their business. Most states in the US require tracking of inventory and sales through a state-mandated traceability system such as Metrc or BioTrack. Even among cannabis POS systems, the level of integration with the government tracking system varies, with many offering only batch reporting at the end of the day. Choose a POS that automatically sends every reported transaction in real-time to the tracking system, thus helping you minimize human errors and always stay fully compliant. Many legal cannabis markets also require digital age verification scanners for dispensaries to scan IDs at the point of entry. So ensure that your POS provider provides all these functionalities.
Reliability and Data Privacy
There have been instances of generic POS crashing when used by cannabis stores. Even popular cannabis-specific POS systems have had recurring performance issues. Learn more about each of the POS systems in consideration by reading reviews and customer stories to figure out how reliable they are. A cloud-based POS system entails storing data on remote servers operated and maintained by a third party. It poses a lower technical barrier to entry and is definitely a cost-effective solution, but you must ensure that your POS provider protects all your dispensary and customer data, as per government regulations.
Inventory Management and Reporting
A well-designed POS system offers inventory valuation and costing methods integrated into your POS to streamline your inventory management. A dispensary-specific POS will provide you the sales trends data you need to most accurately judge the weights, strains, and quantity of products you need to stock up. Many states in the U.S. expect you to have a clear paper trail on every legally grown gram of cannabis, from seed to sale, and your POS system must have efficient reporting capabilities for you to report that. Powerful analytics and a customizable mobile reporting dashboard will enable you to monitor the health of your store and submit reports in real-time from anywhere.
Hardware and Software Integration
How your dispensary POS integrates with your other services and technology is another factor. Consider all the physical hardware that is being used in various sections of your dispensary and whether the POS provider can sync them with its software. You will have to integrate your accounting, HR, workforce, and security software solutions with your POS as well to ensure smooth operations. In a fast-evolving industry, new platforms and innovative solutions can hit the market almost overnight, but you must only select a POS that seamlessly integrates just not with your hardware and software but also with online marketplaces like Leafly, Weedmaps, and Dutchie so that you can offer easy pickup and delivery services to your customers as well.
Product Development and Support
A cannabis-specific POS company that has extensive experience in the industry will remain an authority on the latest developments, and will regularly update its product to stay ahead of regulatory changes. Find out about the after-sales customer support system they have in place- many companies will help you launch quickly but will disappear when problems may arise and leave you to tackle software glitches on your own. Also, choose a dedicated system for your retail business that specializes in the cannabis sector you operate in and is not an all-in-one solution.
Scalability and Cost of Ownership
An enterprise-level POS allows you to manage stock across all stores, set up location-level pricing, perform bulk editing, and even assign granular employee security permissions. It gives you complete visibility and full corporate control of your business with centralized reporting- accessible from anywhere, on any device. A POS built for multi-location brands has a robust platform with open APIs to enable flexible, plug-and-play integrations for easy scalability. Choose a POS provider that has the cannabis industry expertise and the ability to grow with you. Even if you may have to pay a bit more upfront, you will benefit from the long-term ROI and reduce your overall cost of ownership.
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.
Cova designs and builds retail software solutions specifically for the cannabis industry. Our technology platform currently powers 20,000 retail stores and over 1000 cannabis dispensaries with virtually no downtime, even on 4/20, making us the most robust and reliable cannabis POS system available on the market. Our point of sale system and its suite of digital solutions make complex operations simple, so retailers can stay compliant, streamline their operations and deliver an amazing experience always.
Member Blog: 2021 Cannabis Compensation Survey Report Released!
We are pleased to announce the release of the 2021 Cannabis Compensation Survey Report. This second annual survey aggregates compensation data for cannabis businesses and ancillary services, establishing benchmarks to help those businesses better understand the market and stay competitive, all while following federal compliance regulations that guide the collection and dissemination of compensation survey data and results.
FutureSense and NCIA laid the foundation for the project in 2019 and released results for the inaugural survey at the end of that year. At the onset of the pandemic in early 2020, both parties took a step back to adjust their trajectories looking to enhance the scope and depth of the project. Marijuana Business Daily came on as a primary partner to assist with visibility and distribution. Green Leaf Payroll & Business Solutions came on as a supporting partner, providing the project with anonymized payroll data. NCIA has stayed on as an endorsing partner to promote the shared mutual interest of supporting cannabis businesses and the industry at large.
This year, the survey established benchmarks with reportable data for 98 unique positions, a jump up from the inaugural report, which included 78 positions. The benchmarking process also established more accurate job titles representing both specific job responsibilities as well as representing the scope and breadth of organizational structures within the cannabis industry. These benchmarks include close to 200 unique positions total that will be reported on as the project grows and more cannabis organizations participate and submit data in future years.
The final report also includes recent trends and observations connecting the data to anecdotal insights found through our work and involvement in the cannabis community. The final report also provides information about how to utilize the survey data and a “geo-differential” chart to inform making any adjustments by state. The results are presented as percentiles to show both central tendency and spread. They are meant to be used as ‘guideposts’ to help inform salary and wage decisions, rather than exact numbers to base those decisions on. Many factors can and should be taken into consideration when determining what and how to pay employees, but these results provide an accurate representation of what pay amounts can be.
As the survey evolves and more companies participate, the project plans to also produce results with demographic breakouts such as by region/location, industry sector, and company size; as well as data for benefits, incentives, and equity compensation. These are all very valuable insights but require more participation across the country to produce, per compliance regulations.
The results from the survey can be used across every facet of the cannabis business. Understanding not just how to pay your employees, but also how to attract, motivate, engage, and retain your employees through compensation can be make-or-break in this rapidly evolving industry. 60-70% of companies’ expenses are typically payroll; being even 5% on- or off-the-mark could mean thousands or hundreds of thousands of dollars lost or gained.
The survey’s success is contingent on participation. More and more companies are realizing the value of this information and the importance of transparency through 3rd party surveys. All submissions and their respective data are held in strict confidentiality. Abiding by the Department of Justice regulations, this survey produces anonymous and unbiased results.
The survey accepts organization-wide submissions for companies with ten or more employees at this time. Individual submissions are appreciated as anecdotal insights, but are typically not included in data calculation.
For any questions and/or to sign up for next years’ survey, please email matt@futuresense.com or visit: www.BlueFireCannabis.com
Matt Finkelstein is a consultant with BlueFire Cannabis by FutureSense. He has worked in the management consulting world since 2007 while also pursuing a passion for and career in organic farming. His farming experiences span across the many facets of the cannabis industry, lending itself to unique perspectives supporting his current work bringing FutureSense’s services to the cannabis industry and its community.
BlueFire Cannabis is the cannabis-forward division of FutureSense LLC, a management consulting firm providing holistic people strategies that improve business performance. Our specialties include business strategy, motivation and rewards, executive, employee and sales compensation, organizational and individual assessment, leadership development and coaching, human resources, communications, change and sustainable transformation. For more information, please visit www.BlueFireCannabis.com and www.FutureSense.com
Member Blog: A Fire Under Cuomo Lights the Way — 5 Things To Know About Adult-Use Cannabis in New York
By Charles J. Messina, Esq., Jennifer Roselle, Esq. and Donald W. Clarke, Esq. of Genova Burns LLC
After several failed attempts, and seemingly the result of catching significant political heat as of late, Governor Cuomo is allowing the adult-use cannabis industry to blaze forward in New York.
With Gov. Cuomo’s signature, the bill (S.854-A), known as the “Marihuana Regulation and Taxation Act” (MRTA), establishes the legislative foundation upon which a regulatory infrastructure will be built to host a network of licensed operators to cultivate, process, distribute, sell, and host cannabis consumers. In addition to regulating adult use of cannabis, MRTA also amends the state’s existing medical use law (the New York Compassionate Care Act) and provides, among other things, rules for hemp, CBD, and other cannabis extracts.
What does MRTA mean for New Yorkers?
First, adults may personally possess up to 3 ounces of plant cannabis (and 24 grams of “concentrated cannabis”) without being prosecuted or arrested. In addition to decriminalization, the law also expunges convictions based on conduct which is now authorized under MRTA.
Unlike New Jersey’s recently approved cannabis legislation, consumption of cannabis will be permitted in the same (or similar) places as vaping and cigarettes. Also, New Yorkers will be able to grow their own cannabis. Although “home grow” will be delayed for months until after more rules are promulgated and retail sales commence, a household will be able to grow a maximum of up to twelve plants (six mature, and six immature), with a five-pound possession limit for adults.
Throughout MRTA, there is a heavy focus on social and economic equity. This is integrated in the application process, apportionment of tax revenue, and adjustments made to the penal code. Certain applicants can qualify as a “social and economic equity applicant” to help the Office of Cannabis Management reach its goal of awarding 50% of licenses to minority or woman-owned business enterprises, distressed farmers, or service-disabled veterans.
What is the Office of Cannabis Management?
Similar to New Jersey, the law’s terms will be supplemented by not-yet-created regulations. The regulatory framework will be created by a cannabis Advisory Board and carried out by the newly established Office of Cannabis Management (OCM). The OCM will be an independent office operating as part of the New York State Liquor Authority. It will have a five-member board, with three members appointed by the Governor and one appointed by each house.
What types of licenses are there and when will sales get rolling?
Because much of the regulatory licensing framework does not yet exist, there is no established start date. Reports suggest sales could commence as early as December 2022. Home-growers for recreational use must wait no less than 18 months after the initial retail sales to plant their seeds. The tiered licensing structure prohibits those upstream in the production process from selling to the general public.
The available licenses include:
*Cultivator License—includes the agricultural production of cannabis and minimal processing and preparation.
*Processor License—includes blending, extracting, infusing, packaging, and preparing cannabis for sale. There is a limit of one license per processor, but each license can authorize multiple locations.
*Distributor License—authorizes the acquisition, possession, distribution, and sale of cannabis from a licensed cultivator or processor to retail dispensaries and on-site consumption sites.
*Retail Dispensary License—authorizes the sale of cannabis to consumers, with a limit of three retail dispensary licenses per person. A retail licensee may not also hold a Cultivator, Processor, Microbusiness, Cooperative, or Distributor License.
*Cooperative License—authorizes the acquisition, possession, cultivation, processing, distribution, and sale from the licensed premises of the cooperative to distributors, on-site consumption sites, and retail dispensaries, but not directly to consumers.
*Microbusiness License—authorizes limited cultivation, processing, distribution, delivery, and dispensing of the licensee’s own adult use cannabis and cannabis products. A microbusiness licensee may not hold any other license, and may only distribute its own products to dispensaries.
*Delivery License—authorizes the delivery of products by licensees independent of another license.
*Nursery License—authorizes the production, sale, and distribution of clones, immature plants, seeds, and other agricultural products used specifically for the planting, propagation, and cultivation of cannabis by cultivators, cooperatives, and microbusinesses.
*On-Site Consumption License—authorizes the establishment of a location for the on-site consumption of cannabis.
How will cannabis be taxed in NY and where is the revenue going?
MRTA places the tax on cannabis based upon the amount of the chemical compound that delivers effects to users (THC). There will be a 9% state tax at the retail level. A local excise tax will be 4% of the retail price. Counties will receive 25% of the local retail tax revenue, and 75% will go to the municipality. Municipalities can, however, enact legislation to opt out of permitting retail dispensaries or on-site consumption licenses within its borders.
MRTA mandates that 40% of the estimated $350 million in tax revenues will go to community grants and reinvestment, and 20% will go to drug treatment and education. The final 40% is earmarked for schools as of now.
What will be the impact on NY employers and employees?
Employers have no legal obligation to permit adult-use cannabis in their workplace. In addition, while offsite usage is protected, the law includes provisions that allow employers to take action against employees who are impaired at work if their performance is lessened, or the employee’s conduct interferes with the ability to provide a safe and healthy workplace. Employers may likewise act to comply with local, state, or federal laws or allow conduct that would result in loss of a federal contract or federal funding.
Charles J. Messina is a Partner at Genova Burns LLC and Co-Chairs the Franchise & Distribution, Agriculture and Cannabis Industry Groups. He teaches one of the region’s first cannabis law school courses and devotes much of his practice to advising canna-businesses as well as litigating various types of matters including complex contract and commercial disputes, insurance and employment defense matters, trademark and franchise issues and professional liability, TCPA and shareholder derivative actions.
Jennifer Roselle is Counsel with Genova Burns LLC and Co-Chair of Genova Burns’ Cannabis Practice Group. She has unique experience with labor compliance planning and labor peace agreements in the cannabis marketplace. In addition to her work in the cannabis industry, Jennifer devotes much of her practice to traditional labor matters, human resources compliance and employer counseling.
Donald W. Clarke is Counsel at Genova Burns LLC and a member of the firm’s Bankruptcy, Reorganization and Creditors Rights and Cannabis Law Groups. He has extensive experience with complex restructuring matters and a comprehensive understanding of federal, state, and local laws, including regulatory requirements, across all industries. This experience has enabled Mr. Clarke to assist clients with their navigation of such regulatory schemes outside of bankruptcy, including in the space of cannabis law.
For over 30 years, Genova Burns LLC has partnered with companies, businesses, trade associations, and government entities, from around the globe, on matters in New Jersey and the greater northeast corridor between New York City and Washington, D.C. We distinguish ourselves with unparalleled responsiveness and provide an array of exceptional legal services across multiple practice areas with the quality expected of big law, but absent the big law economics by embracing technology and offering out of the box problem-solving advice and pragmatic solutions.
Given Genova Burns’ significant experience representing clients in the cannabis, hemp and CBD industries from the earliest stages of development in the region, the firm is uniquely qualified to advise investors, cultivators, processors, distributors, retailers and ancillary businesses.
Member Blog: The Responsibility of Cannabis Companies to Further Equality
Currently, in the cannabis industry, we find ourselves in a unique position. We are at an important crossroads of policy changes, advocacy efforts, and business opportunities. Within the dynamics of cannabis legalization, certain people seized new market openings, while others scramble to get a foothold in the business.
As legal cannabis continues to normalize, we must ask ourselves whether the industry affords everyone equal opportunities. While certain U.S. states have established social equity programs within their cannabis laws, many people don’t feel it is enough to correct the current imbalances.
Entrepreneurs and professionals alike are asking essential questions about our responsibility to minorities in cannabis. This movement is an excellent opportunity for cannabis businesses to help shape the industry’s future in a way we can be proud of.
The Consequences of the War on Drugs
The imbalances of equality in cannabis can be traced back to the War on Drugs. Since the War on Drugs was enacted in 1971 by President Nixon, it has had detrimental impacts on minority communities.
Increased drug arrests in minority populations are not the result of increased drug use. The nonprofit Brookings Institution tells us, “All along, one consistent target for the nation’s cannabis laws [in the War on Drugs] were communities of color. Despite cannabis usage rates between whites and non-whites being similar, Black Americans were arrested for cannabis offenses at a rate of nearly 4:1, compared to whites.”
For many, it is difficult to comprehend how impactful these cannabis convictions have been on minorities. Many families have suffered for a generation due to the head of household going to prison for cannabis crimes. In these unfortunate situations, there is no opportunity to spread the intergenerational wealth enjoyed by most families.
Status of Social Equity in the Cannabis Industry
From the outside looking in, it is easy to assume the cannabis industry offers equal opportunities. However, if you peer just beneath the surface, you will find several elements at play that keep minorities from starting cannabis businesses. Due to these factors, only 1 in 5 cannabis businesses today is owned by minorities.
In nearly all cannabis markets in the U.S. states, strict laws prevent people with drug convictions from applying for business licenses. Yet, we have already established that far more minorities than whites get arrested for cannabis. This fact immediately creates a lopsided pool of applicants that favors white people as the winners of cannabis business licenses.
Another factor that has led to imbalances in the cannabis industry is that white people are better off financially than minorities. This can be a real handicap, as cannabis businesses are costly to start. To illustrate, MJBizDaily gives us the following cannabis business startup costs:
$2,500,000 – Vertically integrated dispensary
$500,000 – Cannabis processing facility (MIP)
$312,000 – Stand-alone retail dispensary
As can be seen, it takes serious capital to finance a new cannabis business. Yet, many minorities do not have access to this sort of funding. This fact is partially attributable to the damage done in minority communities by the War on Drugs.
State Mandated Social Equity Programs in Cannabis
The early pioneers of legal cannabis did not anticipate the social inequalities that would arise in the industry. However, as places like Washington and Colorado have had functioning industries for over five years, we can now take a more granular perspective on the market.
As imbalances in social equity are now recognized across the industry, individual U.S. states are enacting legislation to help “level the playing field” for minorities. The states taking meaningful steps for social equity in cannabis include New Jersey, Virginia, California, Illinois, Massachusetts, Michigan, Maryland, Ohio, and Pennsylvania.
The breadth and scope of social equity programs in cannabis vary from state to state. To illustrate, California has established an initiative that provides financial support and training to minority cannabis business owners. Also, Michigan, Illinois, and Massachusetts have put controls on the application process to give minorities better chances to win licenses.
Charitable Efforts & Business Groups
While state-mandated social equity programs are a big step forward in cannabis, there is still a lot of work to do. To this end, modern cannabis professionals have taken it upon themselves to start dialogues about social equity. Even more, these people have branched out to join nonprofit groups and business organizations which promote social change in cannabis.
Last Prisoner Project is a particularly impactful nonprofit that seeks to overturn unjust cannabis convictions. Their team is composed of lawyers and legal experts – the organization also enjoys support from such cannabis icons as Jim Belushi and Steve DeAngelo. For their part, Women Grow spreads the message of equality in cannabis by empowering females. They are focused on connecting different women in the cannabis space to create powerful alliances.
Company Ethics and Hiring Practices
To truly affect change in the social fabric of cannabis, businesses must also take proactive measures within their operations. By promoting racial sensitivity within your business, you help plant the seeds of change in your employees and customers.
To help your employee team better appreciate people from other backgrounds, we recommend enrolling them in diversity training. According to Cornell University, “An organization is only as good as its culture — and abiding that culture is not only a role for HR, it’s every manager’s and employee’s responsibility.” Diversity training is a great way to promote equality within your company culture. Specific training programs also educate your HR department on non-discriminatory hiring practices.
Summary
In the few short years that we have had legal cannabis, the industry has taken some fantastic strides. While it seems that the fight for legalization has finally swung in the right direction, there is still a good deal of work to do concerning social equity.
It is going to take a concerted effort to equalize opportunities for minorities in the cannabis industry. This process starts with addressing unjust cannabis convictions on a societal scale, and cannabis business HR departments must embrace these changes.
Lissa Lawatsch currently serves as the General Manager of CLS’ Nevada retail subsidiary, Oasis Cannabis Dispensary. A Colorado native and graduate of Metropolitan State University of Denver, Ms. Lawatsch has served the Las Vegas market for 18 years. With 20 years of VP-level experience in the banking and finance sector, Ms. Lawatsch synthesized her business acumen with her passion for cannabis to effectively launch and manage several brands and retailers in the Nevada market for the last 5 years.
Committee Blog: Fundraising Basics in the Cannabis Industry
So, you discovered a pain point in the cannabis industry while brushing your teeth. You go on to craft a business plan and begin to execute on a minimal viable product to prove your hypothesis and test the market interest in your product. To date, you have funded this by volunteering your time and convincing some other contacts to contribute their time as well. You still have your full-time job, but it’s time to create a formal entity and grow this thing. How are you going to fund this? Well, there are some options and some of them have greater odds depending on your demographic. Are you considered ‘touching the plant” or not? Are you male or female? Are you a person of color or not? Do you have a track record of building businesses and raising funds?
Unfortunately, the data shows that it’s much more difficult to raise funds from angel and VC investors if you are a female or person of color. The following statistic is actually based on the traditional market, so level up the challenge if you are in cannabis:
“Venture dollars invested in sole female founders in 2020 represented 2.4 percent of overall venture funding… the percentage of U.S. venture dollars that went to sole female founders in 2020 dropped dramatically by stage. At the seed stage, 7 percent of VC dollars went to startups with only female founders. At the early stage, that figure was 4 percent, and at the late stage, a mere 1 percent.” – Crunchbase News.
Fortunately, the cannabis investment industry has approached this issue with several new funds and structures. We will touch on that later in this series.
Does your idea involve ‘touching the plant’? Currently, cannabis is illegal at the federal level. This comes with a whole host of challenges and opportunities. With federal illegality comes the opportunity for a startup to solve a problem before the more established, traditional market entities are willing to enter the industry. If you build it well enough, you are likely to be acquired once the market opens up. But you will have to deal with lack of access or restricted access to banking and processing, the IRS and 280E, the certainty of audits, and working within the boundaries of your state’s regulatory structure.
Now you have an idea, so, how to fund? Well, the first thing anyone considering investing in you wants to know is, what is your investment in yourself? Do you have savings, credit cards, personal real estate? For the earliest stages, this is often the first step. This is the “three peeps and a PowerPoint stage” — ideas and iteration come fast. There is no real cost for you to walk away. It is on your dime. You are living off of your day job and everyresource you can apply for This shows commitment and the effort will be a key to demonstrating value in the future. Be scrappy.
You will also need to establish a banking relationship. If you are touching the plant this can be quite the struggle. Federal banks have to comply with the KYC – or Know Your Customer – rules and most are unwilling to take on the extra tasks and time it takes to manage a cannabis account and file Suspicious Activity Reports (SARS). Be ready to navigate the business world in cash – which includes security and safety and paying your taxes. Many local-based credit unions are rising up to the challenge, but that often involves extra, costly fees. And even if you are ancillary, if you choose a “green” enough name you are exposing yourself to having your account closed. This goes for processing too. It really behooves you to be as honest and clear about what you are doing and establish a relationship with your banker. NCIA has successfully advocated for the SAFE (Secure and Fair Enforcement) Banking Act (S. 1200, H.R. 2215) which provides a safe harbor to financial institutions doing business with state-legal cannabis providers. It sits in the Senate after having passed the House twice now, although now a new House version will still need to be approved.
As your concept solidifies, its demands of capital increase, with personal, social, business, and financial needs starting to grow past what you can provide alone. You need help. If you have a buddy willing to put an LLC together for you, that’s bootstrapping. If she wants something in return, you are at friends and family time. This is a good stage to build your early financial network and can really help with those next steps. This is a small round of insiders and is as much about personal capital as financial capital. A friend and family round is a direct contact on your part, and those relationships you made in the boot-strapping are good places to start. These early champions will build your social capital as they talk positively about you. Being a small group also creates scarcity. These subtle behaviors will help your valuation when it comes time for that. A good friend and family round will get you off to a right start with the resources for securing an accountant and other professional services to determine the right way to structure your company.
For these early funding stages, bootstrapping and friends and family funding demonstrate your validity as an investable partner for later rounds. No matter your hurdles, starting your fund journey on the right path will pay off down the road.
In our next blog, we will discuss funding options such as debt, angels, and venture capitalists, and where to find them.
Member Blog: Sleep-Focused Brands Are Seeing Bottom Line Dividends
Nearly 40% of the nation’s top 100 CBD brands focus on need states. Chief among them is sleep, something the American Academy of Sleep Medicine (AASM) reports that 85% of Americans are falling far short of.
The 7.2 million sleep-related Google searches logged this past year provide ample evidence of interest. according to NBC News, which reports that 9 million Americans take prescription drugs to help them fall asleep.
Others prefer more natural solutions.
Nearly 11 million rely upon CBD and/or cannabis-based products to manage insomnia or sleeplessness, according to a 2021 report issued by High Yields Insights. Among them, almost 70% are women considered statistically more likely to suffer from insomnia.
YOUNG AND RESTLESS
Millennials are driving the bulk of market growth. Together, with a smaller percentage of Gen Z consumers, these severely stressed consumers represented 48% of the U.S. CBD market in the fourth quarter last year, according to High Yields Insights President Mike Luce.
Regardless of age or gender, brands like CBDfx are discovering that an ever-increasing number of their customers are using CBD to treat sleep-related issues. The Brightfield Group reports more than 58% of CBDfx customers purchased sleep products in the fourth quarter.
Collectively, 40% (4 in 10) of consumers, rely upon CBD to manage insomnia or sleeplessness, according to a recently issued High Yield Insights and InnovateMR 2021 sleep trend report.
FIGHTING FOR SLEEP
Growing pandemic-related uncertainty, anxiety, and associated sleep deprivation issues have kept sleep specialists like Colorado-based Pulmonologist Dr. Julie Whitaker, struggling to manage ever-increasing patient loads.
“We’re not seeing everyone we should,” says Dr. Whitaker, who sees the need to elevate the understanding of the importance of sleep, particularly among Americans.
The pandemic helped to elevate awareness of the importance of good sleep and has softened the momentum of the “sleep is for suckers” mantra, according to the pulmonologist.
CBD and cannabis brands are seeing significant growth, most notably among 25 to 35 year-olds. Although millennials dominate the growth trends, one brand reported moms 40 – 50 years of age are among its fastest-growing demographic.
Veterans, known to experience higher levels of insomnia (57% veterans) than the general population (30%), face elevated pandemic-related risks. Among veterans with Post-traumatic stress disorder (PTSD) or a traumatic brain injury (TBI), the rates are even higher — 93%, according to the Department of Veteran Affairs in San Diego.
Sleep specialists, like Whitaker, are particularly concerned about the stress levels in at-risk populations, particularly women- and veteran-headed households, whose support needs are more imminent.
When it comes to sleep, routines are important, according to the specialist who recommends patients develop healthy and consistent sleep routines, avoid consuming alcohol and OTC products known to disrupt sleep cycles, particularly antihistamines known to disrupt healthy sleep patterns.
CBD AND CANNABIS EFFICACY GROWING
In regard to other solutions, Dr. Whitaker says there’s “reasonable scientific evidence,” that CBD, particularly when combined with a small amount of THC, can help promote sleep.
Two in five working moms use cannabis, according to a newly minted survey released by San-Francisco analytics firm Lucky Analytics.
Women are helping cannabis brands like Ganja Goddess achieve record-breaking triple-digit sales growth. The cannabis company reports a 635% increase in its sleep lines last year, according to its SVP of Marketing Heidi Genrich.
Gummies provide a popular entry point, according to Incredible Edibles Brand Director Jessica Benchetrit, whose company helps make cannabis more accessible via entertaining and informative educational sessions.
“Consumers are looking for an enhanced sleep experience, says Benchetrit. “The majority (78%) are actively seeking out ‘indica-like’ edibles.
Incredibles’ Snoozzzeberry gummies climbed to the number one infused gummy product in the markets it sold in, during the fourth quarter of last year, according to BDS analytics reports.
REVEALING RESEARCH
A 2019 study published in the Journal of Alternative and Complementary Medicine, found cannabidiol (CBD) improved the sleep quality and reduced nightmares of 38% of the participants, all of whom had PTSD.
Joseph Maroon, M.D., a clinical professor and neurosurgeon at the University of Pittsburgh Medical Center who has researched the effect of cannabis on the brain, says that CBD has properties that could help some people sleep better. Most notably, he says, it appears to ease anxiety and pain, both of which can make it harder to fall asleep or stay asleep, according to a published statement in Consumer Reports.
“CBD is safe,” says Dr. Daniel Clauw, an internationally known pain expert and head of the University of Michigan Director of Chronic Pain and Fatigue Center, who frequently collaborates with the Arthritis Foundation on education efforts.
Among sleep associations, the American Sleep Association has indicated that cannabis may help induce sleep in people with insomnia, anxiety or post-traumatic stress.
A MEANINGFUL IMPACT
“People are interested in better ways to relax at the end of the day,” says Ginrich. “And they are increasingly concerned about safeguarding their well-being over the long term.
“Stress and anxiety are not going away, so products and rituals that help people sustainably manage these pressures are in high demand,” adds the Ganja Goddess Marketing Director.
We all have a role to play in helping put America’s sleep issues to bed.
Author Jackie Berg is the publisher of the Health Hub, a publication division of CBD Marketing Hub, as well as the publisher of TheHUB Detroit, TheHUB Flint and recipient of the Association of Women in Communications 2018 Vanguard award. To learn more CBD Marketing Hub, a cultivator of CBD and cannabis clients, visit its website or reach out at hello@cbdmarketinghub.com.
Committee Blog: National and International Standards & Regulatory Bodies Relevant to the Cannabis Industry
by NCIA’s Facilities Design Committee
The cannabis industry benefits from the accumulated knowledge and established standards developed by many of the organizations listed here. Understanding the regulatory ecosystem is essential for cannabis operators as well as for those who strive to shape the regulatory future of the cannabis industry.
Listed below are some of the major regulatory bodies and standards agencies that have some relevance to the cannabis industry.
The American Herbal Products Association (AHPA) was founded in 1982 to promote the responsible commerce of herbal products to ensure that consumers continue to enjoy informed access to a wide variety of herbal goods. Their seminal Herbs of Commerce (HoC) (first published in 1992) was officially incorporated by the US Federal Government into the Code of Regulations (21 CFR 101.4) establishing consistent naming of botanical ingredients for dietary supplements. With precedent for federal recognition, their active Cannabis Committee is actively paving the path for safe and consistent use of cannabis products.
The American Society of Agricultural and Biological Engineers (ASABE) is an educational and scientific organization dedicated to the advancement of engineering applicable to agricultural, food, and biological systems. ASABE develops standards through its standards committees. Relevant cannabis committees include:
ES-300 Energy Utilization & Application: Leads and coordinates the activities of ASABE in matters related to electro-technology as related to agriculture energy efficiency, electrical wiring systems, and electrical utility programs.
ES-310 Ag Lighting Group: Leads and coordinates the activities of ASABE in matters related to agricultural lighting systems (combined with ES-311 Electromagnetic Radiation Application for Plants)
The ASABE Standards Committee ES-311 X644 Working Group is developing Draft Standard ASABE X644 Performance Measures of Electromagnetic Radiation Systems for Plants.
ASABE Plants, Animals, and Facilities Systems (PAFS) Technical Community is working with ASHRAE (through its Plant and Animal Environment technical committee) to develop x653 related to HVAC and lighting for indoor plant growth without sunlight.
American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE) is a professional organization seeking to advance HVACR systems and design.
The ASHRAE Multidisciplinary Task Group coordinates technical activities related to the design of indoor plant production facilities and their HVAC&R systems and considers deliverables created by Technical Committees like:
Technical Committee 2.2 on Plant and Animal Environment (concerned with the relationships of environmental conditions and the growth, health, and reproduction of plants and animals).
Link to standards relevant to cannabis production:
Established in 1898, ASTM International formerly known as the American Society for Testing and Materials is a globally recognized leader in the development and delivery of voluntary consensus standards. Working in an open and transparent process and using ASTM’s advanced IT infrastructure, our members create the test methods, specifications, classifications, guides, and practices that support industries and governments worldwide. ASTM Committee D37 on Cannabis has 1,000 stakeholders from 30 countries working together to advance the industry by addressing quality and safety through consensus standards.
Examples of standards that have already been approved for the cannabis industry use include:
D8250 Standard Practice for Applying a Hazard Analysis Critical Control Points (HACCP) System for Cannabis Consumable Products
D8222 Standard Guide for Establishing a Quality Management System (QMS) for Consumer Use of Cannabis/Hemp Products
D8197 Standard Specification for Maintaining Acceptable Water Activity (aw) Range (0.55 to 0.65) for Dry Cannabis Flower Intended for Human/Animal Use
The Design Lights Consortium (DLC) is a non-profit organization that promotes high-quality lighting solutions in collaboration with utilities and others and establishes standards for different lighting types.
The European Hygienic Engineering & Design Group (EHEDG) was founded in 1989 as a non-profit consortium of equipment manufacturers, food producers, suppliers to the food industry, research institutes and universities, public health authorities, and governmental organizations.
The EHEDG mission is defined as:
“Raise awareness of hygienic engineering, develop guidance and solutions, and provide a platform to promote EHEDG expertise that facilitates networking between hygienic engineering experts from around the world.”
EHEDG actively supports European legislation, which requires that handling, preparation processing, and packaging of food is done hygienically using hygienic machinery and in hygienic premises according to the food hygiene directive, the machinery directive, and the food contact materials directive (see EC Directive 2006/42/EC for Machinery, EN 1672-2 and EN ISO 14159 on Hygiene requirements for the design of machinery). While EHEDG is European Initiative, the EHEDG Certification Logo is becoming more widely seen on food processing equipment sold in the US as a product differentiator, offering assurances of sanitary design, cleanability, sterilizability, and bacterial tightness. It is considered more stringent than other stamps or marks. Auditors or Regulators who might be inspecting a cannabis facility, if they understood this Certification Logo, should have an impression that the operator has invested in more hygienic equipment.
ENERGY STAR® is the government-backed symbol for energy efficiency. With oversight from the Environmental Protection Agency, this program certifies the energy usage and energy efficiency of products, homes, buildings, and industrial plants. By using a common set of metrics objectively applied across categories, companies and end-users can make comparative decisions based on energy efficiency.
In many localities, the use of ENERGY STAR® certified products or achieving certification for a building or industrial plant may qualify for rebates from local utility companies. Cannabis company eligibility to participate in these programs will vary depending on local laws, products in use, and rebates offered by local utility companies.
Founded by Thomas Edison in 1896 as the Lamp Testing Bureau and renamed to the Electrical Testing Laboratories (ETL) in 1904, ETL certifications demonstrate compliance to the requirements of widely accepted product safety standards, as determined through independent testing and periodic follow-up inspections by a Nationally Recognized Testing Laboratory (NRTL). The company is now known as Intertek.
The ETL Listed Mark indicates to distributors, retailers, and customers that a product has been tested by Intertek and found in compliance with accepted national standards. Acceptance of ETL certification varies by locality though it is widely recognized across the United States and Canada.
The U.S. Food and Drug Administration (FDA) oversees the safety of all food, drugs, medical devices, and cosmetics in the United States through the Federal Food, Drug, and Cosmetic Act of 1938. Despite the current status of cannabis as a Schedule I controlled substance, the guidance provided for analogous products, particularly current Good Manufacturing Practices (cGMPs) align with global best practices that industry can follow to ensure product quality and integrity as well as prepare for potential federal legalization. Resources on the current approval process and research pathways have been published by the FDA on their page: What you need to know about cannabis compounds, CBD, cannabidiol, products containing cannabis, scientific data, development & approval process, and much more!
Some states require compliance with The FDA Food Code in their cannabis regulations, but some reference 2013, some 2017. The next issue is expected in 2021. Be aware that The Food Code is for retail and foodservice segments of the industry. Many in the cannabis sector anticipate that when Cannabis is legalized at the federal level, FDA will apply the regulatory approach suitable to manufacturing, such as:
21 CFR 111 Current Good Manufacturing Practice in Manufacturing, Packaging, Labeling, or Holding Operations for Dietary Supplements
21 CFR 117 Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventive Controls for Human Food
This is a very complex topic, and depending on how the sector for THC and CBD products evolve and how the products are sold and labeled. Other regulations may become relevant, such as:
21 CFR 211 Current Good Manufacturing Practice for Finished Pharmaceuticals.
The Global Food Safety Initiative (GFSI) is a private organization that oversees and approves different auditing platforms as meeting their criteria for safe food processing. This criterion provides a universal gold-standard of recognition to specific food safety audits. There are currently 10 global GFSI schemes that can award certifications. Cannabis eligibility for certification varies based on scheme and jurisdiction. Some states are requiring a GMP audit, “such as GFSI” in their cannabis regulations.
GLOBALG.A.P is a globally-recognized certification program that began as EUREGAP in 1997 to help the supermarkets in Europe address consumer concerns about the safety of agricultural practices and products. GLOBALG.A.P. is the world’s leading farm assurance program, with over 100 countries following the requirements of Good Agricultural Practices (G.A.P.). It focuses on globally accepted criteria for food safety, sustainable production methods, worker and animal welfare, and the responsible use of resources such as water, compound feed, and plant propagation materials. As of 2020, they have begun a feasibility assessment of bringing their G.A.P certification program to the cannabis industry. Cannabis and hemp businesses that are focused on cultivation of the plant would greatly benefit from incorporating these global best practices into their operation.
The Illuminating Engineering Society (IES) is a community of lighting experts seeking to improve the lighted environment by bringing together those with lighting knowledge and by translating that knowledge into actions that benefit the public.
The IES Horticultural Lighting Technical Committee researches and develops best practices for horticultural lighting using climate-based annual daylighting and electric lighting with lighting and shading controls, with a focus on greenhouses, vertical farms (plant factories), and building atria.
The committee produces Recommended Practices documents, including one for professional lighting designers who are tasked with horticultural lighting.
The International Organization for Standards (ISO) is an independent, non-governmental international organization with a membership of 165 national standards bodies that was established in 1946. Today, it has nearly 800 technical committees and subcommittees that manage the standards development process.
ISO standards focus on the business management of an organization and how information and data are reported and responded to. Some of the most common ISO standards relevant to the cannabis space are:
ISO/IEC 17025 – General Requirements for the competence of testing and calibration laboratories
The National Sanitation Foundation (NSF) originally brought together key stakeholders back in the 1940s to develop the first consensus standards for restaurant equipment sanitation. Public health inspectors liked what they saw, and began requiring product certification to NSF/ANSI standards. Currently, many states approach cannabis regulation from a foodservice perspective and the NSF Mark is desirable for equipment in the Cannabis processing room, such as sinks, rolling stock, dishwashers, and if available for cooking and packaging equipment. Even when cannabis is legalized at the federal level and the FDA regulates following Food Safety Modernization Act regulations from 21 CFR, the NSF Mark will continue to provide assurances of the sanitary design of much of the equipment used to produce Marijuana Infused Products (MIPS) However, after federal legalization, Certifications from the manufacturing perspective, such as 3-A or EHEDG, will become, most likely, more relevant.
With the Occupational Safety and Health Act of 1970, Congress created OSHA, the Occupational Safety and Health Administration, to assure safe and healthful working conditions for all workers by setting and enforcing standards. Additionally, OSHA provides training, outreach, education, and assistance. With steep fines that can exceed $50,000 for repeat violations, this commonly overlooked agency actively inspects cannabis facilities in all states. A free Guide to Worker Safety and Health in the Marijuana Industry was developed by a State of Colorado workgroup that cannabis businesses, regardless of state, can utilize.
Resource Innovation Institute is a non-profit research and advocacy organization providing guidance and data for cultivators and their project partners to use to optimize facilities for efficiency and productivity.
Cannabis PowerScore, RII’s resource benchmarking tool, is both a voluntary performance ranking system and in some jurisdictions where benchmarking is required PowerScore is also specified as a way to report energy and water information to regulators.
UL LLC (formerly known as Underwriters Laboratories) is a global safety certification company approved by the Office of Occupational Safety and Health Administration (OSHA) as a Nationally Recognized Testing Laboratory (NRTL).
The UL Listed seal means that the product has been tested by UL to nationally recognized safety and sustainability standards. Additionally, it has been found to be free from a reasonably foreseeable risk of fire, electric shock in a Division 2 environment.
U.S. Department of Agriculture (USDA) has had a significant impact on the cannabis sector through the 2018 Farm Bill, which provided authorization for the USDA to oversee the cultivation of cannabis containing no more than 0.3% THC (i.e. hemp / CBD biomass).
Additionally, the USDA would most likely be involved after legalization if Cannabis producers decided to launch Cannabis-infused meat products. So far this has not happened and the regulatory impact would be difficult to anticipate.
The U.S. Green Building Council (USGBC) is a non-profit organization that promotes high-performance buildings through the creation of voluntary certification systems for projects and credentialing programs for professionals.
The third-party green building certification Leadership in Energy and Environmental Design (LEED), is the most widely used green building rating system for commercial buildings.
The Green Business Certification Inc (GBCI), implements the LEED Accredited Professional (LEED-AP) program to support the construction of LEED-certified buildings.
The US Pharmacopeia, formed in 1820, is an independent, scientific, nonprofit public health organization devoted to improving health through the development of public standards for medicines, food ingredients, and dietary supplements, and related programs. Over 150 countries recognize the standards set by the USP, with more than 40 integrating USP standards into law. The USP formed a Cannabis Expert Panel in 2016 to support the industry with data-driven recommendations on cannabis quality attributes for human use. The 2020 paper on Cannabis Inflorescence for Medical Purposes: USP Considerations for Quality Attributes (Sarma et al., 2020) is available for download.
The International WELL Building Institute™ (IWBI™) has created the WELL Building Standard is a standardized metric for buildings, interior spaces, and communities seeking to implement, validate, and measure features that support and advance human health and wellness.
WELL was developed by integrating scientific and medical research and literature on environmental health, behavioral factors, health outcomes, and demographic risk factors that affect health with leading practices in building design, construction, and management.
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.
The total energy costs for indoor cannabis grow operations typically vary between 20%-50% of total operating costs (approximately 120-150 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 well 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 Bypass 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 Integral Hot Gas Reheat AHU, the cooling coil serves as a dehumidifier, by cooling the air thereby reducing its moisture/latent load (we highly recommend 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 the Integral Hot Gas Bypass AHU 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 maximum temperatures around 70-75F and limit relative humidity to a maximum of 50 percent, but by allowing slightly higher maximum room temperatures of 75-80F, with corresponding relative humidity increases, we can create identical VPDs. 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 grower’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 a $1,300,000 savings in the first 5 years.
Jason Magnuson is the Director of Business Development at mintropy. Mintropy is an MEP (Mechanical, Electrical, Plumbing) Engineering Design firm, with a focus on Indoor Cultivation Facility and Dispensary design. At mintropy, we strive to minimize entropy (minimize disorder) in building systems, by creating innovative and efficient designs to meet our client’s needs. For assistance in your cultivation facility, be it auditing/upgrading existing systems or designing new, reach out to us today.
Committee Blog: Crafting a COVID-19 Vaccination Policy for Your Cannabis Company
By NCIA’s Human Resources Committee
COVID-19 vaccine policies are just the latest challenge for employers as the world continues to adapt to life after coronavirus. COVID-19 has forced employers to be much more actively engaged in monitoring our employees’ health and your company’s approach to a vaccine policy may continue to reflect the unusually intimate partnership between employers and employees in protecting the health of our communities.
Business owners may be eager for operations to return to normal after nearly a year of intense focus on disruptive business practices made necessary while we responded to the COVID-19 pandemic and its implications for the workplace. While a widely vaccinated public has been promoted as the light at the end of this tunnel, over a third of Americans are reluctant to get the vaccine. This is where employers can make a difference in the trajectory of our national vaccine project by encouraging, and even requiring, employees to be vaccinated. Cannabis industry operators should be especially concerned about crafting a careful approach to vaccine policy as many of our workers have been declared essential throughout the pandemic and we provide services to some of the most vulnerable in our communities including those with chronic illness, the elderly, or those with compromised immune systems. Yet, in many states, cannabis business owners and human resources departments continue to struggle with unclear guidance about when our employees will be able to get the vaccine.
What role do cannabis employers play in vaccination against COVID-19?
Employers will have to navigate a number of competing interests and obligations to craft a sound and responsible vaccine policy. On the one hand, employers are obligated to provide a workplace that is “free from recognized hazards” (OSHA General Duty Clause), i.e. persons infected with the coronavirus. On the other hand, employers are generally more hands-off when it comes to personal health decisions like whether or not to get vaccinated against certain illnesses, and indeed we have an obligation to protect our employee’s privacy and right to refuse vaccination due to a religious objection or medical condition. There is no shortage of advice available to cannabis companies but much of this advice fails to explore the real-world challenges that HR practitioners and business owners will face as they navigate vaccine issues with employees on the ground over the coming months, partly because we are wading into uncharted waters. Below is a brief summary of what information is available to guide employers right now.
Employers must be prepared to take a position on vaccines
The Equal Employment Opportunity Commission has provided guidance for employers navigating their approach to vaccination at the workplace. In general, the EEOC supports employers’ right to encourage or require employees to get vaccinated against COVID-19, as well as take other precautionary measures recommended by the Centers for Disease Control. There is a persuasive business necessity to, at a minimum, encourage employees to get vaccinated against COVID-19, and cannabis companies may find that their employees are relatively prioritized in many state vaccine distribution plans due to the prevalence of designating cannabis workers as essential, though guidance specifically pertaining to cannabis workers is slow-coming and vaccine availability has gotten off to a rocky start with an uncertain supply of vaccines. At least for the time being, multi-state employers will have to continue to adapt to a patchwork of various approaches to state vaccine distribution plans just as they have for managing the workplace throughout the pandemic.
Be ready to accommodate legitimate objections
Employers must also proceed cautiously when responding to employees who refuse vaccination. Some employees who resist vaccination will have a legitimate right to be accommodated due to a sincerely held religious belief or a medical condition that prevents them from taking the vaccine. Employers must be ready with a flexible policy that allows qualified personnel to engage in an interactive process with these employees to discover and document the nature of their objection and then to negotiate a reasonable accommodation. For those positions that have already been eligible for temporary work from home arrangements, for example, an extension of this arrangement might be a reasonable alternative to vaccination. Other accommodations can be made for employees who must interact with the public or their coworkers to perform their essential job functions, such as leave of absence, but how soon such an employee would be excluded from the workplace given the scarcity of vaccine availability and under what conditions this employee would be allowed to return to the workplace are still open questions.
Vaccines remain one of many tools employers have to reduce risk
The Society for Human Resources Management (SHRM) published research earlier this month revealing that the majority of employers plan to encourage but not require their workforce to be vaccinated against COVID-19. This approach seems to dodge some of the more troubling aspects of rolling out a mandatory vaccine program and reflects the reality that many employers can use a combination of other means to reduce the risk of transmitting the virus such as the continuation of work from home policies, virtual services, contactless product delivery, etc. A mandatory program would force a confrontation between those employees who are unwilling to get vaccinated and the company’s managers tasked with tracking vaccination, avoids potential workers compensation claims that might arise from adverse reactions to the vaccine, and provides relief for the potential administrative burden of tracking employees’ proof of vaccination. A voluntary vaccine policy also restores some of the onus for making an informed decision about vaccines on the employee rather than the employer assuming all the responsibility, and potential liability, for forcing a decision to become vaccinated on the workforce. Keep in mind that even under mandatory vaccination policies, some employees will inevitably not get vaccinated and the company will need to work with those individuals on a case by case basis to determine what reasonable accommodations, if any, can be made for those workers. Employers who mandate vaccines as a condition of employment will also likely need to pay for vaccination if there is a cost in the future as well as provide paid time off for employees to go to vaccine appointments. A voluntary policy may make it easier for the employer to be flexible and compassionate toward the varying needs and attitudes of our employees while navigating the continually evolving state of vaccine availability and public health advice.
Expect to adapt to new information
Throughout the pandemic, employers have operated with ambiguity and uncertainty. This (hopefully) final stage of the pandemic will be no different. As we craft our vaccine policies, we should be prepared to deal with the unexpected and adapt to change as new information is available or revised. This is where I believe that cannabis companies have a real advantage. In this industry, flexibility and innovation are essential skills and we as professionals in this industry are well-practiced at pivoting with little notice. I am confident that cannabis operators will rise to the challenge of navigating vaccine distribution while protecting our workers and our customers with the same aplomb that has helped our industry thrive during the challenging last 12 months.
Melissa Hafey is the Director of Human Resources for Blackbird. Blackbird is a software and services company that provides marketing tools and transportation solutions for cannabis operators. Melissa is a passionate advocate for creating meaningful work in rewarding work environments. Her experience includes change management, benefits administration, HRIS implementation, recruiting, workplace diversity initiatives, and human resources management across multiple states including California.
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Melissa Hafey is the Director of Human Resources for Blackbird. Blackbird is a software and services company that provides marketing tools and transportation solutions for cannabis operators. Melissa is a passionate advocate for creating meaningful work in rewarding work environments. Her experience includes change management, benefits administration, HRIS implementation, recruiting, workplace diversity initiatives, and human resources management across multiple states including California.