Video: NCIA Today – Thursday, May 19, 2022

NCIA Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff.  Join us every other Thursday on Facebook for NCIA Today Live.

This week’s episode of NCIA Today is brought to you by Senseon Secure Access.

Committee Blog: Is American Cannabis Still the Wild West? 

by NCIA’s Risk Management and Insurance Committee
Matthew Johnson, Quadscore Insurance Services

Cannabis is America’s riskiest business. 

Cannabis itself is a highly valuable commodity, but cannabis businesses also deal largely in cash – making them a prime target for thieves across the country. Recent headlines have reported a rash of unsolved robberies in the Bay Area and Washington State, not to mention the seizure of cash from Empyreal’s fleet of armored transport vehicles (fortunately, that cash has now been returned by the police). 

This is a national problem, which begs the question… What should cannabis businesses do to stay safe during these trying times?

There are many different means of minimizing the risk faced by your modern cannabis business, but we’re going to focus on the big three today – security, technology, and compliance. Through careful consideration of these three tenets, cannabis businesses can take significant steps to mitigate risk and protect their employees. Appropriate investments can yield tenfold savings in the form of fewer stolen assets, lower insurance premiums, peace of mind, and safer employees. 

SECURITY

Let’s start with the topic that gets the most attention during a crime spree – security. In cannabis, security means a number of things… video cameras, man traps, motion sensors, hardened glass, ID checks, and more. When building or retrofitting a facility for cannabis operations, it is crucially important to consult with security experts like Sapphire Risk Advisory Group or Cannabis Compliant Security Solutions. 

“In many areas, it’s not a question of ‘if’ a cannabis business will be robbed – it’s ‘when,’” cautions Chris Eggers, CEO of Cannabis Compliant Security Solutions. With 13 years of experience as a law enforcement officer in the Bay Area – including several years working as an undercover narcotics officer – Chris is uniquely qualified to address the ongoing issues in Oakland and other areas along the West Coast. “There’s a question of how you navigate and survive an incident, but beyond that, how you ensure that your business will survive too.”

There’s an important distinction between security consultants like CCSS, security integrators, and vendors. To achieve best results, cannabis businesses should work with a security consultant who can identify ways to protect the business – without being tied to commission-based sales contracts or a specific ‘brand’ of security solutions. 

TECHNOLOGY

Physical security aside, there are a number of high-tech security tools that can help cannabis business owners protect their operations. For example, let’s take a look at the biggest security company you’ve never heard of – an organization called 3SI Security.

3SI Security began their journey over 50 years ago as the original producer of dye and smoke packs intended to deter bank robbers in the 1970s. Technology has evolved over the years, and so has 3SI’s product offering – now, their GPS tracking tech is ubiquitous throughout banking, pharmaceuticals, luxury retail, and telecommunications.

As VP of Business Development for 3SI, Carlos Casas works to connect cannabis businesses with this tech to protect their assets and employees. “According to a Forbes report from July 2020, an estimated 70% of cannabis businesses are cash-based. This is a staggering statistic which shows the real risk to the industry is on an upward climb.” With the SAFE Banking Act still in the works, savvy business owners have to explore alternative solutions like 3SI’s technology to ensure their business stays safe.

Apart from 3SI, there are a number of technology companies that provide technology to make the cannabis industry a safer place. ADT Security has recently launched a cannabis-focused divison of ADT Commercial to provide critical security technology to cannabis businesses around the country. After spending three years keeping HERBL’s fleet secure on the west coast, Andy Fleet now leads ADT’s efforts to provide security solutions to the cannabis industry. 

According to Andy, “Security planning is critical for any cannabis organization. Take the time to evaluate all the risks within your establishment and build a robust plan that ensures all areas of physical safety and security are considered and protected.” Underscoring the points above, Andy continues, “Working with a licensed, experienced consultant will ensure adherence with all relevant regulations and help keep your employees safe while having technology do the heavy lifting for you.”

COMPLIANCE & COVERAGE

Next up, everyone’s favorite topic: compliance. In this sense, we’re not talking about adhering to the myriad regulations imposed on cannabis businesses wherever they operate – but rather, making sure that your operation complies with the protective safeguard requirements in your insurance policy. Non-compliance with or material misrepresentation of your active protective safeguards could result in an uncovered or denied claim – and could even cause problems with your investors. If you’re buying insurance, you want to make sure that your policy will pay out when stuff hits the fan!

Theft Sublimit – Most cannabis insurance policies will only cover theft losses up to a certain ‘sublimit’ depending on the quantity of cash/cannabis being stored, the physical location of the cannabis business, and any relevant losses that the insured business may have sustained due to theft. Make sure that you are comfortable with the sublimit provided and, if you aren’t satisfied, work with your insurance broker to see if you can secure higher limits.

Protective Safeguards – Virtually all cannabis insurance policies carry some warranties around protective safeguards that can impact your coverage in the event of a claim. Make sure to read the Protective Safeguards endorsement and check that all of your security systems are functioning in compliance with these requirements.

Motor Truck Cargo – Similar to the protective safeguards warranty, make sure that you study your policy to ensure that any requisite safeguards are in place. For transportation operations, these safeguards are likely to include vehicular telematics, buddy systems for drivers, GPS tracking, and possibly even an escort vehicle to accompany the transport unit. 

Security guards – When hiring security guards, it is recommended to employ a third-party guard service that carries appropriate limits of insurance. Make sure that your business is listed as an additional insured on their insurance policy to ensure coverage in the event of an altercation at your business!

Financing – Lenders and VC firms will often stipulate that the companies accepting their funds will need to adhere to certain requirements, like securing Directors & Officers insurance for the officers and executive board. Beyond insurance, it’s important to make sure you are actually doing what you promised to do in terms of safeguarding the property and not just so that you may be eligible for coverage, but also so that you are not held liable for losses suffered by third parties, such as lenders and investors. 

Joseph Cioffi, chair of the Insolvency+Finance practice at the Davis+Gilbert law firm in New York advises, “Operators typically make certain representations to investors, lenders, and other capital providers, and undertake certain activities intended to preserve asset and collateral values. The operator is looking at default if it’s in breach of contract, but worse, the operator and its principals could be sued for misrepresentations made in obtaining funding – and be held liable for losses that flow from those misrepresentations.” 

CONCLUSION

Like an onion, there are many layers to a risk management program for cannabis businesses. Through careful implementation of security measures and protective technology, many businesses will be able to prevent damage to their business with proper planning. In case all security measures fail, a comprehensive insurance policy should be able to help make a business whole again after a claim. Make sure to work with the proper insurance, security, and legal experts when building or restructuring a cannabis operation!

 

Survey: NCIA Retail Committee Wants To Hear From Cannabis Retail Employees

NCIA’s Retail Committee is looking to gauge what educational material may be the most useful in order to better direct our efforts on content creation for all cannabis retail employees.

We would like to hear from those who are most affected by training and continued education, in hopes of being able to provide tools that will enable all retailers and retail staff to grow and develop.

If you can please share this quick questionnaire to your staff, we would greatly appreciate it!

TAKE THE SURVEY

*All submissions are completely anonymous*

Committee Blog: Social Equity Perspectives on Interstate Commerce – Part 3

by Mark Slaugh, iComply LLC
NCIA’s Diversity, Equity, and Inclusion Committee

Previously, in part 1 and part 2 of this series, the DEIC examined the problems inherent in existing social equity programs and the merit for federal social equity in regulating interstate commerce. The DEIC also examined the key components of a proposed framework to address these challenges, how to define social equity federally, and the merit of determining the types and numbers of permits to be issued. 

Sadly, as written currently, all proposed federal bills fail to meet the critical objective of creating as much NEW generational wealth for the most number of those disparaged from participating in the legal cannabis industry because of the socioeconomic impacts of more than 80 years of federal marijuana prohibition and due to the barriers to entry created amid state regulatory regimes.

To conclude this policy framework proposal, the DEIC will look at the key considerations for a federal program to ensure it functions as designed and how this framework can create social equity technical assistance, qualification, and a phased approach of implementation to ensure that social equity operators have ample time to qualify, have adequate funded, and are set up for success with an equal starting line in the new interstate commerce industry.

Qualifying Social Equity Operators –  Federal Technical Assistance Program

It is imperative that any federal social equity framework helps the industry and their new partners, by ensuring permit holders are qualified in both cannabis and business backgrounds, and by helping them bring financing to the table to start a permitted interstate commerce cannabis business that can be as ready, as quickly as possible, to help import, export, and transport cannabis between the States.

To carry out these provisions in the policy, we recommend that amendments to any federal act include:

  • Requiring that qualified social equity interstate commerce permit holders:
    • Have a path to educational qualification (training and development)
    • Can qualify with equivalent experience
    • Can pre-qualify for the SBA’s funding once they obtain education or equivalent experience (funds issued upon state licensing approval)
    • Obtain the majority of initial permits offered for interstate commerce (95%)
  • In alignment with how long and at what percentage the current industry has been dominating the ownership of licenses
    • Entities should have 51% or more verifiable ownership and control by a social equity qualified applicant.
    • Advisory Committee to determine how to verify the 51% social equity ownership
  • Providing social equity qualified permit holders exclusivity for at least 5 years to ensure the qualifying process takes place equitable to the average time in which the industry developed for adult use without considering social equity. 
  • Mandating laboratory testing as national permitting for interstate commerce to work. 
  • Ensure parity amongst states and tribal nations such that tribe-to-tribe trading and interstate trade routes can be protected.
  • Avoiding overly limiting interstate commerce permits, but also giving them value by not making them unlimited either.

    • DEIC suggests 1,500 permits as a starting point divided among the three primary types as a fair balance initially.

These pillars of federal act amendments will proactively resolve interstate commerce concerns that are inherent in descheduling cannabis. Further, pre-qualifying permit holders based on their experience, education, as well as federal financing for their business (contingent on state licensing), will accomplish two primary concerns:

  1. Incentivizes state governments to create social equity licensing regimes that emulate federal efforts
  2. Reduces “predatory” operating agreements that use “token” social equity applicants who do not participate in the business license, contribute little to no financing, and are thereby diluted by existing operators and investors

We believe the U.S. Small Business Administration (SBA) is best to handle collaboration efforts to define this new “Minority Cannabis Business” (MCB) certification program for both program providers on the educational side and for pre-qualifying federal funding for qualified applicants. 

Through this qualification, the Alcohol and Tobacco Tax and Trade Bureau (TTB) and (SBA) would issue an interstate commerce permit to be tied to state licenses, and only then would funding be issued to the applicant by the SBA. All funding issued is contingent on obtaining a state licensed facility or partnership with an existing operator in any given state.

Phased Approach:

We believe it is also important that the amendments clearly lay out a multi-phased approach to the rollout of interstate commerce permitting to ensure those most qualified operators proceed first, and to then qualify others with enough time to do so. Encapsulating the proposed amendments, we envision the following steps to ensure a smooth transition that maximizes the opportunity for social equity applicants to succeed:

  1. Initially, establishing the advisory board for the regulatory agencies and mandates to allow for education providers to apply and be approved to provide the educational qualification to social equity applicants. These education providers may also be prioritized based on social equity and curriculum requirements designed in collaboration with cannabis business experts and diversity, equity, and inclusion advocates in cannabis.
  2. For those who lack the experience in operating an interstate commerce permitted business, but who are impacted by the war on cannabis, approved educational programs are invaluable to overcoming the barriers in not knowing how to operate a regulated cannabis business.
    1. Those with experience may qualify, without the need of an educational provider, and each are evaluated for priority licensing according to the following priority:
      1. Applicants with cannabis and business experience (most qualified)
      2. Applicants with legacy experience but limited regulated business experience
      3. Applicants with business experience but limited cannabis experience
      4. Applicants with little cannabis or business experience (least qualified)
    2. If qualified in both, the applicant goes first and can qualify for SBA funding fastest.
    3. If they have limited experience in cannabis or business, then the applicant can take the coursework to qualify and apply for SBA funding.
  3. During this time, it is also crucial to increase community education efforts so that communities impacted most by the war on cannabis can be made aware of the opportunity to qualify, be trained/educated, and approved, and get access to the information necessary to pursue the opportunity along the above pathways.
  4. Provide an education fund for state and municipal governments to promote the benefits of cannabis social equity, responsibilities, and risks of cannabis.

Access to financing is critical for social equity applicants and must be made available through the qualification process for social equity qualified businesses. Once qualified on education or equivalent experience, the SBA may pre-approve funding for qualified applicants. By achieving these qualifications, applicants have access to *reserved* funding appropriated by the federal act. Pre-approved financing in the form of grants and low-interest business debt instruments that are contingent on successful completion of course requirements and other “qualifying” factors for a Minority Cannabis Business is critical to ensuring success for operators and the federal government. 

These government loans say how one qualifies and is “pre-approved” so that applicants can negotiate with existing industry license holders as valuable partners and receive federal funding contingent on state licensing approval. The idea is to promote partnership and participation between the existing industry and newly established social equity entrepreneurs while ensuring equal opportunity for social equity operators who do not choose to partner with the industry.

Follow Through

To ensure the program functions as designed and that the advisory committee is provided with as much data as possible to improve upon these suggested amendments, the Diversity Equity and Inclusion Committee (DEIC) recommends a final amendment in the form of a best practices study, along with collected data from participating states, to be instituted and reviewed annually for the first five years and subsequently every three years. 

The intention of this study and report is to ensure the enforcement of laws, standards, and programs and to monitor that the activities of social equity operators are in alignment with the intention of the program in benefitting the social equity entrepreneurs permitted, that policies against predatory operating agreements are being enforced, and that policies are truly beneficial to creating social equity in the cannabis industry. The study will provide evidence of the benefits and challenges of the program, as well as possible improvements at federal and state levels

Conclusion

It seems obvious that unless any social equity partner can “bring more to the table” to balance a “mega player’s” contribution, be educated in all aspects of their chosen field in the industry, recognize predatory agreements, and otherwise be positioned more equally to meaningfully participate in the cannabis industry, social equity programs will continue to fall short of meeting the goal of creating new generational wealth. 

History has shown that as long as there’s an opportunity for inequality to be wielded as a weapon for those in power, it will be. No amount of good intention can change that fact. 

Social equity requires empowerment opportunities for social equity candidates to bring more to the table as equals with “mega players.” We recognize partnerships can be an ideal path forward when the power dynamics within them are balanced and fair. The DEIC proposes these amendments to any federal act to serve as solutions to the traditional problems of inequality, exclusion, and gatekeeping that once spurred prohibition in the first place and that continue to prevail in the inequity the cannabis industry is still experiencing and to solve the shortcomings of social equity programs thus far. 

We recognize that the role for the federal government in these federal act amendments is to even the odds in interstate commerce permitting. Their role is to oversee the fairness in qualifying candidates, to ensure a meaningful value for the permits issued, to give permittees the chance to catch up to the privileged few already in the industry with lockout periods for non-social equity applicants, limited licensing, and to provide access to financing for those traditionally locked out of access to financing or wealth as aa result of systemic oppression caused under prohibition.

Interstate commerce permitting seems like the last true chance for America to atone for 80+ years of marijuana madness and its detriment on our society. It is also the last chance for the industry to search for its soul to balance the impacts prohibition has had on these operators in excluding their participation in legal cannabis initially – born as a result of systemic discrimination overall and colonized on by those with clean records.

In doing so, a more equitable federal act can create the bold ideas and incentive to bring traditional wealth and experience into partnership with underprivileged social equity operators and their expertise/culture to form partnerships that truly represent the intent behind the policies intended for social equity and to create a more diverse, equitable, and inclusive industry for all.

Committee Blog: Everything You Wanted to Know About Cannabis Facilities But Were Afraid to Ask Field Guide – Part 3 – Extraction

by members of NCIA’s Facilities Design Committee
Jacques Santucci, Brian Anderson, David Vaillancourt, and David Dixon

Continuing our five-part series on the behind-the-scenes workings of the legal cannabis industry. This series focuses on all of the inner dealings and industry advice from established professionals to craft this unlimited How-to-Guide to assist you in setting up your own facility. These articles cover cultivation, extraction, infused products, and retail facilities as well as support activities. In general, remember to be compliant with all local rules and regulations and contact a licensed contractor and industry expert. 

Part Three, Food: 10 Things to Consider When Planning Your Manufacturing of Infused Products (MIPs) Operations

Food safety and handling practices are an issue for any industry working with or processing products for human consumption and often come with strict guidelines that need to be followed. In the cannabis industry, edibles and other processed or infused products Manufactured Infused Products (MIPs) are ready-to-eat foods, so many states are regulating them as foods under the cGMP requirements of 21CFR117. We feel this is likely the approach that will be appropriate when cannabis becomes federally legal. These 10 things should be considered as you begin to plan your facility.  Always remember to be compliant with all local rules and regulations. 

Sanitary Design and Operation

A production room is straightforward, conceptually: design the space so walls, floors, and ceilings can be washed and sanitized, then verified (ATP swabs) to confirm the cleaning process is effective. To facilitate cleaning, everything needs to be pulled away from the walls, the ceiling needs to be solid and the walls need to be sealed. Insulated metal panels (IMP) are a cavity-free construction that is seeing wide acceptance in the industry. To keep the space clean during operation, slope the floors to spot drains, install coves along with the floor/wall interface and avoid ledges and traps for water or dust.

Employee Hand Washing

A stringent internal process for sanitation and washing of hands is crucial. Make sure that lavatories are available throughout your facility for proper sanitation. Confer with the municipal board of health for locations and quantity. Generally locate any place where employees are handling consumable products or encounter the potential for microbiological. 

Boot Washing

Sanitation includes making sure all boots/shoes are free of contaminants. Employee captive corporate footwear programs prevent contamination potential from non-business-related employee activities.

Cart Washing

For carts that transport ingredients and materials, it is important to prevent floor debris getting transferred from one area to another. Two areas of concern; are wheels and cart shelves. Either wheel or shelf area can be addressed from multiple washing devices specific to each type of cart used.

Product Storage

Food safety temperature and humidity separation of products are an important factor. The purpose is to store food products at such a temperature and humidity level to prevent the growth of undesirable bacteria.

Allergen cross-contamination

Make sure to arrange products to avoid cross-contamination of open and unopened products. Keep the first pallet off the floor at a height of 6” AFF to avoid picking up contaminants. OHSA SHARP may apply how to organize products. 

You can design barriers to keep contamination from entering a room.

Limit contamination by having and always renewing Personal Protective Equipment (PPE), since the adjacent hallways may transport raw biomass. Test all ingredients, including THC, to ensure that everything is microbiologically safe. Wipe down, or unpackage ingredients, materials, and supplies before bringing them into the ‘clean environment’ room. Wear specific scrub, clean boots, and wash off any carts entering the room.

Employees entering the food production space

Contaminants can enter via the employees.  It is essential to have all employees and agents clean up before entering the food production space. You must provide facilities to wash and sanitize hands as well as boots. Continuous training of employees and monitoring adherence to the procedures is important. Your procedure will include how sanitation is necessary, where are smocks hung, how are shoes cleaned, etc. Typical controls are in the FDA Food Code for jewelry, open sores, illness, etc.

Food Safety Inherent in the Recipes

Complete a Food Safety Hazard Analysis to know if you need to implement an upstream preventative control, such as for chocolate, or if you need to manage a thermal kill-step such as cooking the gummies mass. Low water activity, high acid, or a natural biocide additive, can all be considered. 

Control for Allergens

MIPS often contain soy, flour, eggs, dairy, peanuts, tree nuts, coconut, and perhaps others. Each has special considerations for allergen separations and allergen cleaning.

Ware Washing and Clean Parts Storage Room

Don’t Underestimate the Ware Washing and Clean Parts Storage Room. Adjacent to your MIPs production room, consider building a washroom with a commercial dishwasher for utensils, kettles, wetted parts, trays, molds, etc. You might install a three-compartment sink. And make sure to safely store clean items, so they dry and do not get recontaminated prior to use. This room is maintained at negative pressure to the MIPs production room.

Plan for the Pantry

Store ingredients, materials, and supplies in a pantry off the MIPs room can be considered. It is much easier to clean the MIPs room if such items are stored outside production. If you pre-weight, or decant in the pantry, cardboard and plastic are kept out of production. It is a great idea to provide a door also to the adjacent hallway to drop off ingredients, then your staff can enter from the MIPs room. Special care is taken when storing opened products.

Keeping Final Products Food-Safe

The best practice might be to put products such as chocolate bars into primary film envelopes or fin-seal gummies while still in the MIPs room. Often, subsequent packaging is done where there are other possible contaminants such as open bud, pre-rolls, chipboard or corrugated, etc. If the food products are already protected by primary packaging, you will greatly reduce the risk of recontamination. 

HVAC, Humidity Control, and Filtration

HVAC, Humidity Control, and Filtration are critical. The MIP production room should be air-conditioned and filtered to at least MERV 14. Cook kettles may be a source of humidity that could be placed under a commercial hood. Cooling and tempering of chocolates and cooling and drying of gummies/jellies have their own special considerations. And consider provide enough HVAC capacity to dry out the production room after a heavy cleaning. 

Airlocks and Room Pressurization

Airlocks and room pressurization should be planned properly based on your goals, budget and facility. The MIPs room pressure should be positive to all other adjacent rooms: washroom, pantry, extraction, corridors, lab. There are a wide variety of approaches to airlocks, from a pharma approach with air showers down, to just a door with sufficient air supply to the production room to ensure that it is always positive to the adjacent hallway.


Check Out These Related Articles for More Top Things to Consider When Planning:

Committee Blog: Everything You Wanted to Know About Cannabis Facilities But Were Afraid to Ask Field Guide – Part 1 – Cultivation
Committee Blog: Everything You Wanted to Know About Cannabis Facilities But Were Afraid to Ask Field Guide – Part 2 – Extraction Facilities

Video: NCIA Today – Thursday, May 5, 2022

¡Happy Cinco De Mayo! NCIA Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff.  Join us every other Thursday on Facebook for NCIA Today Live.

NCIA Today is brought to you this week by Senseon Secure Access.

Committee Blog: Everything You Wanted to Know About Cannabis Facilities But Were Afraid to Ask Field Guide – Part 2 – Extraction Facilities

by members of NCIA’s Facilities Design Committee
Jacques Santucci, Brian Anderson, David Vaillancourt, and David Dixon

Continuing our five-part series on the behind-the-scenes workings of the legal cannabis industry. This series focuses on all of the inner dealings and industry advice from established professionals to craft this unlimited How-to-Guide to assist you in setting up your own facility. These articles cover cultivation, extraction, infused products, and retail facilities as well as support activities. In general, remember to be compliant with all local rules and regulations and contact a licensed contractor and industry expert. 

Part Two, Extraction: Top Things to Consider When Planning Your Cannabis Extraction Operation

The extraction environment is akin to an industrial process and should be approached away from a safety and chemical handling standpoint. Here are some general considerations as you begin to plan your extraction operation that we often see assumed or overlooked resulting in major unanticipated barriers that significantly impact decision costs and timelines. Always remember to be compliant with all local rules and regulations. 

Interior Building Materials

The walls and floors should be designed to be easily cleanable. In areas with solvent use, should have floors and walls made with the material, and ultimately the method for effective and ease of cleaning such FRP (Fiberglas Reinforced Panels).

Facility Specifications

There are many established standards from organizations like the NFPA and ICC-IFC which are commonly cited and required by Fire Marshalls with appropriate fire engineering controls, room interlocks, etc. Knowing which classifications are required based on the room type has a major impact on facility specifications (e.g. C1D1, C1D2, etc.) and the ultimate design. This requires knowing which solvents you will be using (and equally important, solvents you will not be using) as well as identifying all of the activities you will be doing in your extraction/processing facility (winterization, purification, bulk or final product packaging, and more) and whether the rooms will be wet and dry (how will you be cleaning these rooms?). How you answer those questions will help you and your team select the appropriate room materials and overall design. 

Electrical Power Ideal Recommendations

Evaluate your utility power infrastructure, including street transformers and available power to your site when designing your facility. The power demand for a cannabis facility is significant and grid limitations can destroy or significantly delay the ability for a business to operate.

Losing power due to weather or events outside of your control are another major risk. When considering alternative power generation, consider a generator with auto-transfer switching and the appropriate fuel type, depending on location and local weather. Contact a local licensed professional. A generator can be an invaluable insurance policy as even a short duration power outage can destroy an entire crop and any products that must be maintained at critical temperatures. 

Equipment Rooms and Maintenance Rooms

Appropriate space for equipment and dedicated rooms for maintenance is commonly needed. These all come with different combustion air requirements, venting requirements, air exchange rates, vacuum lines, and more. You may consider a room for spare parts and tools.

Appropriate Storage Area: Biomass, Volatiles, Raw Ingredients, and More

Separation of raw materials with appropriate and dedicated storage areas is needed for the various types of raw ingredients and materials utilized within a cannabis facility. Volatile solvents require extremely specific storage requirements, which will become part of your Chemical Hygiene Plan once you are operational. Refer to your local Fire Marshall for code considerations and from code organizations like the ICC and NFPA.

Cleaning and sanitation agents should be segregated from materials that are utilized in final product formulations (e.i food ingredients, oils, etc.) and raw materials ahead of the design is critical to ensure appropriate storage requirements are met whether indoor or outdoor. Biomass storage can vary based on whether wet or dry and often require controlled temperature and humidity. Finally, do not forget the dedicated space needed for finished good inventory. 

Electrostatic Discharge (ESD) Safety

Do you know that shock you get when you are in your car in the winter or flipping on a light switch? Innocent in everyday life, but potentially lethal in an environment such as extraction rooms where highly flammable solvents could be present. Consider rated and non-rated clothing and other personal protection measures. 

Food Grade Oil Considerations and Inspections

Extracted oils that will be used downstream in edibles and beverages are akin to ingredients that require Food Safety endorsements such as cGMP.

Equipment Ratings

Before selecting equipment for use, evaluation criteria should be established based on your business needs and compliance. Some authorities having jurisdiction require extraction equipment to come with stamps, certifications, or endorsements from organizations such as ASME, UL, and NFPA as relevant to ensure equipment safety and fit for use.

Room Environmental Controls

Grinding rooms often need separate dedicated ventilation and filtration to be checked against grinding method/equipment and concentration of particulate (typically measured in parts per million (ppm) in the air. Dust collection systems for grinding equipment are effective ways to keep dust levels at manageable levels, reducing the need for time consuming cleaning procedures. Extraction and final product rooms may require additional ventilation considerations and monitoring sensors depending on the extraction method or final product type. Example: Solvents will require sensors and air exchanges located near the ground level since most solvent fumes tend to be heavier than air. 

HVACD Management

Designing your facility involves HVACD (Heating, Ventilation, Air Conditioning, and Dehumidification) management that considers airflow controls areas, airflow, and fire protection within control areas. Rooms may require positive and negative pressures with calibrated pressure indicators. You should aim at having a leveled constant environment.

Safety and Injury Handling

Facilities need to have sufficient accessible First Aid and Burn Kits on site. Safety and Emergency Showers are often determined by code and the type of extraction solvent in use at the locations. Eye wash stations may also be required.

Spill and Solvent Safety

In areas where solvents are or may be used, you will need to have barrier/spill kits specific to the solvents and extraction materials on hand. This barrier can be built in or hand delivered per emergency. Solvent storage locations, depending on the type of solvent and hazardous rating. 

Having one or two dedicated people to run point on spills can be part of a comprehensive spill procedure that would include evacuation of the area, assessment of the spill and of the clean up technique, disposal method, etc. There are many materials that are not compatible or properties that make them volatile under certain circumstances so having dedicated people to evaluate the situation will save you time, money, and any possible mishaps. 

Solvent Storage

Indoor and outdoor solvent storage are dictated by NFPA, ICC-IFC, and local regulations. Storage types and limits are essential to check before buying or building a facility. Fire professionals base these limits on several factors of flammability including class and volatility. You may also need to adhere to SARA Type III reporting depending on the solvent and storage amounts. Do not forget about solvent tank types, whether they need to be mounted or chained to walls, security access controls, and SDS requirements.

Solvent Enclosure

C1D1, C1D2 is needed for solvent use. The actual type of solvents (e.g. CO2, Ethanol, etc.), and volume of solvent will dictate the different requirements for enclosures. This section pertains to areas in which the solvent would be transferred, mixed, extracted, recovered, etc. The type of enclosure is dependent on the type and class of solvent. Most enclosures will have volume limits, containment, vapor detector, electrical and ventilation requirements. 

Emergency Ventilation

Ensure wall switch and fast ventilation, automated ventilation when sensors are activated during spill of contaminate.Sensors to be located where appropriate for the substance in use. Coordinated with the fire marshall to meet local requirements through design with architect and mechanical teams.

Employee Access Control

Limiting door access, proper security labeling, and key sets for employees need to be part of your overall security plan. LThe idea is to prevent unauthorized personnel from accessing the extraction space compliant with the local regulatory body. 

Equipment Regulatory Listing

There are requirements such as UL certifications/marks which are dependent on the actual device and intended use. Always contact your local code enforcement office and a licensed contractor.


Check out these related articles for more top things to consider when planning:

Committee Blog: Everything You Wanted to Know About Cannabis Facilities But Were Afraid to Ask Field Guide – Part 1 – Cultivation

Committee Blog: Everything You Wanted to Know About Cannabis Facilities But Were Afraid to Ask Field Guide – Part 1 – Cultivation

by members of NCIA’s Facilities Design Committee
Jacques Santucci, Brian Anderson, David Vaillancourt, and David Dixon

Introducing our five-part series on the behind-the-scenes workings of the legal cannabis industry. This series focuses on all of the inner dealings and industry advice from established professionals to craft this unlimited How-to-Guide to assist you in setting up your own facility. These articles cover cultivation, extraction, infused products, and retail facilities as well as support activities. In general, remember to be compliant with all local rules and regulations and contact a licensed contractor and industry expert. 

Part 1, Cultivation: The Top Things to Consider When Planning Your Cannabis Cultivation Facilities

As you are planning to start your own indoor cultivation facility, there are some often ignored basic parameters that should be taken into account in the design and decision-making process. We have listed the key parameters that will ease the process of going live and may save time and money while you design your facility and the building process. Always remember to be compliant with all local rules and regulations. 

Lighting Recommendations

Depending on your goals, building setting, and local requirements, you have many options for lighting, from HPS light to LED lights. Lighting standards are measured in watts per square foot. Recommendations may vary per state or other criteria. For example, Massachusetts recommends an intensity of 36w/sft for energy consumption.

Water Recovery: Minimum Percentage

Cannabis is a water-intensive crop, and consideration of effluent capacity can be inefficient, expensive, and an issue for municipalities. Depending on your cultivation practices, you should consider a water recovery system and what percentage you are able to capture. There are two types of water recovery – leachate, and condensate. An effective system will recover at least 70% of the water for utilization, significantly reducing your water and sewer expenses. Your irrigation and fertigation selection will have an impact on your water consumption. 

Generator Capacity: Minimum Recommendations

Your area or your business model may dictate for a generator – which is a critical Business Continuity consideration as a power outage, even if for a brief period of time can destroy a crop. Make sure to calculate the minimum capacity requirements of your facility. Do you plan to have it for emergency or stand-by usage? Typically, 50% of your short lighting load capacity of cultivation, 100% for AHU (air handling), and some back-office and security system, including cameras, access, and server needs.

Carbon Dioxide Enrichment: New Versus Recaptured

You can consider 75% new tanked- or generated- natural gas and 25% recaptured sources, for cultivation rooms, gas-fired chillers, and gas-fired boilers.

Carbon Dioxide Alarms Levels: Cultivation and Common Areas

Carbon Dioxide monitoring is critical for worker safety. You should be monitoring common areas to ensure that you are below 3,500 ppm. Monitoring should be tied to the fire alarm system for building evacuation, with 2,000 ppm alarm levels for the cultivation area. 5000 ppm limits are required by NFPA/OHSA. Alarms should contain visual strobes, red/green room access indicator lights and/or possibly an exhaust system that is triggered by an alarm

Renewable Energy: Minimum Energy Production Percentage

To demonstrate a commitment to sustainability, a minimum target of 10% of your facility’s energy consumption should be from renewable energy production: i.e. solar power, wind energy, geothermal, biomass, and/or battery energy.

Refuse Disposal: Recycling and Composting

Consider certified disposal of horticulture byproducts with a minimum of 25% recycling or composting by volume; rendered unusable. You will want to establish and verify that your shredder or equivalent system is capable of breaking up debris to a specified size. 

Airlock Doors for In-Between Uses

You should install an airlock barrier, or at a minimum an air curtain, between the business and the production side, for outside and inside egresses, to keep a controlled environment. Keep in mind considerations for ventilation systems and cascading airflow. 

Wall Material

For best performance to mitigate biological hazards and contamination, depending on your region, recommend installing insulated metal panels, that are non-porous, solid core wall, insulated metal panels (IMP), with surface mounted devices. 

Security Entrance: Facility Safety

Consider creating a separate mantrap style entrance to allow for better safety at the entrance point, monitor visitors, keep a controlled environment as well as avoid weather-related issues, i.e. wet areas due to rain or snow, or temperature variance due to extreme heat or cold. 

Limiting doors access and key sets for employees needs to be part of your overall security plan, with proper door labeling and authorization levels. The idea is to prevent unauthorized personnel from accessing specific spaces, for proper environment control and to be compliant with the local regulatory body. Remember to be compliant with local rules and regulations.

Security Camera: Minimum Area of Coverage

In most states, you will need security coverage for 100% percent of your faculty where cannabis products will be stored or displayed, with proper recording and monitoring. Keep in mind that your security room will likely need its own dedicated HVAC systems

Security Camera: Minimum Data Storage and Resolution

You will need to store all security camera footage on-site for a minimum of 90-days, or more depending on regulations. You may need to store the data offsite for five years for future legal needs. Footage quality may need to be shot in 1080p minimum. An ASTM International Standard Guide for Video Surveillance System provides additional parameters to utilize.

Security Alarm: Monitoring

Security alarm needs to be monitored by a reputable company. A service level agreement (SLA) or similar to ensure there are redundancies in the event of a failure should be considered, and redundancy or a backup system might be necessary.

Odor Control: Exhaust Air Management

Odor mitigation is a crucial part of all operations. All exhaust airflow must be oxidized or ionized. You also need a fogger system and carbon filtration. Refer to local municipal bylaws and regulations for more information.

For interior odor control and non-cultivation areas, consider cascading air flows from non-cultivation areas to provide a common method of control for pressurization control. Plan to control air flow and exhaust. 

Fire Sprinkler: Maximum Bench Sizing

Sprinklers are designed to cover a limited surface area. When installed on cultivation tabletops wider than 48”, additional sprinkler coverage may be required.

Flooring Type: Continuous

Cultivation floors shall have continuous resin or epoxy coating with at least a four-inch lip onto the adjacent wall.

Energy Incentives: Minimum HVAC/D Efficiency Rating

Air Conditioning (AC) units should be no less than 16 SEER, High Point (HP) units no less than 9 HSPF. Incentives for this vary by state. Please check with your local utility company and regulatory commission for all available rebates.

HVAC Validation Requirements: 

Bi-Annual Third Party Controlled Environment Validation using required Trend Data Metrics is the validation and calibration of control sensors, including temperature, humidity, CO2, and other devices such as scales, flow meters, integral valves, PPM sensors, EC meters, TDS meters, HVAC dampers and other applicable devices that may drift from factory or initial installation specifications.

Good Agricultural and Collection or Manufacturing Practices (GACP/GMP): Ready Versus Complaint

Your operation should be designed with documentation to prepare for GACP or GMP requirements. Depending on final product types, specific food-based GMPs with appropriate risk assessment programs (such as HACCP, and others referenced within the Food Safety Modernization Act) will prepare you for any federal or international trade opportunities in a federally legalized framework. 

Employee Locker Access

Plan for gender-specific, male and female locker rooms, with six square feet per employee per shift expected to arrive at the facility at any given time. Employee supplied flock for locker or lock provided by the employer is a business decision. Keep in mind how you will keep the environment of your production facility under control. You might consider having locker access adjacent to the growing area with a proper gowning area. 

Locker Room Type

Make sure your locker room is correctly set up for employees to be able to change in a safe way. Specifications for Locker Room and Gowning/PPE Areas should allow access to faucets for washing hands as well as bathrooms. Note gowning areas should be separate from the bathrooms directly off the locker room area.

Employee Shower Access

Per International Building Code (IBC) and State Plumbing Codes, calculate the number of employees and determine the number of showers based on code requirements as well as business policies. Having gender-specific showers is a recommendation as well as a business decision. 

Emergency Eye Wash- Shower

For safety and based on OSHA standards, Integrated Pest Management (IPM), fertigation, and extraction operations must-have emergency eye wash showers. Eyewash stations need to be placed throughout the facility so that they are within 10-15 seconds walking distance from employees. Check local requirements for additional needs. 

Note: in a facility where corrosives and skin irritants could pose harm to employees and require immediate remediations, you should consider emergency showers.

First Aid Kit Distribution

First aid kits should be available in all rooms where sharp tools and other hazardous materials are intended to be used. These kits need to be within 10-15 seconds of employee walking distances. Per OSHA requirements, first aid kits should be located in all trim, extraction, flower hallway, and shredding areas. This is overall a must-have in your facility.

Safety and Injury Handling

We recommend that you ensure that you have enough first aid and burn kits available throughout your faculty, based on your activity and the number of employees.

Committee Blog: Social Equity Perspectives on Interstate Commerce – Part 2

by Mark Slaugh, iComply LLC
NCIA’s Diversity, Equity, and Inclusion Committee

As the debate heats up on “how” rather than “if” cannabis legalization will happen, social equity and comprehensive reform are at the forefront of the minds of national legislators and advocates. Previously, in part 1 of this series, the DEIC examined the problems inherent in existing social equity programs and the merit of federal social equity in regulating interstate commerce. Sadly, as written currently, all proposed federal bills fail to meet the critical objective of creating as much NEW generational wealth as possible for those harmed by the war on drugs. Now, we examine the key components of a proposed framework to address these challenges, how to define social equity federally, and the merit of determining the types and numbers of permits to be issued.

Key Considerations for a Federal Cannabis Social Equity Program:

Fundamentally, any federal act for cannabis legalization should be a social justice bill that deschedules cannabis federally and that creates the most amount of new generational wealth for those most impacted by prohibition. Expungement for all persons with a past criminal record involving cannabis is the bare minimum these bills should do. However, proposed bills so far fall short of the latest innovative solutions to known problems in social equity programs and should be amended to include these key considerations.

Any proposed act must be amended to include provisions on regulating interstate commerce immediately after descheduling. The NCIA’s Diversity Equity and Inclusion Committee (DEIC) believes any federal act must prioritize social equity ownership of interstate commerce permits issued by the federal government. Learning from the municipal and state social equity programs, this policy paper seeks to propose amendments that meet these objectives, by instituting the following amendments to federal legalization bills:

  • Defining the regulatory agency for federal interstate commerce regulation and taxation

    • Alcohol and Tobacco Tax and Trade Bureau (TTB) and U.S. Small Business Administration (SBA) roles and responsibilities
    • Defining number and types of seats for a Federal Cannabis Social Equity advisory board
      • Ensure a diverse and representative Federal Cannabis Social Equity advisory board members, e.g., federal, state, tribal nations, diverse city representation, NCIA, and social equity cannabis owners, and operators.
  • Defining who qualifies as a social equity interstate commerce permit holder:

    • Outlining what states must meet as a minimum standard set by the federal government to participate with equivalent/reciprocal qualification.
    • May be determined by advisory board to define social equity qualifications
      • With minimum areas defined such as: income, arrest history, disproportionately impacted area(s), residency or heritage to avoid gentrification issues at large.
  • Defining permit types (similar to wine wholesale model) such as:

    • Importing
      • Privileges to buy from exporters directly and sell to distributors or transporters and licensees into a state system from another state
    • Exporting
      • Privileges to buy from operators and sell from a state system to an importer in another state
    • Transporting
      • Privileges to sell to or buy from qualified cannabis licensed businesses within a state system and to move product from or to licensees in a state or between importers and exporters interstate
    • Testing
      • State labs that meet national standards to ensure consistency with results for other permit types
      • May not be strictly social equity since existing labs are more specialized in converting to federal standards and adding this permit

Defining these basic requirements offers a framework for interstate commerce permitting and establishes the essential agencies required to enact a robust social equity program federally. More importantly, it stalls illegal and gray area activity from taking root under the guise of federal legalization by ensuring interstate commerce activity falls under a specific regulatory agency already well versed in interstate commerce permitting and regulation.

Suggested Social Equity Definition:

To define social equity applicant qualifications, DEIC suggests the TTB and SBA move away from diversity supplier program definitions which are too restrictive for a new industry to qualify. In order to accommodate the cannabis industry, DEIC recommends looking at other state definitions of social equity qualification that have proven to be effective. 

  1. Factors like living in a disproportionately impacted area for 5 out of 10 years, being arrested for cannabis or having a family member who was arrested, as well as income below the poverty line, should become qualifying factors. 
  2. Additionally, minorities, women, and veterans should be given additional consideration in the definition of who qualifies as a minority cannabis business. 
  3. High poverty rate, unemployment rate and participation in federal or state income-based programs, a history of arrests, convictions and other law enforcement practices in a certain geographic area, such as, but not limited to, precincts, zip codes, neighborhoods, census tracts and political subdivisions, reflecting a disparate enforcement of cannabis prohibition during a certain time period (war on drugs started in 1971), when compared to the rest of the state. 
  4. Utilize the advisory committee and collaborate with cannabis social equity groups to make sure gentrification and displacement are taken into account. Many areas have drastically changed over the last 5-10 years. Where a person spent their formative, childhood years should also be factored in. Guarding against ‘gerrymandering’ types of map cutouts, where folks who grew up literally surrounded by DIA’s, and who dealt with many of the same issues growing up, are somehow not considered to be disproportionately impacted. 

We believe the federal government should leave regulations within each state alone during this multi-year implementation and defer to the TTB and SBA to work in conjunction with any Federal Drug Administration (FDA) regulations with their primary focus pertaining to interstate commerce and taxation as it relates to social equity permit issuance. 

Defining How Many Permits to Issue to Social Equity Operators

To address the common shortfalls of state programs, the DEIC realizes that social equity applicants are already a minority stakeholder in existing cannabis licensing. In most states, sadly, constituting less than 5% ownership. This is a huge difference compared to the proportion of individuals in prison for the same activities a licensed business is allowed to conduct.

  • Accordingly, the DEIC recommends a direct balance in ensuring a lock-out period on issuing new permits and ensuring, during that time, that 95% of the permits go to social equity owners/operators.

While some may consider such a counter-balance to be extreme, more and more states are increasing the committed amount of licenses for social equity to ensure a fair counter-balance. If anything, mega-players should be competing with each other for a select number of limited licenses – not the other way around.

We also realize that, in order to generate investment or value behind interstate commerce permits, there could not be an unlimited number of them initially issued. While the advisory board may issue more in the future, we feel a bold stand to increase the number of valuable permits for initial social equity applicants nationwide is necessary to ensure a balance that reflects the oversight to include social equity business into the industry thus far.

  • DEIC suggests 1,500 permits as a starting point divided among the three primary types (import, export, transport) as a fair balance initially.

The above policies may seem bold, but they are designed to seek to balance the industry and state’s failure to allow social equity participation. Most cannabis states left out social equity operators by mandating residency and felony-free requirements. 

The reality is that interstate commerce means selling the products already owned and produced by non-social equity folks. Further, if it was not for these legacy operators, there would not be a cannabis culture. A culture that has been co-opted from legacy social equity operators by mega operators who kept “undesirables” from the industry at its inception.

These policies seek to balance the needs of traditional cannabis businesses that would most benefit from interstate commerce, with the needs of social equity businesses to create equal opportunity. By limiting the number and availability of interstate commerce permits for at least a 5 lock-out year period, the policy ensures traditional operators partner with social equity permit holders to export, import, and transport their goods between various markets.

The policy helps ensure partnerships that are more equitable for both parties and, in doing so, seeks to avoid “predatory operating agreements” or “social equity colonialism” that dilute social equity operators who are not given the opportunity or resources to bring anything to the table. Therefore, the DEIC stands by lock-out periods and a dedicated high percentage of limited licenses for social equity interstate commerce permitting as a policy to balance existing inequity.

In the next part of this policy paper series, the DEIC will examine how this framework sets up social equity technical assistance, qualification, and a phased approach of implementation to ensure the widest net is cast and that social equity operators have ample time to qualify, are appropriately funded, and set up for success with an equal starting line for interstate commerce.

 

Video: NCIA Today – Thursday, April 7, 2022

NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.


This episode of NCIA Today is brought to you by Senseon Secure Access, offering concealed protection, monitoring, and workflow management for dispensaries. Senseon is ready to provide you with an exceptional customer experience, plus improved efficiency and compliance, not to mention slim and modular aesthetics. Learn more about their security solutions and cost benefits at Senseon.com.

NCIA Partners with Green Enterprise’s HBCU College to Career Initiative

This week on Thursday, April 7, 2022 kicks off the first event in a partnership between NCIA and Green Enterprise’s HBCU College to Career Initiative to bring career empowerment to HBCU students and alumni (Historically Black Colleges and Universities) starting at Chicago State University.  

This significant initiative expands opportunities for underrepresented Black and Brown people in the cannabis industry. In a series of on-campus events at HBCUs around the country, the College to Career Initiative will assemble prominent Black entrepreneurs, state officials, and thought leaders to discuss solutions to create a point of entry in the growing cannabis industry, as well as substantial pathways to success. 

Join us on April 7, 2022 at Chicago State University for a dynamic day where you can get up close and personal with prominent Black advocates and entrepreneurs for career advancement in the industry! 

You can expect to network throughout the day and join intimate conversations in the afternoon with experts on how to use YOUR unique skills to break into the industry. NCIA leaders will be speaking, as well as hosting “office hours” with students and alumni interested in discussing the best pathways to break into the industry. This event is a continuation of NCIA’s Equity Workshop Series, the live, in-person component of our equity scholarship and mentorship program. 

Creating a Pipeline to Generational Wealth

“The goal here is to create a direct pipeline of opportunity from black and brown students and alumni to our member companies and resources,” says NCIA DEI Manager, Mike Lomuto. By now most of us are aware of the vast underrepresentation of Black and Brown communities in the upper levels of the cannabis industry. This initiative is a way to build a foundation, starting at the ground level with students coming out of educational institutions gaining direct access to opportunities that might otherwise be out of reach by bringing these prominent Black entrepreneurs and cannabis leaders in person to meet with these students. 

When Mike and Andrew Farrior, co-founder of Green Enterprise Magazine, began conversations in the Fall, they aligned on the deep commitment to expanding real opportunities for folks to have access to building generational wealth. Green Enterprise, operated and produced by Digital Venture Partners and Black Enterprise, then announced the Green Enterprise College to Career Initiative. This series of on-campus events will tour HBCUs across the country in 2022, creating a point of entry in the growing cannabis industry, as well as substantial pathways to success. The timing of this couldn’t be more relevant, as many of the HBCUs are in the Northeast and Southeastern states that are coming online with cannabis programs, and as the tour gets established we will be there right on the ground providing access to the industry. 

The Unique Opportunity for NCIA Members 

NCIA will provide adapted versions of our Equity Workshop Tour at these HBCU events. The in-person component of our equity scholarship and mentorship program allows us to engage with social equity applicants and operators, as well as the community at large on the ground, in different regions in the country with the goal of addressing specific needs of the community while connecting them to resources. “So this is why it was such a good fit for us to make this partnership. We hope to connect with Black leaders in the industry who may be interested in joining NCIA and strengthening our mission together,” says Mike. 

NCIA is composed of thousands of cannabis industry companies that are searching for interns, employees, and partners. NCIA has the unique ability to represent small businesses in all different sectors all over the country. There are many opportunities throughout the NCIA network for people to enter and advance in the industry from a variety of entry points. Being involved in this historic initiative allows us to bring people to the table that may not have otherwise had the ability to partner with Andrew and Green Enterprise’s initiatives. When Andrew brought this opportunity to Mike, and Mike subsequently brought it to NCIA’s member base, the response was immediate and exciting. “People are ready to just give and do whatever they can to help with this initiative, and bring the cannabis industry to these campuses in whatever way Andrew thought we should do.” 

The HBCU College to Career Initiative Tour Dates 

These historic events at HBCUs will be taking place throughout the remainder of 2022, and underline a variety of conversations and lectures covering a wide range of topics, from entrepreneurship to cannabis marketing, to building an inclusive industry that began at Southern University in Baton Rouge, LA in February and will continue on to Chicago State University this April 7th, presented by Cresco Labs. The CSU event will be held in conjunction with the predominantly black two-year college, Olive-Harvey. The tour will then make additional stops at Florida A&M University on April 20th, and Medgar-Evers College on April 30th, both being powered by Massachusetts-based operator, Curaleaf.

Cresco Labs, the presenting sponsor for Chicago State University and Olive-Harvey College, will promote significant conversations and initiatives and hand out materials to initiate in-earnest partnerships between cannabis operators and HBCUs and develop a direct, effective talent pipeline into the industry.

Spotlighted topics such as social impact and entrepreneurship, as well as, economics and investing, will be covered. The full schedule is available at GreenEnterpriseHBCU.live:

Chicago State University & Olive-Harvey College – Chicago, IL
Thursday, April 7, 2022

Florida A&M University – Tallahassee, FL
Wednesday, April 20, 2022

Medgar-Evers College – New York, NY
Saturday, April 30, 2022

For more information on attending the upcoming events, please visit https://www.greenenterpriseHBCU.live/.

Get Involved! 

Sponsorship and partnership opportunities are available for this specific initiative and NCIA’s programs. Also for our members interested in becoming involved, please reach out to Mike Lomuto, DEI Manager.

We’re excited to get our members engaged with this initiative to create solid pipelines at this historic point in the industry. 

Committee Blog: Protect Against Corporate Identity Theft with Trademark Rights

By NCIA’s Cannabis Manufacturing Committee

A company’s brand is its identity. Branding elements – names, logos, colors, graphics, slogans – are how customers recognize a product or service as coming from a particular source. Done properly, brands can be as recognizable to consumers as a person’s face, name, and voice. In some cases, brands may be some of the most valuable assets a company may own. Protecting physical assets is common in the cannabis industry, but how do companies protect intangible assets, like their identity? Fortunately, there are bodies of intellectual property law designed to provide legal protections against others from using brand elements that are too close to your own. To take advantage of these protections, however, cannabis companies must understand how each one works and develop a branding strategy that leverages intellectual property laws.

This is the second article in a 3-part series about cannabis IP. The first article focused on patent law and can be found here. The series will culminate with a Q&A-based webinar on April 19th at 1:00 Eastern. Advance questions can be sent to paul@thalo.io.

Mechanisms of Brand Protection

Brands are protected most prominently by legal domains known as trademark and trade dress.  Trademarks include a company’s name, logos, and slogans, as well as those of any individual products. In some instances, trademarks may also include recognizable elements like colors (UPS’s brown) and sounds (NBC’s chimes). Trade dress is a similar concept to trademarks, but applies to the distinct appearance of a product or its packaging. Trade dress can even be used to protect the unique look and feel of a retail establishment, such as a restaurant or dispensary.

Both trademark and trade dress is intended to reduce confusion in the marketplace as to the origin of a product or service. The idea is that the public is best served when they can reliably determine which company to associate with each product. Reliable product-company association increases quality accountability, facilitates safety controls, allows consumers to form powerful brand loyalty.

Companies that avail themselves of trademark and trade dress laws gain access to a set of tools to legally fence off others from using branding that is likely to confuse customers about the source of a product. And, unlike other forms of intellectual property, trademark rights can last indefinitely and even strengthen over time. Some of these rights arise automatically just by using a mark, others must be sought out through registration.  

Principles to Consider When Selecting a Brand

Every company should consider trademark principles from day zero, when first selecting a name. U.S. trademark rights only apply to marks that are “distinctive,” meaning they are capable of distinguishing things bearing the mark from goods and services offered by others. The more distinctive a mark is, the stronger protections provided by trademark law. Names that merely describe the goods or services are non-distinctive and are typically not eligible for trademark protection.

There are five general categories along the spectrum of distinctiveness – fanciful, arbitrary, suggestive, descriptive, and generic – arranged from strongest to weakest.

Fanciful marks words that were invented specifically to serve as a trademark, such as Xerox or Nvidia. Because these words have no other meaning than to identify the source of goods or services, they are the most distinctive category of trademark and receive the greatest protections.  

Arbitrary marks are the second most distinctive category of mark and include words that have alternative meanings, but only meanings in contexts unrelated to the goods or services being sold. These include Apple computers, Lotus cars, and Bicycle playing cards.

Suggestive marks are less distinctive than Fanciful and Arbitrary marks, but still considered sufficiently distinctive to receive trademark protection, though registration may be more difficult.  Suggestive marks imply a quality or characteristic of the good or service the mark is used in connection with. Some examples of suggestive marks would include: Microsoft, a portmanteau of microprocessors and software; ChapStick, for a stick-shaped balm used on chapped lips; and Netflix, which is suggestive of an internet-based video service. 

Descriptive marks simply describe the goods or services being offered and are, therefore, not distinctive. In some cases, however, descriptive marks can acquire distinctiveness and achieve a “secondary meaning” as a source-identifier through long-term use (usually +5 years), heavy advertising, or pervasive adoption. Examples of Descriptive Marks would include: International Business Machines (IBM Computers); Best Buy retail stores; and Sports Illustrated magazine. 

Generic marks are terms that broadly identify the product or service being offered. Generic marks are so non-distinctive that they are not eligible for trademark registration, even if secondary meaning can be shown. The idea is that these marks are so fundamental to the product that it would be detrimental to consumers and the marketplace to allow a brand to have exclusive use of the term in connection with the goods. “Escalator” and “Dumpster” were once brand names but, because they were used widely to refer to all mechanized stairways and trash receptacles regardless of manufacturer, they lost all trademark distinctiveness.

Parody Does Not Apply – Avoid Famous Brands

A surprising number of cannabis companies have used trademarks that reference or parody famous brands. Gorilla Glue, Girl Scout Cookies, and many others have been used as names for cannabis products.  Companies have used packaging that resembles well-known products such as Life Savers and Sour Patch Kids. This is a bad idea. While this practice seems to be increasingly limited to unregulated markets, a recently published (and ill-advised) application for the mark and logo MCWEED for apparel shows that not everyone has received the message:

Registration and Scope of Protection

Some trademark rights are established as soon as a trademark is used in commerce. But to obtain the full scope of legal protections available, trademark owners must register their marks, preferably federally. Federal registration stakes a claim to a nationwide priority date, increases protections available, increases potential damages, and embodies a definities property that can accrue value.

All trademark registrations begin as applications. Trademark applications must, among other things, identify the mark, the applicable dates of use. Applicants must also describe the goods and/or services the mark is (or will be) used with and select one or more classes from an international menu of product classifications. The classes selected and the description of the products can greatly affect the scope and validity of a registration, so it is important to consult with an experienced trademark attorney.

These applications are examined by the U.S. Patent & Trademark Office to ensure they meet the statutory requirements. Typically, the USPTO completes examination within about 6 months, but currently the office is experiencing some delays and it is commonly taking 7-10 months for an application to be evaluated. If the examining attorney identifies any problems, they may issue rejections, to which the applicant will have an opportunity to respond.

If the USPTO approves the application, it will be published for 30 days (expandable to 180 days) to allow other trademark owners to oppose registration of the mark. Sophisticated trademark owners can set up alerts to be notified when any similar applications are published that may be concerning. At the close of that period the mark is recorded in the federal register and the trademark registration is complete. 

A qualified trademark attorney can help guide you through the process and provide counseling concerning how to maximize your chances of registering your trademark without prejudicing your rights. Trademark application fees run $250-$350 per class of goods or services and a trademark attorney will typically charge a few hundred to a few thousand dollars, depending on their experience and the level of pre-application clearance. While trademark mills and self-guided applications are available, there are many pitfalls to avoid while preparing and prosecuting a trademark application, and applicants should be wary of attempting to navigate the process without legal guidance.

Applicants should also be aware that many companies mine the USPTO database to send unsolicited offers to trademark applicants. While these offers can look official and typically include some deadline to respond, they are usually scams. Nevertheless, it can be helpful to have an attorney review any correspondence relating to the trademark application to ensure that no important correspondence from the USPTO is missed.

Embrace the Zone of Expansion

There are a lot of benefits to registering trademarks, but registration is not available in all instances. Under federal law, registrations cannot be issued that cover goods or services that are federally illegal. But the same mark can be registered for other, legal products, and the trademark rights will extend to a reasonable “zone of expansion,” covering products that the trademark owner could reasonably branch out to in the future. This allows a brand owner to obtain the benefits of federal trademark registration and use it to provide some umbrella protection for their cannabis brands.

One option is to sell branded accessory products, such as apparel or smoking accessories, for which a trademark registration will pass muster. It is debatable, however, whether cannabis products are within the zone of expansion of t-shirts.  

Another option is to develop one or more low-THC hemp products under the same brand as high-THC cannabis products. At least one case is already working its way through the courts where a trademark owner is claiming that cannabis edibles are within the zone of expansion of a line of hemp-infused, low-THC edibles. Edible IP, LLC and Edible Arrangements, LLC v. MC Brands, LLC and Green Thumb Industries, Inc., (Case No. 20-cv-05840). Though that approach is also not without its pitfalls, as discussed below.

A final option that every cannabis company should consider is state trademark registration. State registration requirements are typically governed by state law and, therefore, state trademark registrations can often be obtained for cannabis products. State registrations are more limited than federal registrations, but can be a powerful tool in the current landscape of cannabis IP.

Products with CBD Can Be Trademarked, But You Can’t Trademark “CBD” Products

Companies that produce hemp products do not have the same problem with federal illegality as companies with high-THC products. Federal registration is available for trademarks that are used on hemp and hemp products. However, as most hemp companies should know, the advertising of cannabidiol or “CBD” is regulated by the Federal Drug and Cosmetic Act (“FDCA”), 21 U.S.C. §§ 321(g)(1), 331(d) and 355(a). Because CBD is the active ingredient in an FDA-approved drug (Epidiolex®), the FDCA prohibits marketing CBD products (absent a New Drug Application or Abbreviated New Drug Application). Though that may change. As of now, however, the USPTO will refuse to register marks that identify the goods as “CBD.” In re AgrotecHemp Corp., Serial No. 88979905 (issued Feb. 10, 2022) (finding that PUREXXXCBD for plant extracts should be refused registration).  

Notably, the AgrotechHemp decision went further than previous USPTO decisions in that it also criticized the issuance of registrations for marks used on products “derived from hemp.” This may signal a crackdown on all hemp-related registrations, or it may be limited to registrations that explicitly identify the goods as containing “CBD.”

Where’s the Value in Trademarks?

It may come as no surprise that brands can be incredibly valuable assets. In some cases, a company’s brand can make up a significant portion of its balance sheet and brand-centric companies can fetch a premium when they are acquired, known as “goodwill.” Increasingly, specialized lenders are even willing to use secured IP as financing collateral. Nonetheless, the real value for many trademark owners is non-monetary.

When many people think about intellectual property, they recall headlines of jury verdicts with huge damages that can reach into the billions of dollars. The reality is that, absent intentional copying, trademark cases rarely result in large-dollar awards. More often, successful trademark suits result in an injunction preventing further infringement and some relatively minimal damages. The primary value of trademark rights is the ability to control your brand and how consumers perceive your brand in the marketplace. Trademark rights give you the tools to define your brand as a unique identity and preserve that identity in an increasingly crowded industry.

 

Committee Blog: Social Equity Perspectives on Interstate Commerce – Part 1

by Mark Slaugh, iComply LLC
NCIA’s Diversity, Equity, and Inclusion Committee

As the debate heats up on “how” rather than “if” cannabis legalization will happen, social equity and comprehensive reform are at the forefront of the minds of national legislators and advocates. Historically, people chose to legalize cannabis as a method of legitimizing the illicit cannabis market. Beyond the message that “Black Lives Matter,” the issue of the federal legalization of marijuana means, fundamentally, that the federal government must spearhead meaningful policies in diversity, equity, inclusion, and social justice, to balance the scales of injustice during prohibition and early legalization efforts by the States. 

Further, the Biden Administration’s priority of respecting the sovereignty and self-governance of tribal nations means federal trust and treaty responsibilities may finally be met by regularly having meaningful consultations with tribal nations to create federal policy. Thus, the inclusion of tribal nation’s representatives is imperative when creating federal policy to ensure their rights are secure and there is parity amongst states and tribes.

Any descheduling or legalization framework must hold a social equity objective that is clear at the core of its function: To create as much NEW generational wealth for the most number of those disparaged from participating in the legal cannabis industry because of the socioeconomic impacts of more than 80 years of federal marijuana prohibition and due to the barriers to entry created amid state regulatory regimes. 

Sadly, as written currently, all proposed federal bills fail to meet this critical objective.

As soon as the federal government deschedules marijuana, it falls under Congress’ constitutional purview to regulate interstate commerce. Marijuana included. This is likely the ONLY opportunity available for those impacted by the war on marijuana to balance the scales of historic injustice, by providing an opportunity to participate in cannabis business ownership in a meaningful and valuable way. 

If social equity is not adequately addressed in a federal act, it would require a secondary bill to tax and regulate interstate commerce activities. This would waste precious time and open a door to unregulated and taxed activities until congressional consensus and control are established. We have seen mistakes like this lead to disaster already amid state markets who leapt before ensuring a safety net. It also would NOT guarantee that social equity would be addressed in a second bill under new congressional, senate, or executive purview.

More importantly, the projected market cap of the U.S. cannabis industry is projected to be $85B by 2027 and was $18B in 2020. To put that number in perspective today, the largest tobacco company’s market cap is $95.6B – that’s over 5x the market cap of the whole cannabis industry. Similarly, the largest beverage distribution company has a $45.5B market cap – or over $2.5x of the current cannabis industry cap.

Both of these “big businesses” are in the cannabis industry already and they are preparing for federal legalization. The moment cannabis is de-scheduled, it quickly becomes an “extinction event” for social equity unless guardrails are put in place in the first Federal Act to offer social equity a fighting chance. 

To avoid needless delay, to leverage effective taxation and regulation, to protect social equity from rapid market consolidation and control, and to spearhead well-thought-out and innovative ideas to address the inequities of the cannabis industry, the National Cannabis Industry Association’s Diversity Equity and Inclusion Committee (DEIC) presents these considerations to amend any proposed federal act – in order to preserve key concepts central to addressing interstate commerce and the short-falls of previously enacted social equity programs.

The Problems with Current Social Equity Programs 

In analyzing the social equity programs undertaken at municipal and state levels so far, the NCIA’s DEIC has found multiple shortcomings in achieving the goal of generating new generational wealth for as many people who have been systematically discriminated against during the prohibition era of cannabis.

Namely, the following major issues continue to prevail:

  1. Social equity applicants who are unqualified or do not participate meaningfully in the ownership or operation of the cannabis business. This can be because of the following reasons:
    1. A lack of experience or expertise in business skills necessary to operate
    2. A lack of experience or expertise in regulated cannabis operations
    3. Fear of continued persecution and distrust related to trauma from being victimized by the war on drugs.
      1. Based on the fact cannabis arrests have and still disproportionately affected BIPOC community members.

This causes many traditional, large, and privileged Multi-State Cannabis Operators (MSOs), in addition to established market entrants (Tobacco and Alcohol) as well as Special Purpose Acquisition Funds (SPAC’s) – collectively referred to as “mega players” – to decide to “take the wheel and drive” the cannabis licensing process and to put the social equity operator in the proverbial “back seat.” Another issue that remains unaddressed and underlies challenges in successful social equity programs is that:

  1. Social equity operators do not have access to financing to meaningfully contribute to capital or operating expenditures to partnerships with cannabis companies who have capital and expertise. 
    1. This is certainly in large part due to generational prohibition and lack of access in being underprivileged. 
    2. Prohibition also impacts financing which systematically discriminates against the disprivileged; regardless of their interest to participate in the cannabis industry.
    3. These individuals were prohibited from entering the legal market (when barriers were lower) and were initially labeled as “undesirables” because of past criminal history. This gave the cannabis industry and culture away to people who never suffered a day in the war on drugs.

The lack of access to education, experience, and wealth often drives the existing “mega players” who “hold the keys” to expertise and wealth, to justify operating agreements that contain provisions that make the social equity licensee’s position dilutable in the event they cannot meet their operating or fiduciary duties. Which brings up the third underlying problem in social equity programs which is connected to the above factors:

2. Attracting and grooming social equity candidates to qualify for licenses only to then leverage the applicant out of the licenses, is often how “mega players” skirt around social equity provisions. The justification in doing so is due to the above two factors and is justified as “what is best for business” by traditional operators expanding their footprint through social equity licensing. 

In the social equity conversation, these partnership agreements are often referred to as “predatory operating agreements” which refer to the manner in which many “mega player” operators, knowing social equity applicants cannot bring education, experience, or money to the table, systemically target and groom qualified social equity applicants into delusions of wealth participation in cannabis only to obtain a license and then proceed into diluting the social equity partner – rather than educating them, providing them experience, or helping them obtain the wealth to contribute as equals. 

Mega players, multi-licensed cannabis businesses, and vertical cannabis businesses may also engage in “social equity colonialism” in which they create “incubator programs” to educate, train, possibly fund, or partner with social equity entrepreneurs only to have them compete against one another in “pitch competitions” in which the mega player can cherry-pick the most controllable or affordable operator or otherwise leverage them to benefit including using taxpayer funds granted by the state or through discounts on licensing and/or taxes. Too often, the intent is to “tokenize” social equity operators, rather than empower them as equals.

Whether intentional or not, the impact of reducing social equity applicant participation after using them to obtain social equity licensing is a commonplace practice and shortfall of the programs analyzed by the DEIC.

To solve these problems, the DEIC acknowledges that the motivation for those in power to remain in power does not incentivize them to provide a truly equitable partnership simply because a program exists to do so. To address these diluting agreements, we recognize that the Government must play a role in addressing the underlying factors which justify the behavior driving “predatory operating agreements” and “social equity colonialism”.

Indeed, federal legalization and the regulation of interstate commerce with social equity at the forefront may be the last opportunity to address the harms caused by prohibition nationwide and the inequity of governments refusing to address social equity in cannabis. Similar to the Civil Rights Act of 1964, the victims in the war on cannabis cannot depend solely on state and local governments to address social equity. 

Over the next two parts of this series, we will outline a framework of components that may be amended or included in a federal legalization bill to resolve the problems in social equity identified and to provide a comprehensive reform for permitting interstate commerce and addressing the inequity prevalent in the cannabis industry.

Video: NCIA TODAY – Thursday, March 10, 2022

NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.

Committee Blog: Protecting Innovations in Cannabis Technology

The Role of Patents in the Industry, Now and in the Future

Paul Coble is an intellectual property attorney and Chair of NCIA’s Cannabis Manufacturing Committee; Scott Seeley is an intellectual property attorney with Eastgate IP and is Organizer of the Cannabis Manufacturing Committee

Competition in the cannabis industry has always been fierce. To date, most competition has focused on securing licenses and sales territory. But, as markets saturate and the green pastures are all claimed, the battlefronts must shift. Cannabis companies now look to collect non-geographic assets, such as market share, profitability advantages, and a durable brand presence.

Intellectual property law provides mechanisms to capture and monetize these intangible assets. Assets that give a company a competitive advantage can build value into a business beyond its balance sheet. Well-crafted IP portfolios not only deter freerider copying, but are also valuable assets that can be sold, licensed, or provide incentive for investment or acquisition by larger entities. Businesses with a strong IP strategy are able to maintain their edge over their competitors by protecting their investments in technology and marketing to discourage competitors from utilizing their newfound developments or improperly capitalizing on their brand recognition.  

Ignoring cannabis IP not only leaves this value on the table, but exposes the business to unnecessary risk. As in all other industries, cannabis companies must recognize that competitors have IP portfolios that may need to be avoided or licensed. Modern competition requires solidifying your own rights as well as understanding the rights of others.  

Intellectual property is often broadly broken out into four major categories.  Each category is tailored to protect different forms of intangible assets:

  1. Patents (Technological Developments)
  2. Trademarks (Brand Recognition, Consumer Goodwill)
  3. Copyright (Original Authorships and Expressions)
  4. Trade Secret (Information Providing Competitive Advantage)

This blog post overviews patents, and how patents can be used by cannabis businesses to protect their technological advancements. This is the first of a 3-part series about cannabis IP. The series will culminate with a Q&A-based webinar on April 19 at 1:00 PM ET. Advance questions can be sent to paul@thalo.io.

What are Patents?

Patents protect technological advancements and can be used to exclude others from making, using, importing, or selling a claimed technological innovation. 

Patents are often used by businesses to build walls around technologies they develop to temporarily prevent competitors from using the same advantages. Companies also use patents to build portfolios of technology that can be sold or licensed like any other asset, or used to bolster their valuation for acquisition or investment opportunities. 

But patents are not just used to block competition, they can also be a tremendous source of information about technological developments in the field. While patent discovery tools are admittedly lacking at the moment (GooglePatents is a good place to start), the details in a patent can often short-circuit months or years of work. Of course, depending on the patent claims, you may need to license the patent in order to use that information.  But that type of information-for-licensing-rights exchange, with the right mentality on both sides, is the foundation of an efficient industry.

Here are just a few examples of the cannabis technology that may be patent eligible:

  • Cannabis Strains
  • Formulations for Extracts, Topicals, Tinctures, Vape Liquid, Edibles
  • Vaporizer Design
  • Cartridge Design
  • Extraction Methods
  • Manufacturing and Processing Methods

There are three types of patents that can be used to protect cannabis technology: Utility, Design, and Plant. These types of protection are not mutually exclusive and sometimes can be combined to form a more comprehensive protection strategy. 

Utility Patents

Utility patents are the most popular type of patent, offering the broadest and strongest form of protection. Utility patents last 20 years from the date of filing and are good for protecting nearly any new technological innovation including formulations for extracts, topicals, tinctures, or edibles, new vaporizer designs, new improvements to processing or manufacturing methods, and similar developments. Utility patents can also be used to protect new cannabis genetics, at least theoretically. As discussed below, however, there are several practical barriers to patenting cannabis genetics.

A significant benefit of utility patents is that they can protect the actual function of an innovation, rather than just the outwardly recognizable features or the specific implementation. This aspect of protection sets utility patents apart from other forms of protection like design patents and copyright, which are limited non-functional aspects.

Design Patents

Design patents protect an item’s unique ornamental appearance. Design patent protection is sometimes easier to obtain than utility patents because design patents only protect the look of an item, not how it works. So design patents do not protect against someone selling a functionally identical device with a different outward appearance. This narrower protection also lasts only 15 years instead of 20.

Nevertheless, design patents can be a strong tool to protect products that have a novel and distinct design aesthetic. They can cover the visual appearance of vaporizer batteries or cartridges, retail packaging, even unique dispensary displays. In some cases, design patents can be effectively combined with trademark and trade dress protections to create a highly defensible brand style.  

Patenting Cannabis Strains

The most common questions about cannabis patents usually relate to patenting strain genetics. Newly developed strains can be protected by both utility and plant patents, with varying rights and requirements. Cannabis strains may also, theoretically, receive pseudo-patent protection under the Plant Variety Protection Act of 1970 (“PVPA”). As noted below, however, current practical realities make PVPA protection unattainable for most cannabis strains.

Both plant and utility patents can protect cannabis strains, but they do so very differently. Utility patents cover newly invented compositions of matter and, therefore, can be used to prevent copying a novel genetic sequence. These patents literally cover specific sequences of DNA base pairs. A key requirement of utility patents is that the applicant must enable others to make and use the same invention once out of patent. While it may be possible to meet the enablement requirement with a transgenic breeding or CRISPR gene editing, the more common method of enabling plant gene patents is with a biological deposit of seeds or other propagation material with a public organization. So long as cannabis remains federally illegal, it can be difficult or impossible to make the deposit within the U.S. Some applicants have had success making the seed deposit at foreign centers, but the growth of cannabis genetic patents has been slowed by these requirements. When cannabis is eventually descheduled, the practical barriers to genetic patents will fall and that may trigger a rush by more companies to seek patents for their proprietary cannabis strains.

Plant Patents

Another form of patents, plant patents, can protect new plant varietals that have been reproduced asexually. Although cannabis plants are relatively easy to reproduce asexually via cloning or cutting, one disadvantage of this form of protection is that plant patents only cover genetically identical copies, reproduced asexually from the claimed plant. That means to infringe a plant patent, one must physically clone the patented plant–a narrow base for an infringement claim.

Plant Variety Protection Act

The last vehicle that can protect a new cannabis strain is the Plant Variety Protection Act that was designed specifically to protect sexually reproducing plants, such as cannabis.

The PVPA, however, comes along with a strict requirement that at least 3,000 seeds of the claimed plant species be deposited with the U.S. Department of Agriculture in Fort Collins, CO. The USDA will not accept any deposits for plants that are classified as controlled substances, including cannabis. Meaning that, for the time being, PVPA protection is unavailable for cannabis plants that do not qualify as hemp (less than 0.3% d9-THC). 

The Process – How to Get a Patent

All patents start as applications which must be examined and approved by the U.S. Patent & Trademark Office (“USPTO”) to become granted patents. The application process, from start to finish, can last 1-5 years and cost anywhere between a few thousand to tens of thousands of dollars.  

The examination involves a review of the patent application, as well as related literature published before your application was filed (also called “prior art”). An examiner with technical expertise in the application’s field will search for prior art and determine whether the application meets all statutory requirements. Most notable of those requirements are that the invention must cover eligible subject matter and be sufficiently inventive to warrant a patent.

The prosecution process typically involves letters back-and-forth between the inventor and the Patent Office. It is often thought of as a negotiation — nearly all patent applications receive at least one rejection. The applicant is given an opportunity to change what the patent covers or explain why the rejection was wrong. Only if and when the Examiner is satisfied that all statutory requirements are met will the application be allowed to issue as a patent.  

How will Patents Shape the Cannabis Industry?

Like it or not, patents are rapidly becoming a major force in the cannabis industry. The cannabis industry is in a unique position to determine the role intellectual property will play, but one thing is certain: cannabis IP cannot be ignored. Some companies, like Canopy Growth, Nextleaf, and various pharmaceutical companies, are aggressively developing patent portfolios and high-stakes patent litigation is already underway. Additionally, holding companies known as “non-practicing entities” have been formed to purchase valuable patents covering key aspects of cannabis cultivation, manufacturing, and consumption.  

But these forces do not have to dominate the industry. Patents were originally designed to promote scientific advancement, not inhibit it. When the IP rights of others are respected and technology is licensed widely at reasonable rates, intellectual property can cut years and millions of dollars from research budgets. Some industries have found success with patent cooperatives and similar pooled-patent arrangements. The future may see some combination of patent licensing with blockchain technology, NFTs, or decentralized autonomous organizations (DAOs).

We will continue the discussion as to what an enlightened approach to intellectual property could look like in the cannabis industry in our webinar scheduled for April 19 at 1:00 PM Eastern. Please send any advance questions to paul@thalo.io.

 

 

Equity Member Spotlight: Toni Brands with Toni Scott

NCIA’s editorial department continues the Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members. 


Tell us a bit about you, your background, and why you launched your company.

I grew up in Connecticut in the 70s and was repeatedly reminded of the cannabis stigmas, witnessing others partake in regular consumption, yet never noted any of the proclaimed stigmas; in fact, it appeared the exact opposite.

I’m a Master’s prepared Registered Nurse and Certified Yoga teacher, working in the healthcare industry for over 30 years. As a child and well into adulthood, I suffered from debilitating eczema, anxiety, and depression, treated with high-dose topical steroids, sedatives, and antihistamines, eventually leading to overuse. In the mid-’90s, I smoked my first joint; I also began pursuing my first nursing degree. 

A few years after graduation, I began working as a travel nurse in Newborn Intensive Care Units across the U.S.  Although I was very aware of the relief cannabis brought to my physical and mental wellness, I utilized it with underlying shame, guilt, and fear of a positive urine drug test, a legal pre-employment requirement for nurses.

By the early 2000s, I suffered a traumatic professional burnout; at the time, my health was poor, my stress-induced eczema exacerbations left me with painful cracked skin on my face, hands, arms, and legs. I was prescribed the highest dose of topical steroids and antihistamines with no resolve; I was a mental and emotional wreck.

Unfortunately, that wasn’t my first time feeling defeated in my skin; as a child, I ingested various prescribed medications. I can vividly recall feeling like a walking science experiment, constantly misdiagnosed and prescribed drug after drug. Nothing worked; in fact, the treatments left me worse off; it wasn’t until the professional burnout that I decided to take charge of my physical, mental and emotional health. I stopped taking ALL prescribed and over-the-counter medications; instead, I began to intentionally utilize yoga, meditation, dietary changes, and cannabis for self-care. 

I began to dig deeper into the plant, educating myself about the endocannabinoid system phytocannabinoids, researching the history, and regular visits to local dispensaries. It was during the dispensary visits that I identified a massive pain in Gen X and Baby Boomer populations. Stigma, fear, and uncertainty keep many in this demographic away from reaping educational and wellness benefits of a healthy balanced endocannabinoid system, incorporating phytocannabinoids, physical movement, stillness, and creative expression.

I launched my brand to become the sought-after wellness thought leader, educator, and advocate for cannabis health equity in communities most affected and continue to be affected by the war on drugs.

What unique value does your company offer to the cannabis industry?

I bring my personal experiences of the therapeutic effects I’ve received from cannabis. As a nurse, I understand human anatomy and physiology, including the endocannabinoid system. Through continued education, I’m well versed in the relationship between endocannabinoids and phytocannabinoids and the effect they have alone and together on human wellness. I understand how incorporating movement and stillness practices in partnership with cannabis can provide many health benefits.

What is your goal for the greater good of cannabis?

I have three primary goals for the good of cannabis.

  1. Wellness Thought Leader – As an aging woman who utilizes many Eastern wellness practices, my goal is to share with others a new approach to aging, using my handcrafted CBD-infused topical skin products, yoga, meditation, and creative expression practices. 
  2. Education – Cannabis stigma is a significant barrier between acceptance and usage in Gen-X and Baby Boomer populations. It’s my goal through easy to comprehend education, storytelling, retreats, and practice to begin breaking these barriers. Including educating our community leaders, political figures, dispensary owners, and religious leaders. 
  3. Advocacy – Cannabis health equity is not something Black and Brown folks should need to beg for; it’s my goal to be a voice for the voiceless, actively work towards better health and wellness in communities that are often overlooked when it comes to education, yet flooded with legal and illegal access to cannabis without any instruction or understanding. The lack of economic, social, and political health equity in these communities is a recipe for failure as adult use becomes legal and the impending federal legalization. We can’t afford to wait and see this out; we must address cannabis health equity now.

What challenges do you face in the industry, and what solutions would you like to see? 

Unfortunately, being an African American woman in this industry is a challenge. My personal experience with the plant, professional education, and long-standing career in preventative wellness doesn’t seem to hold much weight. The industry is more vested in the marketing and sales of cannabis, touting social equity along the way for good measure. That’s not enough; cannabis health equity, education, resources, and sustainable outcomes must be provided. I’d like to see multi-state operators hire diverse directors of health services to their c-suite. A diverse leadership team can provide a balanced focus on cannabis social and health equity that serves the industry and the end-users.  

Why did you join NCIA? What’s the best or most important part about being a member of the Social Equity Scholarship Program?

I joined NCIA for the opportunity to meet, learn, grow, and collaborate with other industry professionals. The membership fees can be steep for those bootstrapping, and I wanted to see what NCIA was about and if they walked the talk before committing to a full membership. It’s been a fantastic journey so far. I’m on the Education Committee, its retail sub-committee, and health equity working group. Our weekly social equity “Power Hour” is highly beneficial, a safe space to collaborate and support each other. It’s also been a great resource, and I appreciate the educational webinars, complimentary conference tickets, and business development support.

 

2022 and Beyond: Lobbying Congress with NCIA Evergreen Members

by Madeline Grant, NCIA’s Government Relations Manager

Founded in 2010, the National Cannabis Industry Association is the oldest and largest trade association representing legal cannabis businesses. Our membership consists of hundreds of forward-thinking businesses and tens-of-thousands of cannabis professionals from coast to coast. That being said, our work and effectiveness in cannabis policy reform continues to be one of the most important duties at NCIA. During the pandemic, NCIA’s government relations team continued to work to support congressional offices through education and conversation. As we continue to be effective on Capitol Hill, our lobbyists work closely with NCIA’s Evergreen roundtable to effectively shape policy reform. 

Due to Evergreen members’ investment in shaping policy for the cannabis industry, we are able to take our Government Relations work to the next level. This month, we will be hosting our first ever Virtual Mini-Lobby Days, taking place the week of January 31. As we continue to represent a value-driven, responsible industry, our main goal is to educate congressional offices on all aspects of cannabis policy reform; social equity, banking, 280E, scientific data, and much more. I want to thank our Evergreen members for supporting our policy agenda.

Let’s take a look at some policy goals in 2022: 

You’ll remember that during the 116th Congress, the SAFE Banking Act became the first cannabis-related bill to be passed by a chamber of Congress. It also became the first piece of cannabis legislation to pass the 117th Congress in April of 2021 by a vote of 321-101. Since last spring, the bill has languished in the Senate due to disagreement over enacting comprehensive versus incremental reform.

This year, expect pressure on the passage of SAFE to increase. While efforts to enact comprehensive reform continues, the votes are simply not there as of now. If you’re interested in learning more about this conundrum, take a look at this piece that the Brookings Institute recently posted.

NCIA is continuing to build support for the SAFE Banking Act in the Senate, but some big news was announced recently that will certainly impact the legislation in the future: longtime champion and lead sponsor, Rep. Ed Perlmutter (D-CO), just announced that he will not be running for re-election next session. Rep. Perlmutter spoke to Colorado Public Radio this month about his decision not to run for reelection this November and his disappointment that, while the House has approved the Secure and Fair Enforcement (SAFE) Banking Act five times now in some form, the Senate has failed to advance it under both Republican and democratic leadership. The congressman says that he’s going to work to pass his marijuana banking bill before his time on Capitol Hill comes to an end. 

There are numerous bills that have received much attention in terms of descheduling cannabis – among them the MORE Act (H.R. 3617), the States Reform Act (H.R. 5977), and the discussion draft (not formally introduced) of the Cannabis Administration and Opportunity Act (CAOA). Please read my colleague’s blog HERE for more detail. 

As we continue to discuss comprehensive legislation with Capitol Hill offices, our main focus is to continue to be a resource when these offices have questions or concerns. It is imperative that NCIA remains in conversations as language is analyzed and discussed. As we work with NCIA members and our Evergreen roundtable, we continue to relay the burden of federal prohibition and how it impacts our businesses and communities. 

How can you do more as an NCIA member?

There are ways for you to be more active as an NCIA member. For example, you can consider applying to be on one of NCIA’s committees this summer. As a committee member you’ll work alongside other cannabis professionals as thought leaders to develop industry standards. Some of our committees include: Education committee, Retail committee, Hemp committee, State Regulations committee, Diversity, Equity & Inclusion committee, and many more. 

If you are a larger company looking to make a meaningful investment in NCIA’s government affairs work, there is the opportunity to join our Evergreen Roundtable. For more information or a consultation feel free to email Madeline@TheCannabisIndustry.org. Stay tuned for policy updates from our Government Relations team. 

 

Video: NCIA Today – January 13, 2022

NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.

Committee Blog: Brand Driven Package Design Cheatsheet

by Wendy Barr, CEO & Creative Director, Barrcode Branding
Member of NCIA’s Packaging and Labeling Committee

You want “that” package, the one that is flying off the shelves; the one that people photograph and post on social media; the one that makes the consumer feel something inside, something special, maybe even emotional. Maybe it’s a package they keep, reuse, save, share, and purchase over and over again.  

If you’re in retail, you want a package that earns you shelf space. A package that retailers want at eye-level in their stores and dispensaries, featured on their website, in their app, directly in front of the consumer… tantalizing, educating, and urging them to purchase. Admit it, you have an amazing product, and you want irresistible packaging design!

What does all gorgeous packaging have in common? 

YES!! Branding!

Cool, you have been listening…

Yes, it’s true, we’re extremely passionate about packaging design (and branding). That’s why we’ve committed our professional life to the packaging design industry. We want to understand why a consumer is compelled to purchase one package over another. What makes this package so hypnotic and desirable? We want the graphics, colors, messaging and overall design to appeal to something deep inside of the discerning adult consumer. It’s our goal to create a personal connection that expands beyond the product itself. The packaging is more than a mere vehicle. It should hold the sale, inform, and delight the consumer.

Did you know that packaging design is one of the last sustaining manufactured print products?

Think about it. Magazines, books and literature, posters, flyers, brochures, album covers (yes, I remember vinyl), even business cards are on their way out. But, product packaging is here to stay. It can’t be purely ‘digital’; the product has to go into something for transport, storage, information, and more. 

Your packaging is a billboard that represents your entire brand.

Your branding will dictate the look and feel of your packaging, and the language used to communicate the product’s value to the consumer. When you get this part right, you can experience huge rewards. But if you get this wrong, you may never get a second chance. Ouch, that stings…

Many businesses get this wrong, especially those in newer industries like the legal cannabis, CBD, and hemp industry, for example. Some companies opt for a white label product and simple packaging design created by the white label company. Or they print their own labels using their DIY logo and wonder why it’s not selling. It’s a great product, tried and true, but the packaging doesn’t communicate the brand value to the consumer effectively resulting in #epicfail. 

Why focus so much energy on Brand Driven Package Design?

If the goal is to be visible, popular, and profitable, your product packaging can’t be an afterthought. Your branded product packaging is part of the big picture. It’s functional marketing and should be treated as such. Keep it simple, clean, and on-brand, and you can’t go wrong. You got this!

Here is your mini cheatsheet:

Branding (need I say more?)

Your spot-on brand identity comes first, it has to, because your packaging design is a reflection of your brand. The logo, colors, fonts, imagery, and language must be indicative of your unique differentiation as a brand. 

Sustainability (it’s time to save the planet!)

Make sure that your packaging materials reflect your brand values and mesh with the product. Sustainability issues and concerns are critical due to the potential negative impact on the environment. Consider recycled and/or recyclable materials, and work with regulators and lawmakers to improve access and feasibility. 

Primary vs. Secondary Packaging (what does it all mean?)

Primary packaging is what directly holds and contains the product (like a bottle). Secondary packaging is the exterior packaging (like the box that holds the bottle) that protects and/or labels the product. Tertiary packaging is used for bulk handling, storage, and distribution.

Specialty Design Agency (can you say branding?)

Choose an agency that is or has worked closely with you on the development of your brand. A professional agency will have designers with expansive knowledge regarding packaging design, print production, branding, and marketing. Your packaging design, website, and marketing efforts must be intrinsically and cohesively linked to your brand identity.

Wait, maybe white label or private label would work for you. But, in that case, is branding still a valid concern? 

I’m so glad you asked! White labeling is hot and trending in the cannabis industry. But, is it right for you? Let’s take a look…

What are White Label Products?

White label products are mass produced by a manufacturer as a generic product, and sold to a retailer who will in turn add their own label and sell it under their brand name. The formula is standard and typically, cannot be customized. So, the only thing that you can customize is the branding, packaging design and brand marketing. 

What are Private Label Products?

Private label products are produced by a manufacturer as well, but in partnership with the brand to create a unique formulation. It is a longer, more expensive undertaking, but it results in an exclusive product. Retail brands use this to differentiate their products and cater to their niche audience. 

White Label vs. Private Label

How do business owners decide which is the best investment for them? Well, it’s important to weigh the price differential. White labeling is more affordable, but the product is not original. Private label requires a more substantial investment, but it allows for collaboration, flexibility, and exclusivity with regards to formulation, and in some cases, trademarking and market share. But, unless you have a loyal, expansive customer base and exceptional branding/marketing, it could be difficult to compete against established, well-known brands. 

What is exactly the same?

BRANDING! In the end, no matter the direction you choose, a white-label product or a private label, the only way to optimize your visibility and assure that your product stands out is branding. Having professional, eye-catching branding, a spot-on brand story and a unique branded marketing strategy can earn you distribution, shelf space, and loyal customers now and in the future. 

Short story long, if you are in this to win this, do it right the first time! Make it custom, make it YOURS!

 

 

 

 

NCIA’s DEI Program New Year Update

by Mike Lomuto, NCIA’s DEI Manager

We must not let federal legalization become the “War on Drugs 2.0.” Rather, it must be the foundation for the building of generational wealth.

The modern-day cannabis industry is the product of a century of prohibition and the war on drugs. With federal legalization fast approaching, it is up to us all to ensure that this industry does not become the “Drug War 2.0.”

At the National Cannabis Industry Association, we recognize the importance of impactful Diversity, Equity, and Inclusion initiatives. 

At the core of our DEI Program is our Equity Scholarship Program (ESP). Launched in 2020, nearly 200 ESP members are enjoying the benefits of a complimentary first year of NCIA membership thanks to this program and its financial sponsors.

Equity Scholarship Program Features

  • Complimentary passes to all NCIA events
  • Live Social Equity Workshops at our national conferences
  • Weekly video conference calls
  • Facebook community
  • Catalyst Conversation Educational Webinars

Unique Opportunities for ESP Members to Leverage NCIA’s Platforms

“Being part of the program has transformed our company. The mentorship we’ve received has been instrumental in our growth. Being part of NCIA provided opportunities for us to gain new business relationships, become committee members, and participate in webinars. It’s also been great meeting other social equity members and building a community together.”  – Kay Villamin, Hush Chicago, NCIA’s State Regulations Committee

As a trade association, at the core of NCIA’s mission is to create industry-shaping policy advocacy. Our Diversity, Equity, and Inclusion Program is ensuring that diverse voices are properly integrated into that advocacy, including:

Of course, Diversity, Equity, and Inclusion would be meaningless unless we see that greater representation plays out on our biggest stages and in our board rooms.

  • NCIA has one of the most diverse boards of directors in the industry, including members who joined NCIA through our Social Equity Scholarship Program
  • Increasingly diverse representation across the leadership of NCIA’s fourteen sector committees
  • Consistently inclusive representation on panels – live and virtual. The overwhelming sentiment at our recent Midwest Cannabis Conference in Detroit was that it was “the most diverse and inclusive conference” many speakers and attendees had ever experienced

“I’m a firm believer that the more you give, the more you get, and my experience at NCIA is proof of that. Becoming a scholarship member at NCIA as a woman and minority founder has been an incredible opportunity… Committee work has rewarded me with new perspectives, recognition, and invaluable relationships that have strengthened my business.” – Helen Gomez Andrews, Co-Founder & CEO, The High End; Committee Organizer, DEI Committee

“The Scholarship Program gave way more than we could ever ask for. As a veteran and minority-owned company, with a core focus on community impact through cannabis, we have been provided with important opportunities and resources. The program is holding the door open for others like us to enter into the industry. You will not regret being a part of the Social Equity Scholarship Program.” – Keyston Franklin, The Doobie Room; Vice Chair, Banking Committee

As we continue to build for the integrity of the industry and future generations, we are looking for partners to join us.

Become a DEI Program sponsor and let’s build this movement together.

 

 

 

 

 

Video: NCIA Today – Friday, December 10, 2021

NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday here on Facebook for NCIA Today Live.

Member Blog: When Sustainability Comes to Compensation in Cannabis

by Fred Whittlesey, Founder, President, and Principal Consultant of Cannabis Compensation ConsultantsTM
Member of NCIA’s Human Resources Committee

At the NCIA Cannabis Business Summit & Expo next week, there is an all-day workshop on the topic of sustainability. As a member of the NCIA Sustainability Committee, representing the NCIA Human Resources Committee, I have been actively involved in putting this together. While this session will not directly address my specialty, employee compensation, there will be discussion of how broad the idea of sustainability is, and how it permeates every element and every decision in a business.

Not a day goes by that I don’t receive in my inbox one or more blogs, articles, or studies on introducing ESG metrics into executive compensation incentive plans. It’s all the rage. Consulting firms that published opinions only two years ago that this was “not a prevalent practice” and “not consistent with the current corporate governance environment” have been proven wrong.                                                                                                                                        

I have been presenting on this topic, in the context of compensation, since 2014 – in London, Vancouver BC, Los Angeles, San Francisco, Silicon Valley, and Seattle among other places and virtual spaces. 

It has been a priority for the United Nations since the introduction by Kofi Annan in 2006 – first introducing the “ESG” label – followed by the UN’s issuance of the Sustainable Development Goals in 2015. Then the shot-heard-round-the-world in corporate circles, BlackRock CEO Larry Fink’s annual Letter to CEOs starting in 2016, and continuing every year since. ESG is not new.

As recently as 2019 we still couldn’t figure out what to call it. CSR, ESG, Triple Bottom Line, etc. These discussions inevitably include reference to Conscious Capitalism as well. I went to my first Conscious Capitalism conference, in San Francisco, in 2013. The key concept of Conscious Capitalism is consistent and balanced treatment of all stakeholders, not just shareholders. Employees, customers, suppliers, the environment, the community. 

But the discussions today are primarily about adding ESG metrics to existing executive compensation structures. There’s a lot of greenwashing going on there.                                                                                                                                                                                                                                                                           

Sustainability is not just about metrics, as essential as good metrics are for measuring progress. Building a sustainable organization is about more than carbon emissions, recycling, water conservation, and biodegradable packaging. Sustainability is a risk management strategy.

A prominent risk factor in every business is people. Not just regulatory enforcement of labor laws, or risk of litigation from discrimination, or wage and hour law violations. Building a sustainable organization is reducing the constant churn of employees, avoiding destructive labor cost-cutting to pacify shareholders while extracting the funds from other stakeholders, and considering social justice goals when deciding how to pay people.

At that first Conscious Compensation conference for me, I was astounded that employee compensation was not mentioned once. Well, one speaker had one bullet point on one slide that said “employee ownership” – that was it. I returned from the conference and trademarked the term Conscious Compensation® because you can’t practice conscious business without considering how you share value with your employees. From the trademark grew a conceptual model and then dozens of conference presentations, gradually sliding in the sustainability theme while avoiding the appearance of a “save the whales” label.

Now it’s the core of my approach to compensation advisory services. I may not call it that, but it’s in there.

It fits perfectly with the ethos of the cannabis industry. If I was a speaker at next week’s Sustainability workshop, I’d be talking about all of this. In the meantime, check out my other blog this week on the session, Cultivating Your Workforce where we will be discussing compensation.


Fred Whittlesey is the Founder, President, and Principal Consultant of Cannabis Compensation ConsultantsTM, a Compensation Venture Group SPC company. 

Fred is a member of the NCIA Human Resources Committee and the NCIA Sustainability Committee.

Fred is recognized by corporations, professional organizations, universities, media, and colleagues around the world as a compensation expert and thought leader.  His ideas have been presented in numerous book chapters, journal articles, media interviews, conference and seminar presentations, and hosted blog postings.

  • Fred’s thought leadership in the field of compensation is evidenced by his delivery of more than 300 conference presentations, seminars, certification courses, webinars and podcasts. He has presented and taught in 26 US States, 4 Canadian Provinces, UK, Ireland, France, Germany, Netherlands, Switzerland, Turkey, and Indonesia.
  • He has authored more than 50 peer-reviewed journal and magazine articles, book chapters, white papers, and sponsored papers. He has been a paid writer for PayScale.com, Salary.com, InvestorJunkie.com, and SeekingAlpha.
    Fred has been interviewed and quoted more than 100 times by more than 35 different media sources including Associated Press, Bloomberg, Business Week, Fortune, New York Times, Los Angeles Times, Orange County Register, Seattle Times, San Jose Mercury News, and San Francisco Chronicle. He has been retained to conduct research to support investigative journalism for The Los Angeles Times and The Boston Globe.

Cannabis Compensation ConsultantsTM is a division of Compensation Venture Group SPC, a Washington Social Purpose Corporation. The company is a Green America Certified Business. 

The firm specializes in compensation strategy, executive and director compensation, equity-based compensation, incentive design, and employee pay with a focus on sectors driven by innovation. We also provide expert witness and litigation support for civil litigation and regulatory matters.  Our clients include Boards of Directors and executive teams of public and private companies, LLCs, S corporations, and foreign subsidiaries.

Our Canadian sibling consulting firm is Conscious Compensation Group Inc. in Squamish, BC.

 

Member Blog: Compensation in the Wild West of Cannabis

by Fred Whittlesey, Founder, President, and Principal Consultant of Cannabis Compensation Consultants
Member of NCIA’s Human Resources Committee

At the NCIA Cannabis Business Summit & Expo next week, there will be a panel session titled Cultivating Your Workforce. As a member of the NCIA Human Resources Committee, I have been actively involved in putting this together, and as a compensation expert, I wanted to ensure there is going to be, of course, a lot of discussion about compensation – executive compensation, incentive compensation, and employee ownership. 

It’s appropriate that this month’s #CannaBizSummit is being held in San Francisco, arguably the historical culmination of Wild West culture, with the Gold Rush as its driver. Not unlike today’s cannabis industry – a gold rush of sorts, by federal definition a lawless community, and a community culture of moving fast and defining as we go. 

As a compensation expert, I typically prefer a more orderly and well-defined world, which is why I am fascinated with working in the field of compensation in the cannabis industry. It’s challenging because I am in the business of answering clients’ questions about compensation. It’s not always easy to do in cannabis.

There are three factors that explain where we are today in understanding and analyzing compensation levels and practices in cannabis, and three driving forces that will take us from today’s Wild West to tomorrow’s still innovative, still creative, but a bit more business-like approach to compensating employees in cannabis companies.

Today

  • No valid compensation surveys or databases exist for the cannabis industry. There are various publications that self-label as “surveys” but are merely data compilations missing the rigor of survey methods that have been established over the past decades:
  • Little or no definitions of jobs
  • Extremely wide ranges that defeat usability
  • Reports of cash compensation only, some with base salary only
  • Very small sample sizes, often not disclosed
  • No list of participating companies 

In short, they’re not compensation surveys. Established survey companies have not entered the cannabis market due to legal and/or stigma factors. They will, eventually. But they’ll be late to the party, so to speak.

For now, we have no real market data. Except for some executive positions…

  • For executive positions and equity compensation plan design details, data from public company securities filings continues to be the most valid and reliable source
  • Securities and Exchange Commission EDGAR filings (U.S.)
  • System for Electronic Document Analysis and Retrieval (SEDAR) (Canada) 

Despite currency, cultural, and governance differences, combining U.S. and Canadian data makes sense given the integrated labor market for talent. But it’s no easy task.

Unlike for publicly-traded companies in the U.S., executive compensation information for cannabis companies is difficult to obtain and interpret for multiple reasons:

  • Most companies are listed on Canadian exchanges
  • The Canadian disclosure requirements are less rigorous, such as:
  • Lack of a single table for all forms of executive pay
  • No dollar value required to be calculated for equity compensation grants
  • Limited disclosure of the history of equity compensation grants
  • A high rate of errors and omissions compared to U.S. filings (as I discussed in MJBizDaily)
  • Companies whose shares are traded in the U.S. are not on major exchanges and not subject to the extensive disclosure requirements of NYSE and Nasdaq companies. This is changing – as exemplified by last week’s listing of the SPAC Canna-Global Acquisition Corp (NASDAQ:CNGLU) on Nasdaq, but SPAC listings have a reduced set of disclosure requirements. (full disclosure: I am an investor in CNGLU.)
  • Most companies are of a size and status (e.g., Emerging Growth Company) that also have reduced pay disclosure requirements. 

So, despite what is a rich source of executive and equity compensation data which we have relied on for decades now, these databases are not (yet) of the same usefulness as for other industries.

And even if we didn’t have those tactical issues… the characteristics of the cannabis industry exacerbate these difficulties:

  • Smaller companies and private companies 
  • High-growth stage, resulting in the lag time in reporting rendering the information significantly out-of-date 
  • High concentration of founders and insider ownership, which results in compensation levels and practices that are not free-market based – one CEO taking zero compensation and another in the 8 figures. 
  • Top-heavy C-level position structures, e.g., an Executive Chair and a CEO and a President and a COO – too many chiefs 
  • High levels of turnover and movement of executives among internal positions. A good is example is from 4Front Ventures’ most recent filing:

So, the question of how much this company pays its top executives… is an unanswerable question. I wonder if even the company could answer that question?

Tomorrow

The turbulence in executive compensation levels and practices will lessen, and our knowledge and understanding will improve, when three trends converge:

  1. More public companies, including SPAC deals, and continued M&A activity, bring in more outside investors with expectations of corporate governance and practices consistent with other industries in which they are invested. This also will have the effect of lessening the influence of founders as more “professional” (hired external) Board members are added to the governance structure. 
  2. With more public companies will come more market data, as we have for most industries today both in the U.S. and Canada. While limited to the top 3 or top 5 executives in each company, these disclosures provide a factual and verifiable dataset for the most senior positions, for the use of equity compensation for employees, and for the breadth of executive compensation arrangements such as new hire packages, severance and change in control agreements, and various perquisites. 
  3.  And of course, legalization. With the U.S. federal restrictions and the associated stigma removed, cannabis companies will become subject to the same governance, institutional investor and proxy advisor pressures, and the large consulting firms will push them toward the ISS/Glass Lewis “playbook” approach to advising. I’m not saying that’s a good thing, because it’s not, but we already see it happening in Canada where large multinational compensation firms are overlaying the boiler-plate ABCs. 

It is my hope that the innovation and creativity we see in the cannabis sector today will not suffer from these three dynamics. There’s nothing wrong with living in the Wild West, if you’re comfortable with fewer rules, fewer constraints, and less transparency. But it helps when there is a Sheriff and a couple of Deputies in town.

This conversation is not limited to executive compensation. Equity compensation for all employees is a common aspiration in cannabis companies. Equity compensation plans are always complex to design, implement, and administer and are exponentially more so in cannabis companies. Complex organization structures with public entities, private companies, LLCs, and even nonprofits all bring talent from diverse industries with vastly ranging experience with and expectations for equity compensation. 

  • A trimmer coming from agriculture or a Dispensary Manager from specialty retail has likely not received equity as a component of their compensation in the past.   
  • A chemist coming out of biopharma or a software developer, if told there is no equity compensation plan for all employees at your company will be, at the least, disappointed if they even continue interviewing with you. 

Similarly, a candidate from the financial services world may be surprised that every employee is not participating in one or more cash incentive plans, not just the sales reps.

There is a LOT of work to be done on compensation planning in the cannabis industry, and I’m thrilled to be right in the middle of it. 


Fred Whittlesey is the Founder, President, and Principal Consultant of Cannabis Compensation ConsultantsTM, a Compensation Venture Group SPC company. 

Fred is a member of the NCIA Human Resources Committee and the NCIA Sustainability Committee.

Fred is recognized by corporations, professional organizations, universities, media, and colleagues around the world as a compensation expert and thought leader. His ideas have been presented in numerous book chapters, journal articles, media interviews, conference and seminar presentations, and hosted blog postings.

  • Fred’s thought leadership in the field of compensation is evidenced by his delivery of more than 300 conference presentations, seminars, certification courses, webinars and podcasts. He has presented and taught in 26 US States, 4 Canadian Provinces, UK, Ireland, France, Germany, Netherlands, Switzerland, Turkey, and Indonesia. 
  • He has authored more than 50 peer-reviewed journal and magazine articles, book chapters, white papers, and sponsored papers. He has been a paid writer for PayScale.com, Salary.com, InvestorJunkie.com, and SeekingAlpha. 

Fred has been interviewed and quoted more than 100 times by more than 35 different media sources including Associated Press, Bloomberg, Business Week, Fortune, New York Times, Los Angeles Times, Orange County Register, Seattle Times, San Jose Mercury News, and San Francisco Chronicle. He has been retained to conduct research to support investigative journalism for The Los Angeles Times and The Boston Globe.

Cannabis Compensation ConsultantsTM is a division of Compensation Venture Group SPC, a Washington Social Purpose Corporation. The company is a Green America Certified Business. 

The firm specializes in compensation strategy, executive and director compensation, equity-based compensation, incentive design, and employee pay with a focus on sectors driven by innovation. We also provide expert witness and litigation support for civil litigation and regulatory matters.  Our clients include Boards of Directors and executive teams of public and private companies, LLCs, S corporations, and foreign subsidiaries.

Our Canadian sibling consulting firm is Conscious Compensation Group Inc. in Squamish, BC.

Committee Blog: Don’t Wipe Out – Riding the Wave of Cannabis Standardization

by NCIA’s Facilities Design Committee

Staying ahead of the quick rollout of state, national, and international cannabis regulations is a huge and complex challenge. The patchwork of more than three dozen (and counting) different state regulatory regimes remains disconnected as cannabis remains federally illegal as a Schedule I drug. The framework of regulations and standards that guides allied sectors such as Foods, Dietary Supplements, Pharmaceuticals, or Tobacco is just beginning to take shape. Where do you look for guidance? How do you choose how to invest, how to design your operation, and how to produce?

There are a number of considerations and industry-relevant organizations to become familiar with when looking to conduct business in the cannabis space. In doing so, businesses can operate more successfully and mitigate risk. Risk should not be underestimated – many cultivation and manufacturing facilities will fall seriously short of the expectations of agencies such as the Federal Food and Drug Administration (FDA), Occupational Safety and Health Administration(OSHA), the Environmental Protection Agency (EPA), if risk, both business and consumer health and safety, is not considered upfront. Market pressures will build quickly as brand-savvy companies with significant capital and operational expertise enter the field. One way to avoid wiping out – is looking to national and international standards, guidelines and regulations already in place. For a comprehensive list of relevant standards regulatory bodies, refer to our recent blog post here.

As standards continue to be developed by industry experts for adoption by regulators, businesses can be empowered to run their operations with more predictability and reliability knowing that they demonstrate compliance with approved industry guidelines. Laboratories will have access to valid test methods and reference materials. Equipment specifications will require globally accepted certification marks or labels (such as CE or UL) which ensures safety and longevity of operations.

What is the cost of not adhering to established standards?

A simple batch loss can easily exceed tens of thousands of dollars of lost product, let alone the damage to your brand, labor costs surrounding rework, and relationships with your clients. Crop and batch losses due to subpar equipment sourcing, processes that are not validated, and worse – risk of fines or losing your license are all symptoms of a business lacking standardization.

Credible standards – they are data-driven, go through a rigorous and transparent process. In most cases, these standards were developed with input and guidance from federal and international regulatory agencies.

Here is the snapshot today. Read it fast, because it may be out of date next month: 

The NCIA has several relevant committees sharing best practices and developing guidance for our industry.

ASTM International, one of the oldest and most recognized Standards Development Organizations (SDO) formed Committee D37 on Cannabis in 2017, and has already approved over 25 standards that provide guidance on key areas such as: 

AOAC International, another 100+ year old SDO has a Cannabis Analytical Science Program (CASP) where cannabis standards and methods have also been developed – principally in the area of product standard method performance requirements (SMPRs) and methods of analysis such as:

You don’t have to put your business at risk of wiping out! The resources that NCIA Committees continue to create have your best interest in mind. Stay tuned to ensure you have the latest resources and guidance!

Video: NCIA Today – September 10, 2021

NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday on Facebook for NCIA Today Live.

 

Equity Member Spotlight: Next Level Edibles – Anthony Jenkins Jr.

This month, NCIA’s editorial department continues 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 me a bit about your background and why you launched your company?

I was born in Hayward, California and spent most of my childhood in Mesa, Arizona, and in the Bay Area, in Northern California. After high school, I spent some time at The Farm (Stanford) and graduated from The House (Morehouse College). 

Next Level was started almost 10 years ago. During a particularly trying part of my life, a medical professional recommended antidepressants and anti-anxiety medicine for symptoms I was experiencing. Taking these drugs made me feel slightly better, but came with a host of other problems; twitching, irritability, weight gain. I needed another solution. 

In college, I experimented with cannabis and as an adult, I found that it alleviated my symptoms without the side effects. Unfortunately, the halflife for cannabis is only 90 minutes which wasn’t nearly long enough to cover my full workday. I learned about edibles and how they can last for 4 to 6 hours and I was really attracted to their lack of smell. As a business professional, a deal could be broken if I smelled like cannabis. Edibles did not have a negative connotation and were perfectly discreet for my work environment. 

Unfortunately, edibles only came in two different types at this time period: tasty, but completely lacking on potency, or absolutely disgusting and potent. No one should ever need a chaser for their edibles. The industry was ripe for a company with absolutely delicious products that could also provide a strong dosage.

What unique value does your company offer to the cannabis industry?

Next Level empowers people to infuse any food or beverage and accurately dose it for higher tolerances. With our products, the home cook can imbue any dish her heart desires and the morning warrior can add a kick to his favorite hot beverages.

Cannabis companies have a unique responsibility to shape this growing industry to be socially responsible and advocate for it to be treated fairly. How does your company help work toward that goal for the greater good of the cannabis industry?

When we started this venture, there was not much information out there about equity cannabis companies. Realizing there are probably many other minority entrepreneurs trying to start a cannabis business, I started a Facebook group called CES (Cannabis Equity Success) to help disseminate information about equity programs across America and to raise the profile of equity companies to support. In addition, I’ve been assisting new entrepreneurs to get connected with resources to see their vision come to light. As a minority-owned business, it is very important that we celebrate and support other businesses owned and operated by women, veterans, those with disabilities, and people of color. 

It is Next Level’s vision to support these minority-owned businesses. Partnering with women-owned businesses, like Changemaker Creative, not only makes good business sense as they are local leaders in the industry, but also allows us to gain key insights into our target market. The owner and head creator, Lilli Keinaenen, is able to provide details and cater designs that appeal directly to her demographic. Other awesome women-led companies that are our strategic partners include our copacker, the Galley, and Supernova women.

In our distribution chain, we work with BIPOC owned companies like Local Equity Distribution and Breeze which provide jobs and revenue to the people and communities negatively impacted by cannabis arrests.

What kind of challenges do you face in the industry and what solutions would you like to see?

The biggest challenge we face in the industry is getting dispensaries to buy small company products. We are a small “mom and pop” owned by family members from Oakland, CA. It’s more challenging to get dispensary buyers to sit down with us because they prefer to save their time and shelf space for the larger established brands. One possible solution for this problem is to have each dispensary dedicate a certain portion of its stock to legacy brands/small mom and pops/equity companies. 

The other challenge we face is getting access to capital. This is a bootstrapped venture, and issues in cannabis take a lot more time and money to solve than other industries. Unfortunately, there are not a lot of angel investors or investment companies putting money in cannabis and even less in minority entrepreneurs. The solution for this is to make the investment world much more equitable and inclusive. 

Why did you join NCIA through the DEI Scholarship Proogram? What’s the best part about being a member?

I joined NCIA through the DEI Scholarship Program for an opportunity to learn best practices for my industry and to network with the finest minds in cannabis.

 

Committee Blog: Managing Your Workforce During Fall Harvest

By Kara Bradford, Viridian Staffing
Chair Emeritus of NCIA’s Human Resources Committee

It’s that time of year again, the busy fall harvest season. While indoor growers can harvest year-round, the fall can create significant workforce challenges, especially for outdoor producers and processors. Here are three tips to make sure you are ready to go for the fall harvest!

Plan ahead! If you have not already thought through your fall harvest plan, you will want to figure this out immediately. Most cannabis companies need additional workers during harvest season, unless their grow schedule is structured where they are harvesting on a regular basis, depending mostly – if not entirely – on their permanent employees for harvesting, de-leafing, trimming, etc. However, given the increased demand for workers by outdoor growers, even in a normal year, the demand for labor often exceeds the supply, placing added pressure on anyone competing for this talent. 

Every fall we receive a rash of calls from producers, who failed to plan ahead, requesting workers that same week, if not the same day. Unfortunately, by this time, nearly all the available labor, especially those with experience and skill, have already been scheduled and committed elsewhere. In rare cases, staffing companies might be able to provide workers if they had another client in the area back out, at the last minute due to a heavily damaged crop or not being ready for harvest at the time they originally projected, however, cannabis growers shouldn’t count on this. A good rule of thumb is to provide at least 2-3 weeks’ notice, minimum, to request your harvest crews during the fall, and the further in advance the better. Many cannabis companies that have struggled in the past with worker shortages during the fall have started locking in their fall staffing as early as spring.

COVID-19 has created an even more significant labor shortage. Before 2020, we saw thousands of workers coming into the United States from other countries to take their ‘vacations’ working on unregulated market farms doing harvest work and trimming and getting paid cash. Due to COVID-19 travel restrictions keeping much of this seasonal labor out of the U.S., the regulated and unregulated market were increasingly forced to compete for the same domestic talent with the unregulated market often winning this battle as they were paying tax-free cash at higher wages, given their relatively lower costs compared to the regulated market. Thus, many cannabis companies ran into situations last year where, unless they were able to pay premium rates for harvest workers, their in-house staff were forced to work a ton of overtime to make up for the shortfall. We hope that in 2021 this won’t be the case, however with COVID-19 numbers rising again, this is something that cannabis companies should plan and budget for just in case.

If your cannabis operations are relatively remote or not within an easily commutable distance from a large population center, you may need to go the extra mile to make it easier for workers and staffing companies to assist you. If nothing else it is essential to take an inventory of nearby resources and be prepared to communicate them easily. For example, if you can’t provide lodging to your seasonal workers, you will want to create a list of local hotels/motels, RV Parks, and campgrounds that offer services. Many of these workers are accustomed to traveling from site to site in RV’s, camping, etc. Create a list of grocery stores, gas stations, and other retail establishments the crews may need to access. If there aren’t any lodging options close to your farm, and you have the means, you might want to consider buying some land nearby and building some basic lodging. We have even seen some cannabis companies open a cafe or restaurant close to their farm when there weren’t any good or healthy options in the area so that workers would have a place to go on their lunch breaks or after work. The more of a positive experience you can provide to these workers, even though they are seasonal, the better. Production will typically be quicker, you may gain a customer and even an ambassador for your product, and that worker may be excited to return for years to come, which will keep you from having to deal with some of the labor shortage issues other producers struggle with.

Have a contingency plan. Many of you already know this, but you should always have a plan B and plan C, maybe even a plan D. 2020 and 21 have definitely been years of fires, hot temperatures, and floods. If air quality is deemed especially poor in your area, due to smoke, many harvest workers won’t be able to work outdoors as worker’s compensation policies won’t cover workers laboring in such conditions and few people will want to. We’ve also noticed an uptick in state governments coming out with restrictions and safety guidelines during times of poor air quality or extreme heat. If you’re in an area that has a fire season, you’ll want to have a plan for workers during this time. Perhaps you will need to have them work indoors when the air quality is poor, focusing on things like bucking, trimming, and packaging; then back outside to continue the harvest when conditions allow.

Given the increase in COVID-19 cases, you’ll definitely want to have SOPs and contingency plans in place in the event your crew is exposed to COVID-19. To be proactive, you should also take precautions to protect workers from exposure before it occurs including having masks and hand sanitizer supplies on hand in abundance. Contingency plans could include having a partnership with a staffing firm to provide workers for your fall harvest or offering overtime and bonus incentives for your regular workers to pick up the slack, if necessary. If you’re working with a staffing company, most crews of harvest workers will have a team lead who is there to assist with any HR-related issues that might come up (i.e., sick workers, injury, etc.). However, if for some reason there is not a team lead assigned for your crew, you’ll want to make sure that the workers have a point of contact at your company for any HR-related issues that come up. 

Last but not least, if you’re looking for great, experienced harvest talent, especially when it comes to trimming, you will need to budget for the kind of talent you want. With the most talented crews, you’ll likely need to pay some form of a retainer upfront as many of them have trimmed more seasons than adult-use has been around and have not always been paid for their work. Last year, we typically saw trimmers making $15-$25/hour. This was before bonuses. Companies who want to incentivize things like speed and quality increasingly offer bonuses for the quantity and quality of output. This has resulted in the best workers making nearly $50/hour!


The Godmother of Cannabis Industry Recruiting, Kara Bradford, MBA, MM, is Co-Founder & CEO of Viridian Staffing. Founded in 2013 as the first professional, full-service staffing, recruiting & HR consulting firm in the Cannabis industry, Viridian Staffing has led the way in providing temporary, temp to hire, direct placement & HR outsourcing services. Kara has been an HR professional, specializing in Talent Acquisition, Talent Management, Workforce Planning, Employer Branding, Compliance, Federal/State Employment Laws, and Organizational Design for over 15 years. Her career has spanned multiple Fortune 100 companies & start-ups in a wide variety of industries. More importantly, she has more experience recruiting in the cannabis industry than any other Recruiter globally. Kara has an MBA in Human Resources & Organizational Behavior and is LinkedIn Recruiter Certified. Kara is active in many organizations, including NCIA, The Cannabis Alliance, Women of Weed, etc., and was the Founding Chair of the NCIA’s Human Resources Committee.  

Video: NCIA Today – September 3, 2021

NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday here on Facebook for NCIA Today Live.

 

 

Committee Blog: Successful Retail Outcomes of SAFE Banking

By NCIA’s Retail Committee

Have you ever wondered where or how a cannabis retail business banks? You should know that it’s complicated because of federal prohibition. So what do you do? Some are finding workarounds and loopholes, others are able to obtain services with smaller financial institutions for exorbitant costs, while many others struggle to maintain an expensive, risky, and dangerous cash-only ecosystem.

The 2020 elections set the creation of four new regulated state cannabis markets in motion, and four more state legislatures followed suit in the first half of 2021, making the last year arguably one of the most consequential and momentous periods for the cannabis industry and policy reform.

However, cannabis is still illegal at the federal level, classified as a Schedule I substance under the Controlled Substances Act, despite state-level regulated cannabis markets in more than half the country. This prevents banks from doing business with cannabis companies because of fear of prosecution or reputational risk, as these businesses aren’t viewed as legal under outdated federal laws.

The cannabis industry is optimistic about the future, though, thanks to an increasing interest in cannabis, public safety, and economic development in Congress. Lawmakers in both chambers are actively debating comprehensive legislation to remove cannabis from the schedule of controlled substances and regulate it federally while repairing some of the harms caused by prohibition, but there are also incremental reforms in play that have a track record of success in the House as well as bipartisan support. Chief among them is the Secure and Fair Enforcement (SAFE) Banking Act, which would provide safe harbor for financial institutions that wish to work with state-legal cannabis businesses and allow them to provide services to the industry without fear of prosecution. This legislation originally passed the House in 2019 and was the first piece of standalone cannabis policy reform legislation ever to receive a vote or be approved by a full chamber vote.

Since then, cannabis banking has been approved in the House three more times in various forms, mostly recently when it passed the SAFE Banking Act again – and with record bipartisan support – earlier this year. The bill is now awaiting consideration in the Senate, but has yet to be taken up by the Senate Banking Committee. 

So, what does the SAFE Banking Act mean for retail cannabis businesses?

Loans, capital markets, and credit card processing are common interests for cannabis companies. Access to traditional lending is particularly important for small businesses that usually lack connections to angel investors and venture capital. However, some of the benefits of this legislation are of special interest to cannabis retailers. Check out what some of the Retail Committee members are considering to be important aspects of broadened access to banking and financial services:

Safety 

“As a retail cannabis business operator, safety is of our top priorities as it directly affects our staff, our patrons, and our bottom line,” said Larina Scofield, director of retail operations at Lucy Sky Cannabis Boutique dispensary chain in Colorado and vice-chair of NCIA’s Retail Committee. “We are required to operate as a predominantly cash business in a high-risk industry that can sometimes lead to criminal targeting; this can put not only our business at risk but also the potential individuals on-site if a targeted crime were to take place. 

“There is also no doubt that operating a cannabis business is costly, due in part to the fact that we do not receive the same benefits and protections that other businesses have; cannabis companies are also subject to higher fees in order to get similar services, if those services are available at all. Lucy Sky is fortunate enough to have banking and armored services, as well as a cashless ATM service to allow for safer money handling, but this does not come without a price… a high price. Our company pays top dollar every year in order to have banking and secured payment delivery (something that is not seen in traditional businesses), in order to provide safety for our business and to the individuals who frequent our facilities.

“SAFE Banking would mitigate that and allow for retail cannabis companies to operate without having to “constantly look over their shoulders” so to speak. It would provide an enormous sense of security in an already high-risk business, it would allow for small business owners to receive proper funding to allow for safer operations, and it is truly crucial in the progression of the industry as a whole.”

Less Cash on Premise 

“Less cash during COVID-19 is always a plus. The goal is to limit contact, and we all know cash is constantly being passed from person to person. There are plenty of studies highlighting how many germs really are on physical cash. Researchers found plenty of questionable microbes on $1 bills in a more recent study. In a world where we are all concerned about our physical health, the time is now to reduce physical cash in cannabis businesses. Or at least, give people the choice to go cashless if they want to. Let’s also not forget the security benefits of carrying less cash on the premises”, said Byron Bogaard, CEO of Highway 33, a cannabis dispensary in Crows Landing, California, and chairperson of NCIA’s Retail Committee.

Contactless Delivery for Retail

“Golden State Greens had a spike in deliveries during the COVID pandemic but were still forced to collect cash and signatures from customers. When online orders can process card transactions we can make a true contactless delivery where both payment and signature are managed from the customer’s device. This will increase the safety of our drivers by maintaining safe distancing practices and allow new types of deliveries to drop boxes or to customers’ homes similar to Amazon,” said Gary Strahle, chief growth officer for California dispensary Golden State Greens.

Beyond these major issues, there are a number of potential outcomes that could impact retailers as well.

Revamping the relationship between cannabis businesses and banks will likely trigger higher competition for banking services, resulting in lower fees. This would clearly benefit small businesses but could also have an impact on the frequency and nature of mergers and acquisitions in the cannabis space.

Regulatory frameworks will certainly change, and outstanding litigations will most definitely become more complex. Chargebacks from credit transactions will be a constant problem, due to the level of surveillance and data collection they will more easily be disputed.

Better access to banking also positions technology companies for success, as there will be a high demand for mobile wallets, online ordering, and automatic recurring memberships. We can’t predict everything, and there might be more hurdles to cross than we realize, but the technologically-agile retailer may benefit most. Studies show that most of the Top Fortune 500 Companies use software platforms such as Salesforce to manage their enterprise, however many of the canna-specific solutions are missing much of the integration and scalability needed to immediately handle broadly increased access to the banking system.

Speak your voice.

The SAFE Banking Act is critical to the cannabis industry’s success, and your voice will tip the scales. Reach out to your members of Congress, especially your Senators, and tell them what safe banking means to you as a cannabis retailer. Remember, policy needs to support logic over emotion. Emotions are important, but remind Senators of the logic behind implementing safe banking solutions for cannabis businesses: 

  • Reducing the risk of robbery & theft with less cash on the premises 
  • Supporting the demand cannabis businesses receive, which in turn supports the local and national economy and helps minimize the unregulated market
  • Reduce pathogen transmission by limiting physical cash transaction

If your senator already supports the SAFE Banking Act, please politely ask them to prioritize this legislation in the current session.

Video: NCIA Today – August 20, 2021

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