Committee Blog: Announcing Winners of NCIA’s State Regulatory Committee 2024 CannaStar Awards
National Cannabis Industry Association’s State Regulation Committee announces 2024 award winners for cannabis regulatory and program rollout success in 8 states
State-level cannabis regulations are a moving target; or rather, 50 moving targets. Despite nationwide movement in nearly every US state towards a regulated, adult-use market, each state has approached cannabis sales with their own unique flair.
Although it has been fun to watch each state’s program mature under their own particular point of view, as we move forward into 2025 our committee wants to call attention to some of the states we feel are getting it right.
The National Cannabis Industry Association State Regulatory Committee (NCIA’s SRC) hopes that by highlighting the successes (some of them unlikely) in individual states, we can inspire states to come together to share best practices, work towards eliminating redundancies for multistate operators, and create a streamlined framework that allows for greater access to the market for both would-be operators and consumers.
Without further ado, here are the National Cannabis Industry Association State Regulatory Committee’s CannaStars for 2024!
Best Social Equity Program: Illinois
Through the Illinois R3 Program (Restore, Reinvest, Renew), 25% of Illinois cannabis tax revenue is reinvested into communities disproportionately impacted by the War on Drugs, funding initiatives like job training, reentry services, and legal aid. Since launching, this has amounted to $244M in marijuana-funded revenue grants to community organizations that address disinvestment and excessive incarceration in Illinois.
Illinois also prioritizes social equity applicants for licensing by offering additional points on applications, reduced fees, and conditional licenses for roles such as craft growers and transporters. Further, the Cannabis Business Development Fund provides low-interest loans and grants to social equity applicants, helping reduce financial barriers to starting a cannabis business.
Like every state, Illinois continues to navigate the complexities of implementing a fair social equity program. However, the state has also backed up their commitment to restorative justice with criminal record reform. They have identified more than 770,000 records of “minor cannabis offenses” that may be eligible for expungement.
Currently, of the 25 jurisdictions with legal adult-use cannabis programs, 18 have an active social equity program. NCIA’s SRC believes that Illinois leads the nation with a model for social equity within cannabis that truly prioritizes a fair, restorative model.
Best Hemp Regulation: Kentucky
Kentucky’s hemp program stands out as a model of safety, transparency, and innovation due to its prioritization of registration and rigorous testing of hemp products. In Kentucky, all hemp-derived cannabinoids must undergo purity testing and remain compliant with THC limits. Packaging and labeling must also be clear and meet rigorous standards, similar to those in the adult-use markets of other states.
Although enforcing hemp producers and sellers to comply with tight standards has been met with some controversy, NCIA’s SRC believes that Kentucky’s efforts are a good thing and reinforce trust in the marketplace for consumers. California’s outright ban on intoxicating hemp derived products in 2024 has made it clear that lax regulations on hemp put the reputation of the entire cannabis industry at risk.
Beyond safety, Kentucky’s Cabinet for Health and Family Services does an outstanding job fostering collaboration. They engage farmers, processors, and retailers through education and support, and are transparent about regulatory changes and best practices. Their forward-thinking approach has positioned Kentucky as an ideal place for farmers and cultivators throughout the country.
Best Balance of Cannabis and Hemp Regulations: Minnesota
When Minnesota voted to legalize adult-use cannabis in 2023, the state already had a thriving hemp-derived THC product market. Instead of bulldozing the existing hemp market, Minnesota has instead worked to bridge the gap and create a cohesive framework that supports existing businesses, innovation, while also prioritizing public safety and further economic growth.
One of Minnesota’s key strengths is its integrated approach to regulation: hemp and adult-use cannabis are regulated centrally. This is a substantially different model than many other states, where cannabis and hemp are managed by separate regulatory bodies. By overseeing hemp-derived THC products and cannabis under a unified system, the state avoids market confusion and ensures consistent quality standards.
By carefully integrating cannabis and hemp regulation, Minnesota has positioned itself as a model for other states. NCIA’s SRC believes that the Minnesota model – a two-tiered system where lower THC products can be manufactured and sold more readily while higher concentrates of THC are sold through a traditional adult-use framework – merits consideration nationally as a way to increase access, safety, and roll-out adult-use without disrupting existing businesses.
Best Legislator: New Mexico State Senator Katy Duhigg
Elected in 2021, Senator Katy Duhigg (D) represents Albuquerque Senate District 10. Duhigg is the former Albuquerque City Clerk, with a background in election and consumer protection. As a State Senator, she brings extensive cannabis knowledge to her role, and has been critical in allowing New Mexico to emerge as an unlikely success story in adult-use cannabis.
Senator Duhigg serves as Chair of the Senate Rules Committee, and as Vice Chair of the Senate Judiciary Committee, where cannabis-related legislation enjoys the most rigorous discussion. Her commitment to the cannabis industry was witnessed during her very first legislative session, wherein the Cannabis Regulation Act was passed, legalizing cannabis for adult use in New Mexico.
The Cannabis Regulation Act was signed by Governor Lujan Grisham in June, 2021 and New Mexico was able to roll out their program quickly and effectively. Less than a year later, on April 1, 2022, New Mexico was open for business. There are now 3,071 active license holders (as of December 4, 2024).
Since the passage of the CRA, Sen. Duhigg has been absolutely integral, leading the charge in the Senate to improve the enabling legislation and to ensure New Mexico’s cannabis industry continues to mature, with strong equity protections that include uplifting the existing medical operators who have been serving the state since the beginning of New Mexico’s medical cannabis program in the 1970s.
Best Age Verification Guidelines: Nevada
Cannabis is frequently subject to “think of the children” style regulations and moral panic, but states often miss the mark when actually trying to put guidelines in place that protect minors and keep products out of their hands.
Nevada is still the first, and only, state to require any type of ID authentication to detect fake and suspicious IDs, and the Nevada Cannabis Control Board remains the most well-educated regulatory body on the subject of the forensic document analysis required to actually separate adult users from minors presenting false identification.
Furthermore, in March 2023, Nevada Assemblyman Brian Hibbets introduced AB342 – special interest legislation – that would have required onerous, and expensive third party checks as part of the Nevada dispensary age verification process. The Nevada State Legislature smartly shot down this amendment, which was vendor-specific language desperately seeking a problem that doesn’t exist in a state where every dispensary is doing the absolute most to detect fake IDs and keep minors out.
As of May 2024, Nevada is also the only state to include any guidelines for age verification of cannabis purchase via eCommerce, or age verification for cannabis delivery. This makes Nevada the top state in the nation for preventing underage sales, but with a common-sense approach that doesn’t try to add unnecessary burdens to their cannabis operators.
Best Challenge to the DEA: Georgia
In 2023, Georgia took the bold step of deploying their medical program directly into independent pharmacies across the state. With a limited product mix and a nascent patient base, this was an innovative way to jump-start a program and avoid high capital costs. The program was on track to get 90% of the medical cannabis patient base accessible within a 30-minute drive within 6 months of launch.
Unfortunately, in November 2023, the DEA sent an ominous letter to ice the exciting new rollout, reminding pharmacists that cannabis is still a Schedule I substance. However, instead of capitulating to the threat, the industry persisted and the state stood by to support the program with 52 pharmacies remaining active license holders. NCIA’s SRC celebrates Georgia’s commitment to medical cannabis patients and increasing access, in spite of federal threats.
Best Tax Rate Reform: Washington State
The culmination of a 5-year effort finally succeeded in removing all state taxes from Washington Department of Health-compliant products when purchased by registered medical patients. This matches the standards for pharmaceutical purchases in nearly every US state, where prescribed medications are non-taxable. Washington now joins 10 other states who do not tax medical cannabis purchases.
Since 2016 The Cannabis Alliance, Washington’s largest cannabis trade organization, has been advocating for the reduction or removal of the 37.5% state excise tax on medical cannabis products. Now, as of June 6, 2024, registered medical patients can purchase prescribed cannabis tax-free, a nearly 50% reduction in total cost to medical consumers. The state also introduced new higher testing standards for medical products, a patient registry, and a medical cannabis consultant license provided to budtenders.
Although adult-use cannabis in Washington still remains subject to a 37% tax, and the NCIA SRC acknowledges that taxes are needed to continuously fund state cannabis programs, we want to highlight Washington as the first state in the nation to treat medical cannabis as a medical necessity under the tax code, easing consumer financial burdens, and helping better position medical cannabis as a legitimate and needed treatment for many conditions.
Best Employee Protections: Nevada
Nevada leads the way with some of the strongest employee protections in the United States to ensure legal users of medical or adult-use cannabis do not face workplace discrimination. In 2020, Nevada was the first state to prohibit most employers from rejecting job applicants based on pre-employment marijuana tests. This landmark legislation, codified under Assembly Bill 132, effectively protects job seekers who legally consume cannabis, while still allowing employers to maintain workplace safety standards for positions in safety, aviation, and other high risk roles. Additionally, Nevada law protects employees from penalties for lawful off-duty cannabis use. This includes the stipulation that employers cannot take adverse actions against employees for testing positive for cannabis unless there is a direct safety concern or violation of company policies.
For medical cannabis users, Nevada law goes a step further by requiring employers to attempt reasonable accommodations for qualifying medical conditions. This requirement, enacted under Assembly Bill 453, emphasizes that individuals using medical cannabis for legitimate health concerns are entitled to workplace protections, similar to those afforded to employees using other prescription medications.
Notably, the Nevada Supreme Court has affirmed employees’ right to sue for violations of these protections, cementing the legal precedent that employees have the right to challenge discriminatory actions based on cannabis use. The court’s decisions have reinforced Nevada’s position as a model for other states considering similar workplace protections for cannabis consumers. These legal safeguards represent a forward-thinking approach to balancing employee rights with workplace safety, and have set a gold standard for workplace cannabis policies across the United States.
Best Regulatory Addition for Market Diversification: Massachusetts
Better late than never, the Massachusetts Cannabis Control Commission recently drafted new social consumption regulations and has moved to the formal public comment stage. As mature markets struggle with oversupply and overlicensing the rate of entity failures and state court receiverships (both voluntary and involuntary) of licensees are steadily on the rise. Massachusetts is among the first states to proactively offer a diversification opportunity for their cannabis program in the form of consumption lounges.
The draft regulations contemplate three different varieties of social consumption licenses – supplemental, hospitality and event organizer – and would restrict social consumption licenses to only Social Equity Businesses, Social Equity Program Participants, Certified Economic Empowerment Priority Applicants, Microbusinesses, and Craft Marijuana Cooperatives for the first 5 years after program launch. Supplemental licenses would be available to certain existing marijuana establishments and allow for on-site consumption within or attached to an existing facility. Hospitality licenses would permit non-CCC licensed entities to host on-site consumption events in partnership with certain existing marijuana establishments. Finally, event organizer licenses would permit certain existing marijuana establishments to host temporary consumption events.
9 states have already active consumption lounge licensing, and Massachusetts has been considering a social consumption pilot program since 2019, but the NCIA SRC wants to highlight Massachusetts for a considered approach focused on increasing revenue streams for smaller operators and social equity license holders.
Lifetime Achievement Award for Innovation: California
California has consistently led the nation when it comes to innovative and inclusive cannabis policy, going back to their first legalization ballot initiative in 1972. They were the first state to legalize medical cannabis in 1996, and today California still remains a leader in the cannabis industry, driven by its vast market, progressive regulations, and culture of experimentation.
A key milestone in this evolution was the 2024 California State Fair, which became the first state-sanctioned fair to integrate cannabis sales and consumption on-site, embracing cannabis culture into the mainstream. The state is also pioneering new business models, with cities like West Hollywood and San Francisco operating cannabis lounges that combine cannabis with art, food, and entertainment, reshaping consumption and creating new opportunities and economic growth in hospitality and entertainment.
California’s commitment to research further enhances its role as a leader, with the University of California system partnering with private enterprises to explore cannabis’s medical potential, including at the UC San Diego Center for Medicinal Cannabis Research. Together, California’s groundbreaking events and innovative business models position it as the epicenter of cannabis innovation.
NCIA’s SRC expects that California will continue to lead the way with an innovative and focused approach to growing its legal cannabis industry.
Conclusion & Congratulations
Congratulations to the 2024 National Cannabis Industry Association State Regulatory Committee’s CannaStars winners! The committee has enjoyed supporting the progress of medical and adult-use cannabis programs across the US, and can’t wait to see what new developments every state has in store for 2025.
Committee Blog: What is Craft Cannabis? Understanding Small-Batch Cultivation and Artisanal Products
What is Craft Cannabis?
Following state legalization and/or decriminalization, it doesn’t take long for dispensaries to be fully stocked with cannabis brands eager to get their products on shelves. Unfortunately, the flood of flower from cultivators that invest early into the new markets quickly turns into a creek as small independent farmers struggle to meet margins to remain profitable. The price per pound of cannabis quickly drops, and many of those hopeful farmers have no other alternative but to sell their business or close down.
Not unlike the alcohol and tobacco industries, some brands are creating a lane for themselves by differentiating their product as Craft or Artisanal.
Industry Comparison – Craft Beer
We can look to cannabis’ distant cousin, hops, to get a taste of what it means to have a successful craft market alongside thriving value products like domestic beer. According to the Brewer’s Association, a non-profit trade association of craft brewers, a brewer is considered craft if they meet the definitions for “small” and “independent” listed below:
Small: Annual production of 6 million barrels of beer or less (approximately 3 percent of U.S. annual sales). Beer production is attributed to a brewer according to rules of alternating proprietorships.
Independent: Less than 25 percent of the craft brewery is owned or controlled (or equivalent economic interest) by a beverage alcohol industry member that is not itself a craft brewer.
In short, craft brewers measure production throughput and ownership share to be considered craft. Some argue that the 25% ownership plays the biggest role in the success of a craft brand since even a smaller stake in ownership from a large corporation could give them enough capital to outcompete their non-corporate funded counterparts.
Can similar qualifiers be applied to cannabis cultivation and manufacturing?
Putting the Craft in Craft Cannabis
Unlike its distant alcoholic relative, cannabis is used to produce more than one type of product. While the most common craft product is flower, it can also be extended through the manufacturing process to make edibles, pre-rolls, tinctures, and more.
The process of cannabis cultivation and manufacturing is far more complex to narrow the craft definition to just the final weight of the yield. For flower alone, multiple variables are considered when defining craft—lot size, total yield, harvesting techniques, pest control solutions—just to name a few.
California has taken an impactful step forward by introducing the Cannabis Appellations Program to the cannabis industry. “An appellation of origin is a protected designation that identifies the geographical origin of a product and typically includes production requirements.” The most common use of appellations are in the wine (true Champagne must come from grapes grown in the province of Champagne, France) and coffee industries.
Craft Cannabis Webinar Series
Consumers play the largest role in the success of a cannabis brand and, with the help of small business advocates like NCIA, are now learning about the smaller craft cannabis brands available in their state. So then, what does it mean when your jar of fresh flower says “Craft Cannabis” on the label? What and who defines the craft? What does this new appellation program mean for craft cultivators? How can consumers and retailers support these specialized brands?
As the cannabis industry continues to evolve, staying informed about the latest trends and insights is crucial. To keep up with everything happening in the world of craft cannabis and beyond, we encourage you to follow us on LinkedIn for updates, event announcements, and industry discussions. Join our community on LinkedIn today!
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We look forward to keeping you informed and engaged with the best in the cannabis industry!
Committee Blog: Access Control for Cannabis Businesses – A Complete Guide to the Benefits and How to Get Started
As the legal cannabis industry continues to grow, the need for stringent security measures becomes increasingly critical. Among these measures, access controls stand out as a fundamental component for safeguarding premises, protecting inventory, and ensuring regulatory compliance.
Cannabis facilities face unique security challenges due to the high value of their products and stringent regulatory requirements. Effective access control systems are essential for mitigating risks such as theft, unauthorized entry, and internal diversion. By regulating access to sensitive areas within a facility, operators can ensure that only authorized personnel can enter cultivation rooms, processing areas, and vaults.
Additionally, access controls are often mandated by regulatory bodies to prevent the diversion of cannabis products to the black market and to protect public safety. Non-compliance can result in severe penalties, including fines, license suspension, or revocation.
Types of Access Control
Cannabis facilities must implement robust access control systems to address several critical security concerns. These include theft prevention, regulatory compliance, and internal security. High-value cannabis products are prime targets for theft, and access controls help prevent unauthorized individuals from entering sensitive areas. Many jurisdictions require cannabis facilities to have stringent access controls to prevent product diversion and ensure public safety. Access controls also help mitigate risks of internal diversion by restricting employee access to specific areas based on their roles and responsibilities.
There are several types of access control systems available for cannabis facilities:
Physical barriers such as fences, gates, and security doors serve as the first line of defense, deterring unauthorized entry. These barriers can be supplemented with security personnel for added protection.
Electronic access control systems use electronic credentials, such as key cards, fobs, or biometric identifiers (fingerprints, facial recognition), to grant or deny access. They offer the flexibility to manage and monitor access remotely. Integrating access control systems with video surveillance allows for real-time monitoring and recording of entry points, providing evidence in case of security breaches.
Sensors and alarms in intrusion detection systems detect unauthorized access attempts and alert security personnel immediately. These systems are often integrated with access controls to provide a comprehensive security solution.
Designing an Effective Access Control Solution
Implementing access controls effectively requires following best practices. Conducting a thorough risk assessment identifies potential vulnerabilities and determines the appropriate level of security needed for different areas within the facility. Employing a multi-layered security strategy that combines physical barriers, electronic access control, video surveillance, and intrusion detection provides multiple lines of defense.
Regular updates and maintenance ensures that access control systems function correctly, including software updates, hardware inspections, and system audits.
Developing and enforcing strict access policies that define who can access which areas and under what conditions is crucial, and employee training on these policies is essential for compliance.
Regularly reviewing access logs helps monitor for unusual activity or patterns that may indicate security issues. Auditing access logs can identify potential internal threats and ensure regulatory compliance. Integrating access control systems with other security measures, such as alarm systems and video surveillance, allows for a coordinated response to security incidents and enhances overall security.
In addition to these measures, it is important to consider the human element in security. Employees should be thoroughly vetted during the hiring process, including background checks and reference verification. Continuous training and education on security protocols and the importance of access controls can help foster a culture of security awareness within the organization. Employees should be encouraged to report any suspicious activity or potential security breaches immediately.
Furthermore, technology advancements in access control systems can provide additional layers of security. For instance, biometric systems that use facial recognition or fingerprint scanning offer higher security levels compared to traditional key cards or fobs. These systems are harder to duplicate or steal, reducing the risk of unauthorized access. Additionally, integrating access control systems with advanced analytics can help identify patterns and predict potential security threats before they occur.
Emergency Preparedness
Another critical aspect of access control is emergency preparedness. Facilities should have clear protocols in place for responding to security incidents, such as break-ins or attempted thefts. This includes having a designated security team, clear communication channels, and regular drills to ensure that all employees know how to respond in an emergency. Access control systems should also be designed to allow for quick lockdowns of the facility in case of a security breach.
Regular audits and assessments of the access control systems are essential to ensure they remain effective and up to date. This includes reviewing access logs, testing the functionality of the systems, and making necessary updates or improvements. Engaging with security experts or consultants can provide valuable insights and recommendations for enhancing the security measures in place.
As the cannabis industry continues to expand, the implementation of robust access control systems is essential for ensuring the security of facilities, protecting valuable inventory, and maintaining regulatory compliance. By adopting best practices and leveraging advanced technologies, cannabis operators can create a secure environment that safeguards their assets and supports the industry’s growth. The integration of physical, electronic, and human elements in access control strategies will be key to addressing the unique security challenges faced by cannabis facilities. Through continuous improvement and adaptation to emerging threats, the industry can achieve a high standard of security and operational integrity.
Enhancing Operational Efficiencies
The role of access control systems extends beyond mere security. These systems can also enhance operational efficiency by streamlining access management and reducing the administrative burden associated with manual security checks. For example, electronic access control systems can automatically log entry and exit times, providing valuable data for workforce management and operational planning. This data can be used to optimize staffing levels, improve workflow efficiency, and ensure that security protocols are being followed consistently.
In addition, access control systems can be integrated with other facility management systems to create a cohesive and comprehensive security infrastructure. For instance, integrating access control with environmental monitoring systems can help ensure that cultivation areas maintain optimal conditions for plant growth. Similarly, integration with inventory management systems can provide real-time tracking of cannabis products, reducing the risk of loss or diversion.
The future of access control in the cannabis industry will likely see increased adoption of advanced technologies such as artificial intelligence (AI) and machine learning. These technologies can enhance the capabilities of access control systems by enabling predictive analytics, automated threat detection, and real-time decision-making. For example, AI-powered systems can analyze access patterns to identify anomalies that may indicate a security threat, allowing for proactive measures to be taken before an incident occurs.
Conclusion
As the cannabis industry continues to evolve, the importance of robust access control systems cannot be overstated. These systems are essential for protecting valuable assets, ensuring regulatory compliance, and maintaining a secure and efficient operational environment. By embracing best practices and leveraging advanced technologies, cannabis operators can build a resilient security infrastructure that supports the industry’s growth and success. Through continuous innovation and adaptation, the cannabis industry can set a high standard for security and operational excellence, paving the way for a sustainable and prosperous future.
Committee Blog: Extracting the Truth – Best Practices for Cannabis Extraction
We stand at a pivotal juncture in the cannabis industry, defined by rapid technological advancements in extraction methods and an increasingly complex regulatory landscape. How do we make sense of it all? Before you can have consumables, topicals and concentrates, you must first extract the cannabinoids from the plant. There are multiple extraction methods available, and each method not only influences the efficiency and cost of production, but also affects the purity, potency, and safety of the final product. Manufacturers of cannabis products use various methods for extracting vital compounds from cannabis. Keep on reading to dive into the multifaceted world of cannabis extraction, exploring traditional, modern, and emerging technologies that are shaping the industry.
Understanding Extraction Methods
Here’s a look at some of the most common technologies used:
Traditional and Solvent-Based Extraction
Butane Hash Oil (BHO) and Ethanol Extractions: These are among the most prevalent methods, prized for their efficiency and ability to preserve terpenes. However, solvent-based methods require rigorous disposal of the solvent post-extraction to avoid contamination, highlighting the necessity for strong quality-control measures.
CO2 Extraction: Utilizing supercritical CO2 as a solvent, this method is celebrated for its safety and environmental friendliness. The precision and adjustability of CO2 extraction allow for targeted extraction of specific cannabinoids and terpenes, but at a higher operational cost.
Physical and Non-solvent Extraction Techniques
Rosin Tech and Ice Water Hash: These solventless techniques are gaining traction for their simplicity and the purity of the extract. While they offer a safer alternative by eliminating solvent residues, their scalability and efficiency in commercial settings remain areas for development.
Novel Extraction Innovations
Ultrasonic Extraction and Microwave-assisted Extraction (MAE): The cutting edge of extraction technology, these methods promise increased efficiency, reduced processing times, and enhanced terpene profiles. Their adoption is set to revolutionize the industry, provided they can overcome initial high capital investment barriers and integrate seamlessly with existing regulatory frameworks.
Product Quality and Regulatory Compliance
Which extraction method you choose will directly affect the chemical composition of the final product, and advanced testing and quality assurance protocols will be necessary. The industry has seen significant advancements in testing technologies, such as High Performance Liquid Chromatography (HPLC) and Gas Chromatography-Mass Spectrometry (GC-MS), which are crucial for verifying the absence of solvents, pesticides, and other contaminants.
Navigating the regulatory landscape is a formidable challenge for manufacturers. Regulations vary widely across jurisdictions and often lag behind technological advancements. Be sure to understand issues such as labeling requirements, potency limits, and compliance with Good Manufacturing Practices (GMP).
Manufacturing Challenges and Best Practices
Lab Safety and Employee Training
The extraction process involves handling volatile substances and operating complex machinery, so robust lab safety protocols and ongoing employee education are must-haves. Prioritize creating a culture of safety and compliance, such as creating SOPs for your processes. This will help prevent accidents and ensure the well-being of your staff. Also be sure to document training and day-to-day operational issues.
Scaling Production While Maintaining Quality
As the demand for cannabis extracts continues to grow, you might face the challenge of scaling your operations without compromising on product quality. You can achieve this balance by implementing scalable extraction technologies, maintaining stringent quality control, and investing in research and development.
Recommendations for Industry Growth and Policy Reform
Foster Innovation through Research and Development: Public and private investment in research can help identify new extraction technologies and their applications.
Harmonize Regulatory Standards: The standardization of safety and quality regulations across jurisdictions will facilitate compliance and ensure a level playing field.
Promote Consumer Education: Comprehensive educational initiatives will inform consumers about the safety, efficacy, and benefits of cannabis extracts.
Engage in Policy Dialogue: Active dialogue between industry stakeholders and policymakers will ensure that common-sense regulations are informed, pragmatic, and open to innovation.
The demand for infused products is growing, so manufacturers need to be planning for advanced extraction technologies – ones that fit within regulation and prioritize safety, quality, and consumer protection. By embracing innovation, advocating for harmonized regulations, and educating an informed consumer base, we can achieve growth and establish ourselves as a responsible and valuable sector of the global economy.
NCIA Committees: Now Accepting Applications For The 2025 Term!
If you want to take your industry involvement to the next level, now is the time to get join one of NCIA’s 12 member-driven committees! NCIA is excited to announce that from now until December 11, we are accepting applications for the 2025 term!
All NCIA annual members in good standing are invited to apply for an NCIA committee seat for the 2025 committee term. Blooming & Evergreen Members receive guaranteed committee placement.
NCIA Committees enable NCIA members to engage their vast and varied areas of expertise and passion to:
Effect change and influence public opinion and policy;
Demonstrate thought leadership;
Expand professional and personal network; and
Develop best practices and guidelines to shape the future of our industry.
Let’s ensure your marketing strategies are not only effective but also compliant with the ever-evolving legal landscape. For an even deeper dive into these topics, join us for our upcoming #IndustryEssentials webinar, where industry experts will provide actionable insights to help you thrive in this complex regulatory landscape.
The NCIA’s Marketing & Advertising Committee stresses the importance of avoiding unfair, abusive, and deceptive practices (UDAAP) in your marketing materials. UDAAP laws prohibit misrepresentations about product quality, and availability, failing to include appropriate warnings, and more.
However, what constitutes “deceptive” can be subjective, varying by state. With state attorneys general empowered to bring lawsuits against violators, staying informed about state-specific regulations is crucial. Additionally, federal implications under the FTC, FDA, and CFPB underscore the need for compliance.
Backing Health Claims with Science
Product substantiation and health claims are under scrutiny, especially in the CBD arena. While no single federal entity has jurisdiction over the nebulous area of “product substantiation,” the FDA and FTC have issued warning letters and fines related to companies making unsubstantiated health and wellness claims involving cannabis and hemp-derived products.
The FDA requires reliable and competent scientific evidence to support claims. Such claims can be difficult to validate in the cannabis industry, where federal prohibition has hampered research.
What about CBD? Although the 2018 Farm Bill opened the doors to more CBD research, the FDA concluded in 2023 that the existing regulatory framework for foods and supplements was not appropriate for CBD, and that it would work with Congress to determine how to properly substantiate claims for CBD products.
Amidst this uncertainty, it’s essential to prioritize reliable evidence to support your product claims.
Understanding Social Media Advertising Policies
Social media can be a potent tool for cannabis marketing, but it comes with challenges. Major platforms impose strict terms of use, often banning cannabis-related content including any imagery, sale, and even discussion about cannabis. It is important to familiarize yourself with each platform’s terms of use.
Despite these hurdles, compliant advertising strategies can leverage platforms such as X (formerly Twitter) and Pinterest, which at the time of this article’s publication offer more lenient policies. For example, on X, advertisers must be preapproved but can promote brands and include informational content for THC and CBD with some targeting restrictions.
The sale of cannabis products on social media is always prohibited.
Businesses must also navigate the FTC’s regulations on influencer endorsements to avoid misrepresentation as they may be held liable for third-party statements about their products. Endorsers should always disclose any relationship they have with a product they are recommending or reviewing.
Environmental Claims in Cannabis Advertising
As environmental consciousness rises, so do consumers’ expectations. Marketers must substantiate claims of being “environmentally friendly” or “organic” to avoid UDAAP violations. Businesses should consider how consumers are likely to interpret particular claims and avoid using vague terms such as “eco-friendly” or “sustainable,” which may be misleading.
Aligning with state and federal regulations regarding pesticide use and environmental claims is essential to maintain consumer trust. The FTC’s Green Guides sets the tone for environmental claims in cannabis.
Trademarks, Packaging & Branding Guidelines
Understanding trademark protections post-2018 Farm Bill is vital for brand protection.
Following the passage of the Bill, the United States Patent Office (USPTO) has allowed registration of marks for hemp and hemp-derived products containing <.3% or less THC. Federally registered marks offer broader protection, state, and common law protections may apply to legally classified marijuana products with >.3% THC. Cannabis-adjacent products such as t-shirts and caps are also registerable.
Cannabis operators should avoid branding or packaging that may be appealing to children.
Most states containing cannabis regimes prohibit such packaging and deem it an unfair trade practice.
Texting and Calling Compliance
Cannabis companies making calls or sending text messages to consumers should be aware of the Telephone Consumer Protection Act (TCPA) and relevant do-not-call (DNC) laws. Non-compliance can lead to hefty fines and legal repercussions.
The TCPA requires certain levels of consent before cannabis businesses or authorized telemarketers may make prerecorded or auto-dialed calls to consumers. Federal TCPA and DNC laws apply regardless of whether a cannabis business is making calls/texts itself or has hired a telemarketer or affiliate to place calls/texts.
“TCPA lawsuits premised on unlawful calling and texting practices are often bet-the company scenarios. Businesses may face class actions and millions in fines if their calling and texting practices are not TCPA compliant,” Helen Mac Murray, Partner | Mac Murray & Shuster LLP
With consumer protection laws evolving and states beginning to enact their own more rigorous “mini-TCPA” bills, staying updated and ensuring compliance with legal requirements are essential to mitigate risks. TPA lawsuits are difficult to defeat early in litigation and can lead to burdensome and invasive discovery.
In addition to TCPA and DNC laws, short message service (SMS) providers may not allow the promotion of hemp or cannabis via text message.
A notice from email service provider Klaviyo. Captured by Maria Calabrese, Founder Green Bee Life, NCIA member.
Protect Your Marketing Strategy with Compliance
Compliance isn’t just about following rules; it’s about building trust and integrity in your brand. It is the cornerstone of successful cannabis marketing. By prioritizing transparency, evidence-based claims, and ethical practices, you can navigate the complex world of cannabis marketing with confidence. Let’s work together to create a responsible and sustainable future for cannabis marketing.
Mastering Cannabis marketing Compliance: Insights & Strategies from Industry Experts
As the cannabis industry continues to evolve, staying ahead of the curve with compliant marketing practices is more important than ever. To ensure you’re equipped with the knowledge to navigate this complex landscape, don’t miss our upcoming #IndustryEssentials webinar, Committee Insights: Unlocking Compliance: Understanding Cannabis Marketing Regulations, where industry experts will dive deeper into these key compliance guidelines.
Gain invaluable insights on how to protect your brand, foster consumer trust, and grow your business while staying within legal boundaries. Register now and join us to empower your marketing strategies with the tools needed for success!
Committee Blog: The Benefits of Intrusion Systems in Cannabis Retail – Ensuring Security and Compliance
The cannabis industry has seen tremendous growth in recent years, with more and more states legalizing its use for medical or recreational purposes. With this expansion comes a need for comprehensive security solutions to protect businesses from potential threats. While they are just one component in a comprehensive security strategy, intrusion systems play a crucial role in ensuring the safety of employees, customers, products and cash for cannabis retailers.
In this blog post, we’ll dive into the benefits intrusion systems specifically tailored for cannabis industry retailers and consultants – and what a full-service security provider like Vector Security, which offers a dedicated cannabis team of experts – can provide when it comes to protecting your business.
Enhanced Security
One of the primary reasons why intrusion systems are essential in cannabis retail is their ability to enhance overall security. By monitoring and detecting intrusion, these systems prevent unauthorized entry into sensitive areas such as stock rooms, storage areas, cash registers and safes, and computer/networking equipment and devices. This level of control significantly reduces the risk of break-ins, internal and external theft, vandalism and other criminal activities by limiting access to authorized personnel only.
Immediate Alerts
Intrusion systems are equipped with advanced technology that can detect unauthorized entry or tampering with security equipment. Motion detectors, glass-break and door/window sensors trigger visual and audible alarms to ward off intruders, while providing real-time alerts to store owners and other stakeholders as well as alarm monitoring operators. If the emergency is real, authorities are dispatched to the location of the intrusion. This swift response time is crucial in preventing further damage or loss. Professionally monitored intrusion systems ensure your cannabis facility is protected around the clock – during and after business hours, and even on holidays.
Compliance with Regulations
Operating within the cannabis industry means complying with strict regulatory frameworks that can vary from state to state. These regulations often include guidelines related to security and surveillance. Intrusion systems are a vital component in meeting these requirements. By maintaining accurate records of security incidents, cannabis retailers can demonstrate their commitment to compliance during audits. Here is where a seasoned security provider, like Vector Security, can advise and design a system that complies with regulatory requirements.
Protection of High-Value Products
Cannabis products have significant value, making them attractive targets for criminals. Whether it’s the actual flower, edibles or concentrates, protecting these assets is crucial for a successful business. Intrusion systems help safeguard inventory, reducing the risk of internal and external theft and ensuring product availability for legitimate customers.
Cash Management
Cash remains a primary form of payment in many cannabis dispensaries. This makes retailers vulnerable to theft and robberies. In areas where cash is kept, intrusion systems can provide an added layer of security by securing cash registers, safes and other cash-handling areas.
Panic Alarms
In addition to detecting unauthorized entries, modern intrusion systems often include panic alarms. These alarms allow employees to quickly signal for help in emergency situations. Whether it’s a medical issue, a threat from a customer or any other crisis, panic alarms provide immediate assistance. Install panic buttons around the store and in areas with cash so employees can safely and discreetly summon authorities in the event of an emergency, like during a burglary or hold-up robbery.
Scalability
As the cannabis retail industry continues to expand, scalability becomes crucial. An initial investment in a comprehensive and flexible security solution ensures that the system can grow along with your business. Whether opening additional stores or cultivation facilities, retailers should be able to seamlessly integrate new locations into their existing security infrastructure. Make sure your security provider can adapt your security solution to respond to your business’s changing needs, including responding to new threats or opportunities.
Conclusion
Intrusion systems are not only about preventing break-ins, they are also essential tools for maintaining compliance, protecting valuable assets, and ensuring the safety of employees and customers. By investing in robust security solutions, cannabis retailers can focus on their core business knowing that their facilities are well-protected.
Remember that while effective at providing a layer of protection, intrusion systems are just one component of a comprehensive security plan for cannabis businesses. It’s beneficial to work with a full-service security provider that can design a complete plan that integrates and streamlines all parts of your security, such as video surveillance, access control, fire and environmental monitoring, panic alarms and more. Working with a full-service vendor that has expertise in the cannabis industry ensures you’ll receive the range of products and services you need, with tailored solutions that meet the unique demands of your cannabis business.
Committee Blog: Breaking the Stigma – Cannabis in the Retail World
Cannabis, once relegated to the shadows of society, is making a significant push into mainstream America. However, the journey from prohibition to acceptance is faced with many challenges, particularly in the retail world. The stigma surrounding cannabis stems from historical, legal, social, and cultural factors, and lack of education, plays a role in shaping the stigma. In this blog, we’ll explore some of the roots of the stigma on cannabis and how the landscape is gradually changing.
The Historical Backdrop
The roots of cannabis stigma are deeply embedded in history. In the early 20th century, cannabis was criminalized in many parts of the world. The United States’ War on Drugs, which began in the 1970s, heavily penalized cannabis use, linking it to criminal behavior and societal decay. Media reports of cannabis users as lazy, unmotivated, or criminals; these negative stereotypes are what many believe to be true.
However, alongside this negative portrayal, there exists a rich history of cannabis as a medicinal plant. For centuries, cannabis has been used to treat a variety of medical issues. Ancient cultures across Asia, the Middle East, and Africa utilized cannabis for its therapeutic properties, including pain relief and anti-inflammatory benefits.
In more recent times, cannabis has shown promise in helping cancer patients manage symptoms such as nausea, pain, and loss of appetite. Additionally, it has been found to fight inflammation, which is beneficial in treating conditions like arthritis and multiple sclerosis. This positive history of cannabis as a healing plant is often overshadowed by its criminalization and the stigma attached to its recreational use.
Legal and Regulatory Hurdles
One of the most significant barriers to cannabis acceptance in retail is the complex legal landscape. In the United States, for instance, cannabis remains illegal at the federal level, despite being legal in several different states. This legal ambiguity creates uncertainty and fear among businesses, banks, customers as well as B2B consumers.
Moreover, the reluctance of banks and financial institutions to work with cannabis-related businesses due to federal regulations results in limited access to financial services and funding. This financial exclusion makes it difficult for cannabis businesses to operate and expand, perpetuating the stigma. It also makes it challenging for funding purposes for these businesses to continue to operate efficiently.
Social and Cultural Challenges
Public perception plays a crucial role in the acceptance of cannabis. Despite increasing acceptance, many still view cannabis use negatively and as a Schedule 1 drug, influenced by concerns about health impacts, addiction, and moral values. Workplace policies that maintain strict no-drug stances, regardless of legal status, also contribute to this negative perception. Enhancing education on cannabis can help mitigate this stigma within our culture, which in turn will aid in positioning the cannabis industry as a credible sector in the eyes of consumers, banks, and other business sources.
Retail Industry-Specific Issues
In addition, mainstream retailers are often hesitant to carry cannabis products due to fear of backlash from conservative customers or communities, which limits the visibility and availability of these products in the broader spectrum.
Furthermore, stringent marketing and advertising regulations restrict cannabis businesses from effectively reaching new customers and normalizing their products. Social Media advertising is prohibited as well as certain television channels.
Conclusion
Resolving the challenges surrounding the stigma of cannabis in the retail world requires a multifaceted approach. Firstly, education plays a pivotal role: increasing public awareness about the medicinal benefits of cannabis and dispelling myths through targeted campaigns can shift negative perceptions. Secondly, advocating for legislative reform to align federal and state laws can provide clarity and confidence for businesses to operate effectively. Moreover, fostering open dialogue among stakeholders, including policymakers, industry leaders, and the public, can promote understanding and acceptance. Lastly, mainstream retailers can be encouraged to embrace cannabis products through initiatives that demonstrate responsible consumption and highlight regulatory compliance, thereby normalizing its presence in the retail market. By addressing these aspects comprehensively, we can gradually reduce stigma and integrate cannabis as a legitimate and beneficial sector within the retail market.
Committee Blog: Understanding the Nutritional Demands of Cannabis
The nutritional demands of cannabis are still not well understood. Due to the legal status of the plant, intense studies on cannabis nutrition have been limited. The subtleties of plant nutrition are not well understood, particularly in cannabis. Nickel was not recognized as a plant essential nutrient until 2004. The presence of a single micronutrient deficiency can decrease the production of fruit and some flowers in excess up 30%.
The Presence of Physical Symptoms
The physical symptoms of plant deficiencies and toxicities typically don’t manifest from anywhere between three and nine weeks. Usually, by the time these physical symptoms appear visually, the damage has already begun to occur. Physical symptoms of plant nutrition vary considerably and there’s substantial overlap between the visual characteristics of symptoms. Nutritional deficiencies can sometimes be caused by the toxicity of another element. For example, an excess of magnesium can inhibit the plants’ ability to uptake calcium.
The Importance of Soil and Growing Media
The soil/growing media used during the cultivation process can impact nutrient absorption in several ways, primarily depending on its physical and chemical characteristics. Cannabis prefers well-draining media with a pH range of 5.8-6.2. The pH of the media itself can enhance or reduce the plants’ ability to absorb certain nutrients. For example, iron becomes decreasingly soluble at higher pH levels. The drainage of the media is highly dependent on the growing style and environment, but generally, a well-draining growing media allows for healthy roots and maximum nutrient absorption. The media acts as a sort of nutrient reservoir for the plant’s roots.
Leaf Tissue Analysis
Leaf tissue analysis has been a long-utilized tool in traditional agriculture. Its presence in cannabis is limited primarily due to the long-standing illegality of the plant. However, there has been major interest recently in using this tool in cannabis cultivation. The basic premise is that fan leaves are removed from the plant, dried to completion, and analyzed at an analytical laboratory for primary, secondary, and micronutrients. One of the main advantages of this is the guesswork is taken out of the identification of the toxicity or deficiency. Visual symptoms of toxicities and deficiencies can have overlapping visual cues. The nutritional issues may be far more complex than an issue with a single element. By having empirical data, it allows the cultivator to compare the analytical results to established target values. From there, the cultivator can adjust the fertilization program to mitigate any potential toxicities or deficiencies. Regular monitoring of nutrient levels allows for proactive adjustments of the fertilization program. This, in turn, can lead to optimization of quality and yield.
Fertilizer
Fertilization is one of the most important aspects of any cultivation. A dialed in nutrient program optimizes the speed of growth, quality of the product, and overall yields. Fertilization can be a complex puzzle and no two cultivators grow in the exact same way. By analyzing the fertilizer, nutrient solution, plant tissue, water, and growing media the cultivator can trace back to the source of any potential issue. A common issue in cannabis cultivation is iron deficiency, this can be caused by an excess of manganese as cannabis will selectively absorb manganese over iron. The iron levels may be completely sufficient in the nutrient solution, but the excess manganese mitigates absorption. A typical response to an iron deficiency would be to add more iron, by using plant tissue and nutrient data, it can be discerned that the solution to the problem is a reduction in manganese and not the addition of more iron.
Water
Water quality is one of the foundations to successful cannabis cultivation. Testing water prior to planting and throughout the growing season can help prevent issues before they occur. If the source water for the nutrient solution originates from a well, it is important to understand the mineral content of the water so that fertilization can be adjusted accordingly. If the water is filtered, it is a useful tool to monitor the life of the filters. As reverse osmosis (the most common type of filtration used in cannabis cultivation) filters age, the boron concentration in the filtered water begins to rise considerably. In addition to this, the presence of excess chlorine or chloramine can create issues with nutrient absorption.
Environmental Conditions
Environmental conditions play a significant role in nutrient absorption and overall plant health. Nutrient levels can be optimized in the fertilizer solution, but environmental effects can prevent optimized nutrient absorption. Humidity, temperature, light, CO2, etc. can all greatly impact the plants’ ability to uptake nutrients. Optimization of these conditions is critical to a successful cultivation.
Conclusion
While the nutritional demands of cannabis are still not fully understood, leaf tissue, water, soil, and fertilizer analysis can assist immensely in the identification and mitigation of nutritional deficiencies and toxicities. These tools allow cultivators to make data driven decisions and prevent issues before they occur. Optimizing nutritional levels in cannabis maximizes the quality and yield of the plants.
Committee Blog: Time to Hire
The road to opening a licensed cannabis business is a long one. You have managed to navigate through a competitive and complex licensing process. You have convinced your local community to give your company a shot. You have beautified the area surrounding your business. You have secured your supply chain, and you even opened a special account at a cannabis bank to deposit all that cash. You have hired armed security, and even though you are paying the company 3X what you’re making, it’s okay because you and your staff are safe. You even survived the facility build-out, and hopefully, you have about six months of capital. What an accomplishment. Bravo! You did it! Wait… you need a team to help you operate this beast. Time to hire!
I heard someone say, ‘Great things in business are never done by one person. They’re done by a team of people.’ I would guess that if you have made it to the finish line, you’re likely to already have a team. Now it’s time to expand that team. As if the odds aren’t already stacked, in the fast-paced world of cannabis retail, turnover rates are hitting a staggering 55% within a year, per headset.io as of November 2023. I learned about this very early on when I began my research. I needed to know why and what I could do to avoid more than half my staff quitting within the first year. There were some common factors that led to employee attrition. I was a bit surprised to hear that pay wasn’t a top factor. What I learned was budtenders, in particular, didn’t feel the company provided any kind of staff development. Many instances described a poor management staff, and many felt unappreciated and overworked.
When we started this thing, it was important to make sure we could create opportunities for others. I’ve worked for both big and small businesses, some corporate and some non-corporate. I have had some good managers and some bad ones. I learned something from each job I’ve held. I vowed to make sure my staff never looked at our managers and our company and put us in the bad category. Trust is earned, and leadership can never be forced. I opened doors on April 22nd, and we hired 21 part-time employees. I will follow up in 12 months to see if I beat the odds. I’ve done it before.
It was through the NCIA network I met Carlo, and he had me go through a workshop. What I learned was, first, we needed to ask ourselves: What are our principles at Banyan Tree? My team is amazing, and we have been together so long we trust in each other’s expertise to maintain a harmonious environment. We want to make sure the staff feels the same way. So collectively, we created a list of principles. Next, we posted the job position. The response was overwhelming. Within 24 hours, we had close to 500 applications. We narrowed that down to 50. We scored the candidates based on their work experience and the video response they provided, aligning with our principles. Next, we scheduled the interviews. We called each candidate to share what they could expect during the interview. We sent them the list of our principles. We would be conducting the interview using the S.T.A.R. method: Specific, Task, Action, Result. That means the questions we ask will all be related to their work experience. We expect the answers you give to describe an experience that uses the S.T.A.R method response. It really helps us get to know the candidates during the interview, and you can tell someone is being genuine when they can recall an experience they had while working at previous jobs. There were about 21 of those interviews that went on for a full hour. We hired 21 amazing people. They all feel like they are part of something special. It’s my job to keep my promise.
It’s important to continue developing and educating the staff to help them get better at their skill. It is necessary to provide them with the tools they need to perform their job. Stuff like scanners and POS systems and card readers need to work. Technical issues disrupt the flow, but that’s controllable. Communication and trust are key. Without it, you’re doomed. Appreciation and praise go a long way. We need customers to stay in business, but we can’t do business without staff. My philosophy is that my employees are everything. As long as they love their job, our guests are going to reap the benefits.
Committee Blog: Regulations in the Inhalable Cannabis Space – A Call for Sensible Flavor Regulation for Cannabis Vapes
As the cannabis industry continues to evolve, so do the discussions around regulations, particularly concerning flavor additives in inhalable cannabis products. This blog post represents the members of NCIA’s State Regulations Committee current reflections on the successes and shortcomings of existing cannabis vape regulations, focusing on flavor limitations, safety considerations, quality specifications, and labeling practices. While technical, this topic has a tremendous impact on cannabis brands and consumer safety.
First, for those who might question the need to add flavors to cannabis vapes, it’s essential to highlight the following points regarding why flavors are added and the benefits they bring:
Restoration
In some cases, such as with cannabis distillates, processing or manufacturing techniques can alter or remove natural cannabis flavors from vape liquids. Adding cannabis flavors back simply returns the final product back to nature’s intended taste profile, providing consumers with a comprehensive vaping experience.
Mimicking Smoking Sensation
For individuals transitioning from traditional smoking to vaping, flavors can mimic the sensations and tastes they are accustomed to, making the switch more enjoyable and satisfying.
Customizing Preferences
Consumers have diverse preferences, and adding flavors allows them to customize their vaping experience based on their personal taste preferences, whether they prefer fruity profiles or classic cannabis flavors. Akin to aromatherapy, consumers may also predict the mood impression they will experience by vaping a particular flavor.
Providing Consistency
Consumers often expect certain flavors in products based on their product familiarity so it is important for brands to be able to deliver a consistent vaping experience wherever their product is sold despite changes that the consumer may otherwise notice due to harvesting variability of the cannabis or limitations on strain availability across borders.
Meeting Market Demands
The vape industry is driven by consumer demand for a wide variety of flavors. Adding flavors allows vape manufacturers to meet market demands and cater to the preferences of different consumer segments. In regions where certain flavors are restricted or banned due to regulation, the legal vape industry is challenged to compete with the illicit market, where flavors would continue to be available. However, these illicit market alternatives may not undergo the same safety and quality standards as legal vape products, potentially posing risks to consumers’ health. By offering a wide range of flavors, the legal vape industry can provide consumers with safer alternatives and help combat the proliferation of potentially unsafe, unregulated products.
Personal taste aside, the dangers of unsafe flavors in unregulated products are real, as was demonstrated in 2019 through cases of EVALI (E-cigarette or Vaping Associated Lung Injury). As detailed in this piece, manufacturers need to follow best practices to protect vaping consumers no matter if they are in regulated cannabis, unregulated cannabis, or the CBD/hemp markets.
Flavor Limitations
Overall, the addition of flavors to cannabis vapes is not just about enhancing taste but also about meeting consumer expectations and improving consumer safety. Flavors create consistency in products and are common across consumer products we already enjoy daily. Consumers are trained to expect flavor variety and consistency in traditional e-cigarettes, and cannabis vapes should be no different.
What’s Working?
We commend states like Oregon for taking a pragmatic approach by allowing a broad range of natural, artificial, and cannabis-specific flavoring ingredients while rightly prohibiting scientifically known inhalation hazards. This approach provides broad room for innovation while protecting the public from valid safety risks.
What’s Not Working?
Conversely, restrictions on flavor ingredients to only natural sources, as seen in states like Nevada, California, and New York, are unnecessarily limiting and not scientifically justified. Further limiting flavoring terpenes to being cannabis or hemp-derived, like in Connecticut, also hinders creativity, imposes higher costs, and potentially pushes consumers towards unregulated alternatives. Likewise, enforcement actions to prevent adolescent access to vapes should be prioritized over regulations to limit flavors or labels thought to be more appealing to adolescents.
Safe Flavors
Everyone’s goal should be to provide consumers with the safest possible experience when using inhalable products containing flavors. What’s safe to eat isn’t always safe to inhale.
What’s Working?
Responsible suppliers implementing robust quality and regulatory pre-qualification measures for all flavor ingredients is a positive step. Vendors should be vetted, approved, and responsible for the products they supply. Encouraging manufacturers to develop comprehensive toxicological programs tailored for inhalation safety is also crucial.
What’s Not Working?
Requiring flavors or flavor ingredients to be listed on the pharmaceutical FDA IID for inhalation is inappropriate and does not guarantee a safer flavor. The only reason flavors or flavor ingredients may be in the FDA IID is because they already exist in pharmaceutical products that went through a safety review process. However, the flavors themselves haven’t been evaluated independently for inhalation safety (emphasis added).
Instead of mandating a specific database of flavors, it’s more appropriate to regulate the process of sourcing and validating ingredients.
Quality Specifications
Once a desirable and suitable flavor has been identified, manufacturers need to understand how to maintain quality.
What’s Working?
Adhering to the approach of FDA’s Food Safety Modernization Act (FSMA) for quality plans is best practice, ensuring hazards are identified and controlled by qualified individuals at each manufacturing stage.
What’s Not Working?
Overly broad testing requirements for non-cannabis-derived flavors or multi-ingredient cannabis products are redundant and economically unviable, particularly when hazards are effectively controlled through quality plans at earlier or later stages of a supply chain.
Labeling Practices
Finally, it’s important to examine how manufacturers should disclose when flavoring has been added to products. Consumers have a right to understand if a product is flavored.
What’s Working?
Simple, consumer-friendly labeling, such as using common terms like “Natural and Artificial Flavors,” aligns with other industry standards and will be recognized by the common consumer. Adopting labels familiar to the conventional Consumer Packaged Goods (CPG) industry effectively bridges the gap between industries and aligns with how consumers already make these decisions across all products they buy.
What’s Not Working?
Listing the chemical names of all flavoring ingredients, as mandated in Oregon, New York and Missouri, is excessive and may confuse or intimidate consumers. Consumers are not qualified to assess risk from formula information. Unregulated products that do not list flavor ingredients may become more appealing to some consumers that are intimidated by the chemical names on the flavor label of the licensed product.
Recommendations
Having reasonable and consistent regulations across the country will help to create a safe and level playing field for manufacturers and brands to compete for consumer market share. While nuanced, these regulations materially impact the ability to bring a product to market or make a product economically viable.
Starting with flexible flavor definitions allows for a wide range of internationally recognized flavor ingredients, including natural, artificial, and cannabis-inspired isolates.
Banning known risks is common sense best practice. This process must be dynamic and listen to science. For example, Diacetyl, once a popular popcorn flavoring, was banned after research concluded it was unsafe for inhalation. A known, published inhalation hazard list is critical.
Implementing a safety certification policy based on thorough toxicological risk assessments specific to inhalation exposure ensures accountability.
Finally, adopting simple and recognizable labeling terms like “Natural and Artificial Flavors” and aligning allergen disclosures with established FDA and EU regulations make sense and protect intellectual property. We are advocating for consistency.
These effective regulations prioritize safety without stifling innovation or burdening stakeholders. We welcome ongoing dialogue and collaboration to develop pragmatic, science-based regulations that benefit consumers and the industry.
Committee Blog: Harnessing the Potential of Partnership Between the Cannabis Industry and Academia
Although cannabis companies are limited in the scope of their business activities awaiting much needed descheduling, it hasn’t stopped the need for educating and preparing the cannabis workforce. For some states cannabis tax dollars are appropriated to education, violence prevention and workforce development and often developed through the lens of social equity. Ohio,Colorado, Illinois, and Michigan for example, each invest in cannabis literacy in some way. Cannabis programs such as Oaksterdam University offer learners certificates or degrees for every aspect of the supply chain. Departments shape cannabis curricula with the support of faculty members and subject matter experts from both the private and nonprofit sector. These diverse educators instruct to prepare employees to fill the expected 1.5 million to 1.75 million cannabis jobs by 2025 as estimated by the Bureau of Labor Statistics.
Partnering with academia
Legacy growers and professionals from more mature markets like California and Colorado find themselves advising academic partners on the type of information most needed by the first generation of cannabis employees. Amanda Reiman, PhD MSW serves as the Chief Knowledge Officer for New Frontier Data and instructor of Implications of Legalization of Cannabis: Policy and Compliance for Excelsior University, she believes legacy knowledge, paired with academic research, will help address the gaps in knowledge created by prohibition.“For decades, academic institutions had to stay an arm’s length from cannabis due to its legality. Now, with state laws changing, it has opened up an opportunity not only for academic institutions to offer coursework to support the emerging industry, but to learn from those who have been growing and working with cannabis prior to legalization,” Reiman says.
Using the state laws as a baseline for cannabis literacy, programs structure certificates and degrees to prepare learners to understand the complexities of the cannabis industry. For cannabis businesses working with the academic sector is a way to keep the pulse on emerging local talent, remain aware of the effectiveness of educational approaches and in some instances, earn an income. Positioning your business in academic networks is best when it’s both mutually beneficial and ethical.
It is important to keep in mind that programs can lead to good-paying jobs for those who’ve suffered from the war on drugs and justice-impacted populations.
Some programs are of no cost to students, while others compensate students for their participation. Certifications and degrees however don’t ensure employment. Most importantly cannabis businesses providing subject matter expertise must also continue to learn how to have a favorable impact on student populations that require learning how to serve them best.
Teaching
When teaching cannabis student populations will vary. It is important to approach the various topics with a sensitivity to the historical injustices and disparities that have existed within the cannabis industry. Some students may have faced disproportionate barriers to entry into the industry due to systemic discrimination and lack of resources. Other students may have different experiences related to health and wellness that when discussing need to be facilitated with great diplomacy, discretion and protection of privacy.
Instructors must provide accurate and unbiased information about cannabis, but sourcing materials may be challenging. It is recommended to identify the most credible and accessible resources for courses.It is also important to acknowledge the potential for exploitation and exploitation of vulnerable communities in the cannabis industry, and to educate students on how to navigate these challenges and protect their rights.
“I came into cannabis from teaching urban ecology, urban agriculture and environmental justice concepts and I was quite familiar with learning and teaching novel concepts to diverse audiences. But what I noticed is that it was challenging for my peers. I had helped write our Illinois legislation and also had a professional cannabis network. Industry experts were invaluable for me to be successful in teaching this material and without those trusted peer mentors I doubt I would have been able to create meaningful coursework and identify high quality resources to do so,” shared Mila Marshall, PhD, NCIA Education Committee Chair.
Furthermore, it is crucial to empower social equity students to advocate for themselves and their communities within the cannabis industry. This may involve providing resources and support for networking, business development, and community engagement that are embedded in the course material and syllabi.
“Teaching is a skill above and beyond knowing the subject. For subject matter experts to be effective teachers, they should gain knowledge around differential learning styles, student engagement and effective communication,” shared Dr. Reiman. She contends that being a cannabis expert is only part of what is needed to be an effective teacher in the cannabis space. Overall, teaching cannabis with social equity students should be approached with an ethical and inclusive mindset, recognizing the unique challenges and opportunities that these students face in the industry. By promoting transparency, empowerment, and social responsibility, educators can help to foster a more equitable and just cannabis industry for all. Instructors play a key role in unlocking the potential of cannabis learners and there is a learning curve for instructors. Dr. Hemant Kumar has worked many years as a medical cannabis educator and is the Program Director of M.S. in Biotechnology and Office of Online Education and Expanded Programs at Morehouse School of Medicine. He has realized that it’s important to understand the student audiences and their level of knowledge of cannabis. He promotes remaining aware that academia is just as susceptible to the dynamic and fast paced nature of cannabis as an industry. “Scientists are globally publishing cannabis discoveries daily, shared Dr. Hemant. We see there also is a fast growing demand for business and entrepreneurial courses with potential for career pathways; manufacturing, tech start-ups, data analytics, marketing and even healthcare,” Dr.Kumar shared.
Advisory councils
Programs benefit from the strategic advice of cannabis businesses and social equity advocates. Advisory councils are often informal in nature and independent from state regulation oversight. Council members provide insight on everything from hiring of educational professionals to establishing events and bringing in additional resources to construct greenhouses or implement hands-on internships. Commitments can vary from a single semester to an entire year or more.
Academic Advisory councils provide feedback and direction for long-term goals and strategic planning. With cannabis more in the academic spotlight than ever, it is crucial we start developing programming and educational strategies to highlight cannabis career opportunities.
As cannabis is a continually evolving industry, there are opportunities for subject matter experts to collaborate with the academic community. The cannabis industry intersects with so many different aspects of the workforce that span multiple sectors and academic degrees. Yet there are often missed opportunities for securing talent from junior colleges, trade schools, and research universities.
Cannabis organizations’ presence at career fairs ideally should be used for visibility and awareness in the cannabis space. This allows future employees and the canna-curious an opportunity to view this industry as a legitimate career path with ample employment opportunities. It closes the communication and educational gaps and offers opportunities for subject matter experts to collaborate with the academic community.
Cannabis companies, like other industries, are part of our nation’s workforce. To normalize our booming industry, it’s important to spread awareness that the medical cannabis space is a thriving industry in need of graduates, interns, and talent from all walks of life, to help fill a myriad of different positions within the cannabis space.
Our industry is unique in that it encompasses so many different fields of study across such a vast range of subject matter. Educating academia is crucial to paving the way for research and the normalization of this industry. We must empower and support entrepreneurs and their communities by creating an equitable and sustainable cannabis industry. By aligning with academia, we unite with community and industry leaders to achieve cannabis normalization for our communities.
In any industry, whenever we try to optimize a process, the first step is to collect data to understand the dependencies and identify bottlenecks. In cultivation, we are still lagging behind, and we accept an average process loss of 10-20%. How can we change that?
Cannabis cultivators will lead this transformation in cultivation
Cultivating and growing plants to their full potential takes experience and specialized skills. Cannabis is no different, and many would argue, can be even more difficult to grow compared to other plants; that is because cannabis is cultivated for multiple reasons. The majority of people know that cannabis is grown for recreational and medicinal use. However, cannabis is also grown for its hemp fiber to create paper, clothing, biofuel, and food. Cannabis is an extremely fast-growing plant. The plant attracts and is susceptible to many pests, including several types of insects, fungus, and bacteria. Another challenge with cannabis is the fact that it has not been grown at scale or studied to the extent of other crops. The legal cannabis industry has only been around since 2012, when Colorado and Washington were the first states to legalize recreational use. Growing cannabis is basically like driving a race car for the first time without knowing the course ahead. Good luck. Wouldn’t you want to know more about your race car, your team, and the uniqueness of the track in order to navigate with precision and skill? That’s exactly why data is such a powerful asset in cultivation, especially for cannabis cultivators.
Switch from qualitative to quantitative data
A lot of stress, miscommunication, and conflict in cultivation operations are due to the subjective nature of data collection. We rely on humans to assess a crop’s state and remember it when comparing historic results. “It looks better than last time.” or “It looks good.” – imagine if you could rely on numbers when making such statements: “We have 10% larger flowers than last cycle” or “This cultivar stretched until day 25 compared to the other cultivar which stopped stretching around day 30”. These are statements that are easy to agree on and hard to challenge since they are objective facts.
Capture a comprehensive set of data
The other important aspect to know about data is that data becomes exponentially more valuable the more complete and comprehensive it is. If you are baking bread and you only measure the flour but not the salt, water, or yeast, there is not much value to this information. The question we need to answer is what data allows us to draw a comprehensive picture of a garden. What data do you need to remotely steer a crop and guide a team on the ground? Cultivators heavily rely on the visual feedback of plants when assessing plant health. Being able to see the plants will be key but also to get a sense of plant health in numbers to allow for quantitative comparisons. Obviously, measuring environmental parameters like air temperature, relative humidity, light intensity, and CO2 is key to operating a cultivation facility. One of the most critical parameters to optimize is the Leaf Vapor Pressure Deficit or Leaf VPD. It provides information on how the plant is transpiring and, thus, how efficiently it can grow. In order to calculate the Leaf VPD, one also needs to know the leaf temperature. Substrate properties are another key piece of the cultivation puzzle. Water content, EC, and pH are important factors to navigate. Finally, it is important to know if any pests, molds, fungus, or viruses are present in the environment. And other factors are obviously key to measuring and understanding when operating a cultivation facility, like airflow, power consumption, etc. The more data you can capture the better you can consistently bake and optimize your favorite bread.
Leverage automation and AI to capture and process the data
However, when collecting data we need to keep in mind that all environmental parameters affect the same plant and, thus, they are all intertwined – in general, changing one parameter requires the adjustment of all other parameters as well. At the same time, the impact of these decisions is often only assessed by looking at the final yield, which makes it impossible to derive what influence each decision had on the respective result. Like in many other fields, modern automation and artificial intelligence are fueling the transition to data-driven decision-making in cultivation. And Cannabis, as one of the highest margin crops, is at the forefront of this evolution. Automated, intelligent systems can monitor your crop 24/7, allowing you to focus on fixing the issues rather than identifying them. They can measure properties across the full canopy, which have not been accessible before, like leaf temperature, bud count, plant stress, pests, and other crucial factors. They enable your team to assess the garden and to discuss its state remotely as well as to compare historic data across growth cycles.
Investing in data collection means making more money
The lack of data obviously results in inconsistencies and even crop loss—in cannabis, the industry average is 15% crop loss. Translation: millions of dollars lost, which goes even higher the larger the facility. That’s a significant amount of revenue that is lost instead of being deployed in other areas for expansion or optimization. In a highly competitive industry, implementing features such as data collection to minimize crop loss and optimize yield pays off quickly and can play a huge factor in a business’s long-term success.
Committee Blog: Unwrapping the Complexities – The Plastic Packaging Predicament
Written by: Karen Quinto, MS Environmental Science, Willow Industries
Balancing Protection, Sustainability, and Safety in the Packaging Industry
In 2012, child-resistant packaging legislation prevented access to children while the legal cannabis market began to open up but the issue persists over a decade later and the topic is still controversial to some.
“CR [Child-resistant] packaging on flower products makes no sense. On edibles sure, but flower? Not to mention that alcohol has no CR, and I’d argue is 100x more harmful to a kid who gets into it…. It feels like a piece of legislation to make regulators feel good about themselves but is a frustration to everyone else,” voiced Tyler Works on his LinkedIn page.
Works, the Director of Account Management for Cannabiz Media, is not alone on this sentiment. The delicate balance between protecting products and ensuring consumer safety is continuously challenged by concerns over its efficacy and common sense.
“When we worked on these rules, this was considered but it was more important to satisfy the minds of the people terrified of kids getting into cannabis,” chimed Gus Green, who helped states adopt the Code of Federal Regulations for the Poison Prevention Packaging Act due to cannabis being a Schedule 1 drug, therefore automatically deemed harmful to children. “Now is a better time to breach the subject. The Poison Prevention Packaging Act states that any product deemed toxic for a child under 5 years old should be in child- resistant, and senior-friendly packaging. I worked with state agencies around the country to adopt these. The rule is a bit more specific than that if you dive in though, it’s about the ability for a child to ingest a toxic amount within a specific timeframe…[For example] travel-size Listerine bottles are not always CR, but the large bottles are always CR.My specialty was child-resistant, or specialty packaging. Packaging specialists should be the ones rewriting these rules but I often see committee members with no background in the field attempting to write them.”
CFR 16 PART 1700 refers to Title 16, Part 1700 of the Code of Federal Regulations (CFR), which specifically deals with Poison Prevention Packaging. This regulation focuses on the packaging requirements for substances that are potentially hazardous or poisonous, especially to children. The key objective is to prevent accidental ingestion by children and reduce the risk of poisoning incidents.
The regulation outlines standards and specifications for packaging design and labeling to ensure that products posing a poisoning risk are packaged in a way that makes it difficult for children to open or access the contents. This includes child-resistant closures and barriers to entry. The goal is to enhance the safety of household products, medications, and other substances that could be harmful if ingested by young children. Compliance with CFR 17 PART 1700 is essential to meet safety standards and protect consumers, particularly children, from accidental poisoning.
It seems straightforward enough but there are many problems inherent in adopting a rule that was not specifically made for the cannabis industry.
The Dose Makes the Poison
Works’ earlier sentiment is essentially that “the dose makes the poison”. This fundamental concept in toxicology states that any substance can be harmful in large quantities but may be safe at lower levels.
Proponents of this sentiment argue that cannabis flower contains THCA, which is a non-psychoactive cannabinoid, meaning it does not produce the “high” associated with THC and cannabis use. THCA is a precursor to THC through decarboxylation, which converts THCA to THC with the application of heat, typically when it is smoked, vaporized or cooked. Therefore, ingestion of THCA is unlikely to cause intoxication in a child. Moreover, Works argued that requiring child-resistant packaging for THC flower is inconsistent with the treatment of other potentially harmful household items that are not subject to the same level of regulation, such as bottles of alcohol that do not require child-resistant packaging despite their inherent availability and quantity in a household.
Advocates for the deregulation of child-resistant packaging of flower might suggest that just like for alcohol, home environment control would suffice in controlling cannabis as a safety measure for children. Storing THC flower in an inaccessible location followed by strong educational measures urging parents to responsibly store and prohibit access could be effective in preventing accidental ingestion.
While these points are presented for the sake of argument, it’s important to reiterate that child-resistant packaging regulations are designed to prioritize child safety. The potential risks associated with accidental ingestion of THC or other substances are serious, and any discussion around exemptions should carefully consider the well-being of children. Public health and safety regulations are typically enacted with the aim of preventing harm and protecting vulnerable populations. But this is not the only issue people have in mind regarding packaging.
Child-resistant packaging for flower not only seems problematic because it is incongruent with regulations for other harmful household substances including alcohol but also because it creates trash. A lot of it.
The Single-Use Abuse
The Sustainable Cannabis Coalition estimated that in 2020, the US Cannabis Industry used almost one billion pieces of single-use plastic that mostly ended up in landfills. Research and testing activities–including those for the cannabis industry–adds up to over 12 billion pounds per year. The majority of these plastics cannot be recycled due to their diverse material composition. A whopping 40% of total emissions are attributed to our procured goods and services.
Packaging materials, particularly plastics, are composed of various substrates such as polyethylene, each with distinct properties. Sustainability concerns arise as certain laminated plastics prove difficult to recycle. Challenges persist, especially in the context of single-dose packaging and restrictions on child-resistant reclosable plastics.
“People want to recycle bioplastics but they don’t have good barrier properties,” Gus Green states. “There is also a problem with the idea of biodegradables because they are designed to break down. Biodegradable plastic is not allowed in child-resistant reclosable plastics because the mechanism will fail because the material is frail, but laminated plastics that have great barrier properties cannot be recycled.”
The Sustainable Cannabis Coalition blog announced that in 2021, CULTA, a cannabis company, partnered with The High 5 Initiative, a non-profit company that’s working to keep Polypropylene #5 plastics out of landfills through recycling. Patients can return packaging to CULTA, where the initiative team sorts and processes the materials, recycling over 95% and transforming #5 plastics into Post Consumer Resin (PCR) for manufacturing other products.
Despite the environmental benefits, transitioning to eco-friendly packaging faces challenges, including cost implications. For instance, CULTA notes that switching to eco-friendly cellulose packaging would increase costs, making it economically challenging for cannabis companies, coupled with perceived quality issues with thinner and more pliable cellulose bags (which may seem cheaper, thus impacting consumer acceptance).
The Future of Plastic Waste in Cannabis
New metalized child-resistant compostable cellulose film bags have entered the market for the first time and offer the opportunity for both home and industrial composting, including the cannabis industry.
“In Canada, Wyld has adopted child-resistant compostable pouches. Many edibles brands are moving to an inner-outer pack combo with individually-wrapped pieces inside a mother bag, similar to many traditional candies. Think caramels, Starburst, cough drops, Hershey’s Kisses, Reese’s cups, etc. – cannabis consumers want fresh products, and individual wraps accomplish that. To avoid more single-use plastics, NatureFlex is seeing significant, promising interest,” Elisha Hedin, a regional sales manager from Futamura, manufacturer of NatureFlex explained. “Compostable films can actually have a very good barrier and NatureFlex is an ideal packaging material for both gummies and flower. There’s a perception in the industry that compostable materials are low quality and that’s simply not true.”
Wyld, a Climate Neutral Certified brand, offers the cellulose-based packaging made from cellulose film laminated to a biosealant for their gummies. In home composting, this metalized compostable film degrades completely in 12-16 weeks. In industrial settings, it takes twice as fast to convert the cellulose into water, CO2, biomass, and mineral salts in just 6-8 weeks.
Meanwhile, in the research industry, Polycarbin has touted itself as the world’s only circular economy for single-use lab plastics. This California-based company helps labs achieve their sustainability goals by diverting these valuable materials from landfills and incinerators into the next generation of low-carbon lab products.
“Much like with food-tech and biotech, the cannabis industry is driven by a growing dependence on single-use plastics. From the harvest fields to the QC and QA laboratories, it is more important than ever that this industry consider the carbon footprint associated with its supply chain,” James O’Brien, CEO of Polycarbin emphasized. “Through responsible waste stream management and sustainable procurement, the cannabis laboratories can significantly attenuate the environmental impact of a major source of its scope three emissions—fossil fuel-derived, single-use plastics.”
As the packaging and research industry grapples with the complex interplay of material properties, sustainability challenges, and stringent safety standards, a delicate balance must be struck. Navigating the evolving landscape requires continuous innovation, collaboration, and adherence to regulations, ensuring that the packaging not only safeguards products but also contributes to a sustainable and secure future.
Committee Blog: A Guide to Navigating Cultivation Environmental Requirements
Navigating environmental requirements and reviews can be one of the most challenging and costly aspects of obtaining a cannabis cultivation license. Environmental standards and regulatory requirements differ from state to state and within local jurisdictions. While regulations may vary, cannabis operators encounter similar environmental requirements nationwide. Environmental reviews and impact assessments require an evaluation of cultivation policies and operations for sediment and erosion control, water usage, wastewater discharge, energy efficiency and carbon footprint, air quality, and odor control. This guide will aid operators in establishing the best practices for these environmental concerns to create a smoother environmental review process for the cultivator.
Sediment and Erosion Control
Sediment and erosion control methods are required for outdoor cultivation to ensure the facility has a comprehensive mitigation plan to prevent adverse effects the outdoor crop may cause to the land. Sediment controls are structural measures intended to complement and enhance the implemented erosion control practices and reduce any sediment discharge. Erosion control is a soil stabilization process consisting of mitigating measures to prevent soil particles from detaching and moving into stormwater runoff. Ensuring this compliance may include implementing Best Management Practices (BMPs) for Sediment and erosion control. These BMPs should be implemented before the onset of the rainy season, typically in October. Sediment and erosion control devices and measures should be replaced when they deteriorate.
Sediment Control BMPs
Silt fences
Fiber rolls
Hydroseeding
Sediment Trap
Inspect the trap on a routine schedule for litter and debris
Remove the sediment built up in the trap and sprinkle it lightly over vegetated areas to increase soil fertility
Gravel bag berms
Sandbag barriers
Straw bale barriers
Observation station on the property for visual monitoring of sediment pollution
Add gravel to dirt roads
Add stormwater detention basins
Erosion Control BMPs
Vegetative Swales & Buffers
Swales should be trimmed to prevent restriction of flow
Routinely monitor for any debris and overflow
Buffers should be added to the edges of parking lots and storage areas
Placement of straw mulch over disturbed land
Should be replaced often
Soil binders
Vegetation preservation
Vegetation replacement for any disturbed areas that will not be in use
Seed mixes containing native grass and wildflowers
Hydroseeding
Earth dikes
Waste Usage and Wastewater Discharge
Water usage and wastewater discharge management plans are required to ensure the cultivation facility legally and efficiently obtains its water and that no hazardous water is dumped onto the land surface, directly into the ground, or into another body of water where it could negatively impact the environment. Water usage may require obtaining documentation demonstrating you own the water rights to your facility or property. Cultivations connected to their municipalities’ water district may only need to report that information to meet this requirement. Such a facility may also need to contact its water provider to create a water rights letter showing the operator has the right to use that water. Cultivations that use other water supply methods, like wells, may need to provide a detailed report of their water quality and have well flow testing performed. Depending upon your state, you may also need to show how your water will be conserved. A cultivator may be required to create a water conservation plan detailing the procedures implemented at the cultivation site to conserve water. Wastewater discharging typically will require a cultivation site to apply for a Wastewater Discharge permit. Wastewater discharging plans that thoroughly explain how the cultivation will discharge any hazardous wastewater and what mitigating practices will be implemented to prevent wastewater from entering the environment untreated are also frequent requirements for this process.
Water Conservation Methods
Recycling irrigation systems
Automated irrigation systems
Precision emitters
Watering more frequently throughout the day in smaller amounts
Planting pots
Divert the dehumidifying and cooling system’s piping into a holding tank to reuse the water for irrigation
Use organic mulch around each plant to prevent moisture loss
Rainwater harvesting, if allowed in your area
Substrate sensors to monitor water saturation
Wastewater Discharge Measures
Using planting pots to prevent excess runoff
Vegetative swales and buffers to capture wastewater
Recycling irrigation systems with reverse osmosis and ultrafiltration or thermal evaporation
Recycling systems that don’t have a filtration system can hold any hazardous wastewater in a holding tank and have it transported to an approved wastewater treatment facility
Substrate sensors for the prevention of excess runoff
Stormwater runoff prevention
Store pesticides, chemicals, and fertilizers indoors and away from any outdoor growing areas and in approved containers
Covering wastebins
Divert stormwater away from any stockpiled materials
Energy Efficiency and Carbon Footprint
Cultivation energy efficiency and carbon footprint reporting are becoming more popular among regulators as the country moves toward environmentally friendly practices. Energy efficiency may require the cultivation site to comply with specific requirements for equipment and lighting. Many licensing bodies also require an energy efficiency plan that details what mitigating measures the operator will implement to reduce energy costs. Carbon footprint reporting may require greenhouse gas emission (GHG) reporting, which can require a cultivator to purchase carbon offsets. Green energy plans are sometimes required; these plans demonstrate how the cultivation will utilize green energy options to reduce their carbon footprint.
Energy Efficiency
LED lighting
Automated irrigation systems
Automated blackout curtains for greenhouses
On-site composting
Low-flow fixtures
Split ductless air condition
Chilled water systems for dehumidification
Modulating hot gas reheat forced air systems
Sensor motion lighting in rooms that aren’t frequently entered
Adjust lighting schedules based on the weather if using mixed-light
Installing solar panels
Request an energy efficiency review from your utility provider
Carbon Footprint
Sign up with a clean energy provider that partners with your utility company and reinvests the funds from the program into clean energy initiatives in your state
Avoid generation use wherever possible
Install renewable energy sources at your facility, like solar panels
Replace pesticides with biocontrols using predatory insects
Use recycled or biodegradable packaging, even for wholesale flower
Cultivate companion plants that deter pests and attract beneficial insects
Reduce or eliminate lighting requirements by establishing a greenhouse or outdoor cultivation facility
Air Quality and Odor Control
Air quality reviews may be triggered for cultivation facilities, including the requirement to obtain an air permit. Air permits allow an operator to release a limited amount of pollution within certain restrictions. Air quality reviews for cultivations are triggered by several factors based on the state requirements, some of which may include drying, processing, generator use, fugitive emissions, and pesticide application. If a cultivator is required to obtain an air permit, they will be licensed to perform those activities. Cultivations going through air quality reviews may need to provide an Air Quality Control Plan outlining the mitigation efforts the cultivator will make for air quality pollution. Odor Control Plans are one of the most common regulatory requirements for cannabis businesses. If your environmental review includes odor control and you operate an outdoor cultivation site, you may be required to conduct an odor control study on your facility. These studies use wind patterns to measure the distance the odor from your cultivation will travel. Based on your state or local jurisdiction’s requirements, an odor control study may require you to move the border of your canopy. Conversely, an odor control study may prove that your cultivation will not be a nuisance due to odor pollution, and no mitigating measures will be required. Odor control plans should detail precisely what mitigating measures the cultivator will implement and, if available, data on how effective those measures will be.
Air Quality Control Plans
Wetting the surface of dirt roads during the dry season
Encourage ride-share amongst your employees
Reduce VOCs wherever possible
This can include timing harvesting to reduce ozone impact
Include a chemical usage plan that describes how pesticides, fertilizers, and other agents will be stored and disposed of in alliance with the manufacturer’s recommendations
Detail how you will maintain Safety Data Sheets (SDS) on all chemicals at the facility
Odor Control Plans
Indoor cultivations and greenhouses can implement the following measures:
Use carbon filters
Explain in your plan how carbon filters work, provide data on their filtration rates, which you can locate in the manufacturer’s guide, and how often you will replace them
Use wet scrubbers for indoor cultivation or greenhouses
Explain how the air is treated when it passes through the scrubber
Implement biofiltration measures
Explain how the air will pass through soil, mulch, or other organic matter to filter the air
Use oxidization treatments through your facility’s ventilation system
Explain how the process of oxidization removes odor
Have open communication with your neighbors regarding odor
Explain how you will speak with your surrounding neighbors about any odor concerns and request your neighbors contact you if they do smell odor so you can begin an assessment into structural or equipment failures and, if needed, implement further mitigating measures to your plan
Outdoor cultivations can implement the following methods:
Hire a professional to do an odor study to prove your facility’s compliance
Plant fragrant flowers around the exterior of the site
Use oxidization treatments through high-pressure misting devices around your cultivation area
Explain how the process of oxidization removes odor
All cultivation types should have open communication with surrounding neighbors regarding odor
Explain how you will speak with your surrounding neighbors about any odor concerns and request your neighbors contact you if they do smell odor so you can begin an assessment into structural or equipment failures and, if needed, implement further mitigating measures to your plan
As regulatory requirements vary across the country, cultivators should carefully read their regulations and contact state and local departments for guidance on requirements specific to their operations. A thorough understanding of what plans must be created, studies performed, and special permits obtained will create a smooth environmental review process. Join the upcoming NCIA webinar from the Cannabis Cultivation Committee to dive deep with industry professionals on navigating environmental reviews across the United States.
Committee Blog: Discovering the Potency of Data – How Cannabis Brands Can Harness Audience Insights to Elevate Success
In the rapidly evolving landscape of the cannabis industry, understanding your audience is critical to staying ahead of the curve. For brands, this can be difficult given retailers hold the keys to their customer data. However, through the utilization of digital marketing, cannabis brands have the opportunity to glean invaluable insights from their audience data. In this comprehensive breakdown, we’ll explore how cannabis brands can leverage audience data from programmatic advertising, email campaigns, SEO and more to gain a deeper understanding of their customers and enhance their overall success.
The Power of Data in the Cannabis Industry
Data is the cornerstone of informed decision-making, and in the cannabis industry, with its regulatory restrictions and shifting consumer preferences, its importance cannot be overstated. By harnessing audience data from digital marketing campaigns, cannabis brands can move beyond conjecture and gain actionable insights into their customers’ behaviors, preferences, and needs.
Analyzing Audience Demographics
One of the primary benefits of digital marketing is the ability to gather detailed demographic information about your audience. Through tools like Google Analytics, social media insights, campaign reports, and customer relationship management (CRM) platforms, cannabis brands can paint a vivid picture of their customer base. From age and gender to location and interests, this demographic data provides invaluable insights into who your customers are and how best to engage with them.
Understanding Consumer Behavior
Beyond demographic data, digital marketing campaigns offer a window into consumer behavior. By tracking website traffic, engagement metrics, and conversion rates, cannabis brands can gain a deeper understanding of how customers interact with their brand online. This insight allows brands to identify trends, uncover pain points, and optimize their digital presence to better meet the needs of their audience.
Personalizing the Customer Experience
One of the most powerful applications of audience data is in personalizing the customer experience. By segmenting their audience based on demographic information, cannabis brands can tailor their messaging and offerings to resonate with individual customers. Whether through targeted email campaigns, customized product recommendations, or educational content, this level of personalization not only enhances the customer experience but also drives engagement and loyalty.
Optimizing Marketing Strategies
Audience data also serves as a compass for guiding marketing strategies in the cannabis industry. By analyzing the performance of various marketing channels, content types, and messaging approaches, brands can identify what resonates most with their audience and allocate resources accordingly. Whether it’s investing more heavily in content creation, refining digital advertising tactics, or experimenting with email campaigns, data-driven insights enable brands to optimize their marketing efforts for maximum impact.
Predicting Trends and Forecasting Demand
In addition to informing day-to-day marketing decisions, audience data can also provide valuable insights into larger industry trends and consumer preferences. By analyzing macro-level data trends across their customer base, cannabis brands can identify emerging market opportunities, anticipate shifts in demand, and stay ahead of the curve. Whether it’s launching new product lines, expanding into new geographic areas, or pivoting to meet evolving consumer needs, data-driven forecasting empowers brands to make informed strategic decisions.
Enhancing Product Development
Finally, audience data can play a pivotal role in shaping product development strategies within the cannabis industry. By soliciting feedback from customers through surveys, reviews, and social media interactions, brands can gain valuable insights into product satisfaction, preferences, and needs. This feedback loop not only informs the development of new products but also enables brands to refine existing offerings based on real-time customer input, ensuring that their products remain relevant and competitive in a rapidly evolving market.
Conclusion
In conclusion, audience data is a potent asset for cannabis brands seeking to unlock the full potential of their marketing efforts. By analyzing demographic information, understanding consumer behavior, personalizing the customer experience, optimizing marketing strategies, predicting trends, and enhancing product development, brands can gain a deeper understanding of their customers and elevate their overall success in the cannabis industry. As digital marketing opportunities continue to evolve, brands that harness the power of data will undoubtedly emerge as leaders in this dynamic and rapidly growing market.
Committee Blog: The Importance of Insurance and Risk Management for Early State Applicants
2024 is shaping up to be a bang-up year for cannabis whether its constant news about the potential for federal action regarding rescheduling, or multiple states expanding their current cannabis markets or entering the cannabis space for the first time. As exciting as all this is for prospective cannabis business owners and operators, there’s an issue which we in the cannabis industry often encounter time and time again.
There’s plenty of businesses seeking to enter the industry who overlook the importance of insurance and risk management. This may not be the most exciting topics when thinking about cannabis, but its one of the most important and often sidelined. Here, we’ll dive into how insurance and risk management can impact your cannabis business and why it’s important not to delay this vital step in your business development.
Insurance and Cannabis
Due to the current federal illegality of cannabis, just the process of getting insurance for your cannabis business can be a headache. But just because it can be frustrating to get, doesn’t mean that this important business step should be forgotten about or ignored. If anything, starting early on your cannabis insurance path will help set you apart from others in early licensing phases and can often help with getting a license itself.
All states which have their own cannabis market require some form of insurance, and many require insurance documentation as a requirement for the licensing process. This can often be any form of insurance—from fire protection to property—so long as it’s up to date and follows the state regulations and guidelines.
What Are the Risks?
Perhaps no bigger risk in working with cannabis nowadays is the federal side of business. While we are eager about the prospects for rescheduling and with that, hopefully, some banking regulations such as some version of the SAFE Banking Act, there is always the federal risks. The odds are low that the federal government is going to step in and shut down all cannabis operations in states, but they aren’t entirely eliminated risks either.
Of course, when it comes to risk management, the federal government and their response to cannabis business isn’t the only thing business owners need to be concerned with. There’s the risks of theft of cash, diversion of cannabis and cannabis product, and even high turnover of staff. These are all inherent risks that should be managed and assessed when pursuing a cannabis license. This is also the case for businesses which may be up and running, though it is most critical to assess the risks and your own handling of them as early as possible.
Early Steps to Take
Let’s say you’re interested in opening your cannabis business. Maybe you’ve received a provisional license from the state, or perhaps you’re waiting for an application licensing round to open. What should you do when it comes to insurance and risk management?
Simple; start sooner than you anticipate. Over the years, clients have asked me countless times, “When should I get to work?”. It never hurts to be over-prepared, but it can torpedo your chances at licensure or opening a compliant cannabis business if you delay or rush some of the most important and necessary business functions. Insurance and risk management may not be what gets people into cannabis (I’m a nerd and think both these areas or interesting but even *I* wouldn’t say they’re what got me into this industry!) but they are essential. Start early and begin doing your own research in these areas.
Thankfully, there are insurance providers who will work with “plant-touching” businesses such as a dispensary or cultivation facility. They may not be the easiest to come by, but they are out there and are familiar with cannabis operations and the risks associated with insuring a business like yours.
And when it comes to risk management, identify your own risks through a thorough SWOT analysis (strengths, weaknesses, opportunities, and threats) or a detailed risk assessment. Find professionals who can guide you through this too if needed, as they’ll be the ones who can highlight what are some of the unique and individualized risks your business may have. For example, an outdoor cultivator has different risks than an indoor cultivator or a hoop-house cultivator.
When it comes to insurance and risk management, it’s never too early to begin discussing and meeting with professionals who can help and this is an area which shouldn’t be ignored or put onto the back burner for too long.
Committee Blog: Crash & Grab – Hitting the Brakes on a Cannabis Burglary Trend
Haley Glover, Senior Security Consultant at Sapphire Risk
So, you run a cannabis business. You’ve spent years and years going through the licensing process, finding a suitable facility, hiring qualified employees, and growing top shelf buds to impress sophisticated buyers.
It hasn’t been easy – and it hasn’t been cheap. But that feeling you get when you help a sick customer find their new favorite medicine – well, that makes it all worthwhile. After all that hard work, nobody wants to see it all slip away in the middle of the night (and sometimes broad daylight) due to theft.
We have long known cannabis businesses’ perceived abundance of cash on hand has attracted criminal activity. This is evident with the industry’s issues of armed robberies and the silent scourge of employee theft, targeting everyone — well-known brands likeCookies to mom & pop shops. This blog will examine a recent trend which has been on the rise, criminals utilizing vehicles to breach facilities in the act of a burglary.
While not a new technique, vehicle rammings have risen in prevalence over the past few years, sparked in part by a TikTok trend known as the Kia Boyz. As the Cannabis Information Sharing & Analysis Organization (Cannabis ISAO) detailed for The Blunt, thetrend starting picking up within the industry in 2022 as social media spread details on how to easily start non push-button ignitions on certain makes and models utilizing aUSB charger.
It is important to understand crime trends like this to evaluate a changing risk landscape, which can impact how resources are deployed. But for this blog, how a criminal obtained a stolen vehicle and breached your outer security isn’t the most relevant question. We will focus both on mitigation strategies, as well as how to respond to such incidents.
Let’s Hear From A Security Professional
With years of experience in cannabis (not to mention jewelry stores and pawn shops), the Sapphire Risk team are bona fide experts in security. Though they prefer to be involved as early as the application/buildout process, Sapphire’s team frequently gets called in after break-ins to help operators fortify their facilities.
We spoke with Sapphire Risk’s Senior Security Consultant Haley Glover, who shared the following advice about preventing unauthorized vehicular-assisted entry. “Implementing physical barriers like bollards or security planters placed strategically around the exterior of the building are great ways to prevent a vehicle from successfully driving through your location.” Bollards can be tremendously effective at stopping an errant vehicle in its tracks. Keep an eye out and you’re likely to notice them around federal buildings, banks, and high-end retail stores!
Another area of concern for cannabis businesses are the entryways. Haley advises, “A business can utilize the strongest and most secure door, but without a frame to match it, the door is useless, so it’s important to consider all aspects of a facility when securing it and identifying where threats and vulnerabilities could be present.” Don’t put a strong door in the middle of some cheap drywall!
Beyond Walls, Bars & Guards
While Warden Norton from Shawshank Redemption felt the only way to spend tax-payers’ hard-earned money was to get “more walls, more bars, and more guards”, adding additional physical barriers is not the only deterrence strategy that cannabis operators should be considering to safeguard their facilities.
Washington State’s Senateunanimously passed a bill that would increase penalties for anyone who utilizes a vehicle to gain entry into a cannabis retailer.Senate Bill 6133, sponsored by state Sen. Jim McCune, R-Graham, would have a new “special allegation” to seek an additional year of custody for the convicted criminal. Prosecutors could also charge the suspect with either first-degree or second-degree robbery – a class A or class B felony, respectively. (A PDF of the bill can be viewed here.)
NCIA’s Risk Management & Insurance Committee recently spoke with Senator McCune’s staff to learn more about this initiative. It is important to note that while this bill’s genesis from legislative recognition of a growing safety problem, there is now a model for industry professionals in other states to help drive legislation that will serve as a proactive deterrent.
While the passing of the Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers (INFORM Act) by Congress last year made headlines as a major win in the fight against Organized Retail Crime (ORC), it’s mainly addresses the problem of reselling stolen merchandise via online marketplaces, which is not the destination of stolen cannabis products. This is further proof cannabis businesses need to lean into their State legislatures to get support that is currently unavailable at the Federal level. Efforts like theRobbery Tracker that has been put together for several years by Uncle Ike’s Ian Eisenberg can help demonstrate to legislators the need for additional crime deterrents.
Dive into Insurance Mumbo Jumbo
Let’s talk about Protective Safeguards endorsements on cannabis property policies. These endorsements will exclude losses if all the described protective safeguards (security guards, alarms, cameras, vault, etc.) aren’t in place and/or properly functioning. Imagine having a house fire and getting your claim denied because you didn’t replace the batteries in your smoke detector. Well, it’s the same thing for cannabis.
Protective Safeguards endorsements can be as simple as a burglar alarm or as demanding as needing a follow car, two way radios, and telematics in place for your cannabis delivery vehicles. Another common provision is for product on display – most insurance policies required product to be stored in a safe/vault while a store is non-operational, with a sublimit only allowing around 25% of stock to be on display at any given time. Whatever the situation, best to make sure you read the policy thoroughly and understand what is required of you for coverage to respond.
One should also be familiar with the coverage sublimits in their policy and adjust them regularly to adequately reflect stock on hand. In another scenario, a cannabis business has all of their security systems and protective safeguards in line. Robbers come by and steal millions of dollars worth of cannabis products — but the business only has a $100,000 sublimit for cannabis inventory! Imagine the frustration of following all the rules and only walking away with a partial reimbursement after a huge loss.
Incident Response
As with any incident, things go more smoothly when you have a plan in place and everyone knows their roles and responsibilities. This can help ensure to both expedite the process, while also making sure vital steps are not overlooked.
Some items that should be contemplated in the plan might include:
Contact local law enforcement
Gather and maintain written event logs
CCTV video storage and maintenance
Appropriate follow-up steps depending on the situation
security weak-spot reviews,
HR interviews,
medical follow-up, or
filing an insurance claim
By having formal guidelines in place for event response, you’ll save valuable time and money getting the business operational again — while minimizing the confusion that your employees face during a time of crisis.
Conclusion
The RMIC advocates for a proactive approach to risk management that emphasizes the importance of informed decision-making. When in doubt, contact a trusted insurance professional and get a second set of eyes on your coverage — and your protective safeguards!
Committee Blog: Navigating Cybersecurity Risks in the Cannabis Industry
Cannabis Industry Cybersecurity threats are on the rise, and organizations that don’t take a proactive approach to information security may see themselves increasingly targeted. In this blog, members of National Cannabis Industry Association’s Risk Management & Insurance (RMIC) details key considerations to help cannabis organizations enhance their network security. Throughout the blog there are hyperlinks for further information on certain topics, and for those organizations just getting started on their cannabis industry cybersecurity journey, two free resources to consider investigating are the Small Business Administration’s (SBA) Cybersecurity Guide and the Cybersecurity & Infrastructure Security Agency’s (CISA)Cyber Essentials Starter Kit.
A Business Case for Cybersecurity Investment.
Like with any business investment, increasing cyber defense resources must provide a sufficient ROI for the business. When considering cybersecurity, it may be best to define that as Regret Of Inaction. Consider that according to IBM’s2023 Cost of a Data Breach Report the average cost of a breach has reached an all-time high of $4.45M. The old adage, “an ounce of prevention is worth a pound of cure” is certainly applicable to security measures.
Cybersecurity risks are not just applicable to large enterprises,Accenture’s Cybercrime study reveals that nearly 43% of cyber-attacks are targeted at small and medium-sized businesses (SMBs), and 60% of small businesses close within6 months of being hacked.
Cannabis Industry Cybersecurity Starts with People
Any cultural shift at an organization needs to start from the top, and that includes security. Security culture needs to be driven from the top. Adopting proper policies and procedures to properly safeguard organization networks and personnel is key. This includes regular employee training. As many as95% of attacks are caused by human error.
Being a Victim Stinks- Elevate Your Basic Cyber Hygiene
The National Cybersecurity Alliance just completedCybersecurity Awareness Month, where they stressed four of the key principles which can help better secure organizations. We’ll touch on each below, and for additional best practices check out the Cannabis Information Sharing & Analysis Organization’s (Cannabis ISAO)blog from 420 where they asked 4 cybersecurity experts to compile 20 tips for the cannabis industry.
Recognize and Report Phishing. A best practice is to set up a channel in your organization’s chat platform where employees can share screenshots of phishing attempts to raise awareness.
Update software. Don’t forget to include all of the connected Internet of Things (IoT) devices throughout the organization
Navigating Cyber Insurance
The world of business insurance, especially in the cannabis sector, can be quite complex. However, with the insights provided here, you can navigate your policy purchasing process with confidence and ensure your business is fortified against potential risks. By understanding policy forms, adhering to safeguards, and adapting to local regulations, you can lay a resilient foundation for your business’s growth and success.
“In Cannabis, we don’t get many options when it comes to cyber insurance providers, so it’s important we put our best foot forward when seeking or renewing cyber insurance policies. Work with your broker early to understand any changes upcoming to policies and the expectations being set by your insurers. When you can, hire a dedicated team that is focused on securing your digital estate, and leverage well known guidance frameworks such as NIST CSF, CIS Top 20, and HIPAA, and work with an independent party to verify your progress, which help keep your premium costs down long-term and reduce the risk of you having an incident that requires you to file a claim in the first place.”- Chris Clai, Director of Information Security, Green Thumb Industries
Stay up to date on Cannabis Industry Cybersecurity threats and trends
Cyber criminals are opportunistic and will look for any advantage to beat cannabis industry cybersecurity systems or trick employees. Holidays can be a prime time for attacks because of employees taking time off and being more distracted than usual. Holidays and major newsworthy events can also lead to a spike in phishing and other scam activities. In the same way FEMA often warns people to look out for scams after natural disasters, consider what industry news may cause a lot of buzz that could also be used in phishing campaigns. Announcements related to a new state legalizing adult use, or legislative updates around SAFER Banking could all be hiding malicious links.
Being involved in communities that actively sharing information about ongoing threats can be very beneficial. A member of the Cannabis ISAO recently shared details of cash management company who had been avictim of a Business Email Compromise (BEC) which led to fraudulent wire transfer requests being sent out. Days later MJBizDaily reported a similar incident which resulted in the loss of funds totalling nearly $650K for MariMed. Keeping up to date on these types of incidents can help inform employees of the current threat landscape, and boost organizational resilience.
Incident Response
Responding to a cybersecurity incident is not the first time you want to be considering what your response processes are. In response to the recent high profile MGM and Caesars ransomware incidents, National Cyber Security Alliance Executive Director Lisa Plaggemierstated “the best way to deal with a ransomware attack is to practice having one, to do tabletop exercises.” Having plans and procedures in place are important, but it’s equally important to test and validate those plans.
In the event of an incident, it may be necessary to utilize a digital forensic vendor. Consider having one on retainer, or at least establishing a relationship ahead of time to enable a speedy response. In some cases your cyber insurance company may have preferred vendors for this type of work.
Conclusion
The RMIC advocates for a proactive approach to risk management that emphasizes the importance of informed decision-making. By evaluating an insurer’s claims experience, comprehending legal nuances, and staying attuned to the evolving threat landscape, you can empower your business with robust protection, ensuring a resilient foundation for growth and success.
The cannabis industry has experienced remarkable growth in recent years, as both regulatory landscapes and public perceptions shift. As the market expands, cannabis companies face increasing pressure to scale their operations while maintaining compliance and meeting customer demands. In this era of digital transformation, Business AI tools, such as ChatGPT, offer innovative solutions that can empower cannabis companies to streamline processes, enhance customer experiences, and drive growth. A tremendous benefit is it takes little skill to learn how to use AI for a beginner or one could work with an expert in AI. In this article, we will explore the potential of AI tools in the cannabis industry and delve into strategies for their effective implementation to achieve desirable business outcomes.
The Power of Business AI Tools in the Cannabis Industry
Artificial Intelligence (AI) is transforming various industries, and the cannabis sector is no exception. Business AI tools encompass a range of technologies, including natural language processing (NLP), machine learning (ML), and data analytics, all of which can be harnessed to address the unique challenges faced by cannabis companies seeking to scale.
Enhanced Customer Engagement: One of the critical aspects of scaling any business is effective customer engagement. AI-powered chatbots, like ChatGPT, can provide personalized, round-the-clock support to customers, addressing inquiries, guiding purchasing decisions, and even providing product recommendations. These chatbots create a seamless and responsive customer experience, fostering loyalty and increasing sales.
Data-Driven Insights: AI tools can analyze vast amounts of data to extract valuable insights that can inform strategic decisions. For cannabis companies, this could mean analyzing customer preferences, tracking market trends, reviewing internal operations management, and optimizing supply chain management. These insights enable businesses to adapt quickly to changing market dynamics and stay ahead of competitors.
Process Automation: Tedious and time-consuming tasks can hinder scalability. AI-powered automation can optimize inventory management, order processing, and regulatory compliance, allowing employees to focus on higher-value activities. This not only increases efficiency but also reduces the risk of errors.
Predictive Analytics: Predicting demand and optimizing production are crucial for scaling operations. AI can analyze historical data to forecast market demand, ensuring that companies can maintain sufficient inventory levels and avoid overstocking or shortages.
Regulatory Compliance: Navigating the complex and ever-changing landscape of cannabis regulations is a significant challenge. AI can assist in monitoring compliance by cross-referencing business practices against current regulations, minimizing the risk of legal issues.
Implementation Strategies for Business AI Tools
While the potential benefits of AI tools are clear, effective implementation is key to realizing those benefits. Here are some strategies for cannabis companies to consider when integrating AI technologies into their operations:
Identify Pain Points and Goals: Begin by identifying the specific pain points your cannabis company faces in its scaling efforts. Whether it’s customer service bottlenecks, inventory management challenges, or regulatory compliance hurdles, pinpointing these issues will guide your AI implementation strategy.
Certified Professionals and Agencies: Collaborating with certified AI professionals or agencies that specialize in your industry can provide invaluable expertise. These experts can assess your business requirements, recommend suitable AI tools, and tailor solutions to your unique needs. Their experience ensures a smoother and more effective implementation process.
Data Collection and Preparation: AI thrives on data, so ensuring clean, accurate, and comprehensive data is crucial. Collaborate with your AI partner to define data requirements, gather relevant information, and organize it for analysis. This step forms the foundation for accurate predictions and insights.
Customization and Training: Generic AI models can be a starting point, but tailoring these models to your cannabis business is essential. Work with your AI professionals to fine-tune algorithms, customize chatbot responses, and train the system to recognize industry-specific nuances.
Continuous Monitoring and Improvement: Implementing AI tools is not a one-time task. Continuously monitor AI performance, gather feedback from customers and employees, and refine your AI systems accordingly. This iterative process ensures that your AI tools evolve with your business needs.
Change Management and Training: Introducing AI into your company may require employees to adapt to new processes. Effective change management, including training programs and clear communication, can help employees embrace AI technologies and use them to their full potential.
Desirable Outcomes and Future Considerations
The successful implementation of Business AI tools can yield a multitude of desirable outcomes for cannabis companies:
Scalability: By automating processes and optimizing operations, cannabis businesses can scale their production, distribution, and customer base more efficiently.
Improved Customer Experiences: AI-powered chatbots provide prompt and personalized customer service, enhancing the overall experience and fostering brand loyalty.
Data-Driven Decision-Making: AI-driven insights enable data-backed decisions, reducing uncertainty and enabling proactive responses to market changes.
Regulatory Adherence: AI tools can help ensure compliance with evolving cannabis regulations, minimizing legal risks and potential setbacks.
Innovation and Competitive Edge: Embracing AI technologies positions cannabis companies as forward-thinking, innovative players in the industry, setting them apart from competitors.
As the cannabis industry continues to evolve, it’s important to consider potential future developments and challenges. These may include:
Ethical Considerations: As AI becomes more integrated into business operations, it’s important to address ethical concerns surrounding data privacy, transparency, and bias.
Regulatory Changes: The cannabis industry’s regulatory landscape is dynamic. AI tools must adapt to new rules and compliance requirements, requiring ongoing monitoring and adjustments.
Advanced AI Capabilities: AI technology is advancing rapidly. Cannabis companies should stay informed about emerging AI tools and consider how they can further enhance business operations.
Conclusion
In the ever-expanding cannabis industry, the integration of Business AI tools holds immense potential for companies aiming to scale their operations and achieve sustainable growth. From enhancing customer engagement to optimizing processes and predicting market trends, AI technologies like ChatGPT offer tangible benefits that can drive innovation and success. By partnering with certified professionals or agencies and following effective implementation strategies, cannabis businesses can navigate the complexities of AI adoption and position themselves as industry leaders. As the industry evolves, a thoughtful and strategic approach to AI implementation will be essential for cannabis companies looking to thrive in a competitive market.
Contributing Authors:Stephanie Bozzuto, Cannabis Connect Insurance, Acrisure Partner | Merril Gilbert, Trace Trust | Shay Aaron Gilmore, The Law Office of Shay Aaron Gilmore | Matthew Johnson, AssuredPartners
Navigating the labyrinth of insurance coverage can be daunting for any business owner, especially within the emerging cannabis industry. Questions like “What coverage do I need?” and “How do I ensure my policy covers my exposures?” are common and crucial. The National Cannabis Industry Association’s Risk Management & Insurance Committee is here to guide cannabis business operators in protecting both personal and business assets.
Below are ten key insights and considerations to guide you when purchasing your next insurance policy. Whether you have a policy in place or are exploring multiple policies, it’s crucial to ensure they align with your intended coverage.
Understanding Policy Forms, Endorsements, and Exclusions
Policy forms, endorsements, and exclusions are pivotal during a claim. For instance, some policies sold to cannabis companies in the US have outright ‘cannabis business exclusions’. It’s crucial to read and understand these documents to avoid jeopardizing your business.
Compliance with Protective Safeguards
To ensure theft coverage response in a loss, understand and comply with the protective safeguards on your property insurance policy. For example, non-compliance with a Central Station Alarm Warranty can exclude coverage after a robbery.
Landlord Insurance Requirements
Understand the insurance coverage required by your landlord before signing any contract. If a triple net lease is required, you, as the lessee, will need to insure not only your business but also the building, which can be costly.
Local Insurance Requirements
Each city, state, and county permitting cannabis will have its own insurance requirements, often including general liability, product liability, commercial auto insurance, and workers’ compensation.
Some states have created specific requirements not present in other states (looking at you, Michigan!). Consult with an attorney to fully understand and meet these requirements.
Facility Maintenance
Maintain and update your facilities, especially if they are older than 20 years, to avoid limited property coverage and being forced to buy an “actual cash value” policy versus “replacement cost.” Updates to your HVAC, plumbing, roofing, and electrical systems are well worth the investment.
High-Risk Area Considerations
If your facility is in a high brush area, be prepared for limited property insurance options and a list of exclusions due to tighter wildfire insurance availability. Your insurer may offer expanded coverage if you’re willing to invest in wildfire defense systems.
Evaluating Insurance Companies
Know the financial strength of your insurance company before purchasing. Consider whether the company is admitted or non-admitted and research their reputation and claims experience.
Claims Experience
Inquire about the carrier’s claims handling experience, conditions of coverage, and the duration it takes to receive a payout from a covered loss. If your broker doesn’t have claims experience with a given carrier, feel free to ask someone on the NCIA’s Risk Management & Insurance Committee.
Legal Concepts and Types of Insurance
Understand the legal concepts involved in property and liability insurance and familiarize yourself with the different types of property insurance policies available on the market. For instance – are you purchasing an admitted or a non-admitted insurance policy? Are you on an ‘all risk’ or a ‘named perils’ coverage form?
Grasping Liability Insurance Distinctions
Liability insurance is crucial, acting as “third-party” coverage, contrasting with “first-party” coverage like property insurance, which protects against damage to one’s own assets.
Duty to Defend vs. Duty to Indemnify
Understanding the difference between the duty to defend and the duty to indemnify is vital. The former is broader, obligating the insurer to defend the insured in lawsuits, even if allegations are baseless. The latter only kicks in if the insured is found legally liable for damages.
Defense Inside/Outside the Limits
One should also inquire about defense inside versus defense outside the limits of a liability policy. A policy with ‘defense outside’ considers all legal costs separate from the total liability coverage, while legal fees will erode the total liability limit for a ‘defense inside’ policy.
Insurable Interest
An insured must have a direct financial interest in the preservation of the property and be exposed to monetary loss as an immediate and proximate result of its destruction. The interest must not be contingent or expectant. Interest in anything not founded on an actual right to the property is uninsurable.
Scope and Importance in Cannabis Industry
The scope of liability insurance, covering legal costs and payouts, is essential, especially in the cannabis industry, where legal landscapes and associated risks are continuously evolving. Adequate coverage is paramount to mitigate potential financial losses due to unique legal challenges and risks, such as product liability claims.
Conclusion
The world of business insurance, especially in the cannabis sector, can be quite complex. However, with the insights provided here, you can navigate your policy purchasing process with confidence and ensure your business is fortified against potential risks. By understanding policy forms, adhering to safeguards, and adapting to local regulations, you can lay a resilient foundation for your business’s growth and success.
The proactive approach advocated by the National Cannabis Industry Association’s Risk Management committee emphasizes the importance of informed decision-making. By evaluating an insurer’s claims experience, comprehending legal nuances, and staying attuned to industry developments, you can empower your business with robust protection, ensuring a resilient foundation for growth and success.
Committee Blog: Cannabis Cultivation Facilities vs. Cannabis Retail Facilities – Disparities and Economic Impact
The cannabis industry has experienced a significant transformation in recent years, with the legalization and decriminalization of cannabis in many regions around the world. This shift has led to the emergence of two distinct yet interconnected sectors within the cannabis market: cultivation facilities and retail facilities. While both play a vital role in the cannabis supply chain, they exhibit notable disparities that have a substantial impact on the economy.
Cultivation Facilities: Nurturing the Green
Cannabis cultivation facilities are the backbone of the industry, responsible for the growth and cultivation of the cannabis plant. These facilities are typically large-scale operations that require advanced horticultural techniques, specialized equipment, and a controlled environment to ensure the optimal growth of cannabis plants. Cultivators must navigate various factors such as lighting, temperature, humidity, and nutrient levels to produce high-quality yields.
One of the most significant disparities between cultivation and retail facilities lies in their resource requirements. Cultivation facilities demand substantial capital investment for equipment, real estate, utilities, and staffing. High-quality lighting systems, advanced climate control mechanisms, and nutrient delivery systems contribute to the significant start-up costs associated with these facilities.
Beyond the financial aspect, cultivation facilities often face regulatory challenges. Licensing requirements, zoning restrictions, and compliance with state and local regulations add another layer of complexity to their operations. However, despite these challenges, cultivation facilities have a direct impact on job creation, local economies, and tax revenues. They provide employment opportunities in rural and urban areas alike, stimulating economic growth and revitalization.
Retail Facilities: The Consumer Experience
On the other end of the cannabis supply chain are retail facilities, where consumers can purchase various cannabis products, including flowers, edibles, concentrates, and topicals. Retail facilities offer a diverse range of products to cater to the preferences and needs of consumers, enhancing the overall cannabis experience. These establishments range from dispensaries to specialized stores and require a different set of considerations compared to cultivation facilities.
Unlike cultivation facilities, retail establishments tend to have lower start-up costs. However, they face their own unique challenges. Navigating a complex web of regulations regarding product labeling, packaging, and sales is crucial for compliance and consumer safety. Retail facilities must also provide a safe and welcoming environment for customers while ensuring age restrictions are strictly enforced.
Retail facilities play a pivotal role in shaping public perception and acceptance of cannabis. As these establishments become more mainstream, they contribute to the normalization of cannabis use and promote responsible consumption practices. This normalization, in turn, has implications for the broader economy.
Economic Impact: Cultivation vs. Retail
The economic impact of cannabis cultivation facilities and retail facilities extends far beyond the cannabis industry itself. Both sectors contribute to job creation, tax revenues, and local economic development. cultivation facilities often require a larger workforce due to the labor-intensive nature of plant cultivation and processing. These jobs span across various skill levels, from horticulturists and technicians to administrators and security personnel.
Retail facilities, while generally employing fewer people per establishment, create job opportunities in customer service, retail management, and education about cannabis products. Moreover, both cultivation and retail facilities contribute to the local economy through real estate demand, leasing agreements, and utilities consumption.
From a taxation perspective, both sectors generate significant revenue for local and state governments. Cultivation facilities are subject to cultivation taxes and other regulatory fees, contributing to state coffers. Retail facilities, in addition to sales taxes, often face excise taxes on cannabis products. These revenues can then be channeled towards public services, education, infrastructure, and social programs.
It’s All Economics
Having more cultivation facilities and fewer retail facilities can have detrimental effects on economic stability. The balance between suppliers and retailers plays a crucial role in maintaining a healthy economy, and an excessive skew towards either end can lead to negative consequences as we are realizing in the current economic state.
A robust economy thrives on competition, which drives innovation, efficiency, and lower prices for consumers. When there are an excessive number of suppliers combined with fewer retailers, this can create challenges in distribution and logistics. Retailers act as intermediaries between suppliers and consumers, helping to streamline the flow of products and information. When there are fewer retailers, distribution networks can become strained, causing delays, inefficiencies, and potential shortages.
Economic stability relies on a balanced employment landscape. An overabundance of suppliers with limited retailers may lead to job losses in the retail sector, affecting consumer spending and the overall labor market. This can create ripple effects across various industries and reduce the purchasing power of consumers, ultimately slowing down economic growth.
Moreover, concentration of power among a few suppliers can lead to monopolistic tendencies, stifling competition and limiting consumer choice. Monopolies can dictate prices, control supply, and hinder market dynamics, negatively impacting economic stability.
Closing Thoughts
The disparities between cannabis cultivation facilities and retail facilities highlight the intricacies of the evolving cannabis landscape. While cultivation facilities require substantial investments in equipment and compliance, retail establishments focus on creating a positive consumer experience and normalizing cannabis use. Together, they form a symbiotic relationship that drives economic growth, job creation, and tax revenues.
As the cannabis industry continues to mature, it is crucial for stakeholders, policymakers, and entrepreneurs to recognize the importance of both cultivation and retail facilities. Striking a balance between these sectors will be vital for achieving a sustainable and prosperous cannabis market that benefits not only those directly involved in the industry but also the broader economy and society at large.
Committee Blog: The New York Cannabis Market Landscape – A Real Time Analysis with a Social Equity Call to Action
The burgeoning New York State Cannabis Market has been able to launch in record time compared to more mature markets like California and Illinois. The time between state legalization and the actual opening of licensed cannabis medicinal retail and more recently adult-use dispensaries is within one year! This is a great feat to be proud of by any metric though we are in the beginning stages.
With an indelible New York State of Mind, cannabis industry advocates, ancillary technical/professional services stakeholders and regulators created well-informed introductory regulations to get the ball rolling. The New York Social Equity Roundtable examined the best and worst practices of other programs and weighed in on current regulations in our recommendations to the NY Office of Cannabis Management (OCM).
The New York Social Equity Roundtable is a diverse gathering of industry stakeholders along the cannabis industry supply chain with a mission to be a catalyst in the building of an equitable and inclusive cannabis that reflects the ethnic, cultural, social, and economic diversity of New York State. The Roundtable is committed to gathering and sharing valuable industry insights and invites collaboration with other advocacy organizations and individuals to develop solutions.
I would like to point out that while the news cycle has brought to light certain aspects of the New York market, the public should also be made aware of the ongoing, painstaking battle it has taken to fight for equity in New York.
Below are snapshots of the NY market landscape and some of the major challenges facing current and aspiring cannapreneurs that will hopefully inspire further conversations on the matter. Our hope is that this article helps not only provide understanding of what it has been like in the Empire State, but also provides new states with an understanding of the massive undertaking that cannabis legalization requires in order to be executed upon equitably.
In this article:
Comments on the impact of unregulated smoke shops
Comments on bad faith lawsuits
Legacy Operator definition
A note on Supply Chain Opportunities
July 31st Public Comments on Adult Use Rules
January & February Public Comments
Letter recommending an Advisory Board focused on Economic Inclusion & Expansion
Letter to the Governor urging Pardons for ALL Nonviolent Cannabis Offenders
Unregulated Smoke Shops / Grey Market thwarting the growth of licensed retailers
Frederika Easley, The People’s Ecosystem, MCBA Board Member:New York’s goal must be to create a regulated market that is so enticing and easy to navigate that operating in both the gray and legacy markets feels like unnecessary risk. The smoke shop owners who have decided to be greedy and harmful in many cases offering tainted products and appealing to the youth must receive consequences that educate, penalize and offer opportunity for redemption.
Stephanie Keeffe, Etain:Allowing smoke shops to operate without the appropriate licensure sets a dangerous precedent and undermines the efforts to establish a safe and legitimate cannabis industry in New York. It is in the best interest of everyone, including consumers, businesses, and the government to ensure that all businesses follow the appropriate licensure procedures and comply with regulations. Safety should always be paramount.
Tavian Crosland, Social Equity Empowerment Network:Gray market operators are a reality in any transitioning market and we don’t want to have a second wave of cannabis criminalization. We also want to give the people most impacted by prohibition a chance to profit from the plant. With priority CAURD licenses issued we have taken a step towards restitution and equity and without the step of enforcement we may be setting them up for failure. This is the most hostile environment a new business, in a new market could traverse. Enforcement doesn’t have to mean criminalization and we’ll miss our mark if we don’t reign in non compliant operators. We won’t get a second chance to get it right.
Scheril Murray Powell Esq, JUSTUS Foundation:The MRTA is very clear that priority should be given to those who have been significantly harmed by the criminalization of cannabis. The typical Grey market participant is not from these disproportionately impacted communities and have the financial means to open these storefronts. The individuals that have not directly experienced the harm referenced in the MRTA should recognize that they are trying to skip ahead of those who qualify for equity and have been harmed. There will be thousands of retail licenses in NY and plenty of opportunity for everyone to participate, but the grey market actors need to wait their turn. This is not judgment, but an appeal to their moral compass.
Hawaii Mike: The grey market shops are causing the biggest obstacle on the pathway to a thriving legal market. The lack of clear laws and regulations make this an almost impossible battle without using extreme measures to force these businesses to cease operations. Until these shops are closed permanently there will be confusion amongst the consumers and unsurmountable competition to legal operators.
Raina Jackson, NCIA DEI Committee Organizer:NY needs an Advisory Board that is more representative of the cannabis supply chain as operators and ancillary providers with direct applicant/operator interaction. Too many assumptions are made about what operators want without a robust survey of what we say we actually need. More than just money is needed. would help illuminate pain points and to keep the conversation focused on how to resolve unintended consequences arising from any venture this new under regulation. The current configuration does not represent stakeholders disproportionately targeted and excluded.
Lawsuits Attempting to Circumvent the Equitable Rollout of Cannabis Retail Licenses
The recent CARCS lawsuit is reminiscent of lawsuits launched in Illinois by general market operators disregarding the need for the prioritization of those disproportionately harmed by racially motivated cannabis prohibition tactics. Guided by greed, their intentions are to use the courts to stall progress and eliminate competition.
Mike Lomuto (former Head of DEI at the NCIA): While New York has an uphill battle as it navigates the unregulated market and integrates Legacy operators into the regulated space, OCM has ensured that the first set of licenses in New York go to individuals deemed disproportionately impacted by the war on drugs. It appears as if this lawsuit is a tactic we have seen in other states, where the small handful of multistate licensees who were part of a highly exclusive rollout of the Medical market are attempting to push themselves into the Adult Use market, under the guise of promoting equity while in actuality furthering the harm of the war on drugs and continuing the exclusion of justice-involved licensees.
Raina Jackson, NCIA DEIC Organizer, Policy & Regulatory subcommittee chair:As a reminder to companies that have unloaded these spurious lawsuits against well intentioned cannabis programs, be on notice that we see you and have documented what you have been doing to undermine equity, progress, and fairness. When you end up on the wrong side of history, no one will buy your revisionist historical accounts. The influential Millennials and GenZ populations that you seek as customers demand a higher level of corporate responsibility and may not be so forgiving. Before it’s too late I hope you find that it’s more rewarding to cooperate and coexist rather than to try to conquer. It is proven that well run companies that prioritize equity, inclusion, and transformation reap the benefits in the bottom line, including employee retention and community goodwill, no matter what industry.
Discussion of the ASTM Legacy Operator Definition
Legacy operators have been maligned and misunderstood in the regulated The definition of Legacy is Definition – as an added layer to help readers understand the situation
ASTM Definition of Legacy Operator
“A Legacy Operator is an individual who:
1) Commercially for the majority of their income, or sacramentally, or ceremonially distributed cannabis
2) Outside of the Legal Framework
3) During the period of Prohibition
4) For a minimum of 5 years before legalization”
Lack of Education on Supply Chain Opportunities and Licensing Timelines
We notice that the infrastructure focus on brick and mortar retail is often to the detriment of other license types that don’t get as much attention but are more financially attainable.
Lack of education provided on license types within the supply chain outside of retail and cultivation, including ancillary opportunities without a need for licensure. There is a need for real or hypothetical case studies illuminating the financial and business steps and resources necessary to succeed. Expectations need to be tied to realistic timelines and financial inputs.
Resolutions and Opportunities. Need for heightened levels of Technical assistance and ancillary service/product providers
Public Comments Submitted on July 31st Regarding Adult Use Rules
The Office of Cannabis Management put out a request for public comments in May of this year, on its latest round of Adult Use rules. Over the course of several Roundtable discussions and countless hours of document review, comparison to previous Rules, and several debates over specific language, our Roundtable produced a set of public comments we are very proud of, that we believe if adopted would provide for a more equitable industry.
This is an excerpt of the full document, which can be found here.
Part 121 – Social and Economic Equity
§ 121.1 Qualifications for a Social and Economic Equity Applicant. (a) (b)
RECOMMENDED TEXT (a) General Qualifications. To qualify as a social and economic equity applicant, an applicant shall demonstrate, through the mandatory production of documents and other information described in this Part: (1) that sole control of the applicant is held by: (i) an individual from a community disproportionately impacted by the enforcement of cannabis prohibition; (ii) a minority-owned business; (iii) a women-owned business; (iv) a distressed farmer; or (v) a service-disabled veteran owned business. (b) If sole control of the applicant is held by a woman who is also a minority-group member or women who are also all minority group members, the applicant may qualify as a minority- owned business, a women-owned business, or both. (1) Applicants qualifying for both a minority and women owned business shall have extra priority status in processing applications.
RATIONALE
We have added (b.1) because there needs to be a prioritization of Black, (Afro-Latin), andIndigenous women within women-owned businesses. Otherwise social equitydisproportionately benefits White women, as selective affirmative action has oftendone in the past.
Due to Prop 209 in CA, race could not be used as a qualifying criterion for equity. As aresult in San Francisco, equity grant funds were distributed among an even number ofBlack and White applicants/operators. CA is unique because of the history of whitelegacy operators upstate yet this was not equitable funds distribution. NY should avoidthe same mistake.
Public Comments Submitted in January and February 2023
Earlier in 2023, our Roundtable also submitted public comments on an earlier version of OCM’s Adult Use rules, as well as its rules regarding marketing and packaging. Internally, our Roundtable faced the challenge of transitioning into a new year and a new committee term at the NCIA. The fact that our public comments were the most robust document we had completed to date was a testament to the resilience and collaborative nature of our Roundtable.
Letter Recommending Advisory Board, Re-submitted to OCM September 2023
In September of last year, our Roundtable submitted a letter to OCM, recommending the creation of an Advisory Board that would be community-based and focus on Economic Inclusion & Expansion. This was modeled after a similar initiative that has produced successful in Michigan, with Eric Foster, M4MM’s National Policy Director, serving as the bridge between our Roundtable and the Michigan Social Equity Task Force.
Letter to Governor Hochul Urging Pardons for Nonviolent Cannabis Offenders
A very strong unifying factor of our Roundtable is everyone at the table’s commitment to the repair of the harm inflicted by the War on Drugs. With that in mind, we submitted a letter to Governor Hochul late in 2022 urging her to pardon ALL nonviolent cannabis offenders, effectively taking the lead of President Biden, but going an imperative step further to set New York as a leader to undo some of the harm it has itself inflicted. As this action has still not taken place, our Roundtable has resubmitted this letter to the Governor.
This is just the beginning. Unfortunately, it is necessary for us to always remain diligent in our work for true equity, not only in cannabis but in society. At least until the overall momentum of society is moving in that same direction. Until then, we encourage you to keep going strong, to tap into collaborative groups doing the same work, to draw on one another’s strengths, as well as wisdoms, experiences, and collective resources.
The fight to create an equitable industry in New York and other states will continue on, and the members of the New York Social Equity Roundtable will be here until our mission is achieved.
Committee Blog: Production of Cannabis Infused Products – A Guide to Optimal Facility Design and Workflow
The burgeoning cannabis industry continues to grow and diversify. One sector that’s seen significant expansion is cannabis-infused food production. In this industry, meticulous facility design is crucial to ensure product quality, worker safety, and regulatory compliance.
This article discusses key design considerations for creating an efficient, safe, and regulation-compliant cannabis food production facility.
Begin with the End in Mind
This may seem more philosophical than operational but adopting this mindset early in your design process can help you avoid common pitfalls that seem to plague even experienced cannabis professionals. So, what does it mean to “begin with the end in mind?” It simply means that you need to define a lot of aspects of your business before you begin design. A very simple example of this is: What product(s) do you want to produce in this facility?
This might seem like a simple question, but there is tremendous complexity lurking just below the surface. While a commercial kitchen in a facility such as a restaurant might be a very flexible space allowing for the production of multiple products using the same space and equipment, food manufacturing of shelf-stable products requires a bit more specificity. Let’s pick a single product as an example: Gummies. Here are a few questions and decision points that need to be addressed before diving into design specifics:
Do you have a recipe for your gummies?
Does your recipe require specific equipment for production? Does that equipment require ventilation (i.e., a hood)?
Have you set throughput and volume targets for production (i.e., how many gummies do you want to produce per hour/day/month, etc.?)
How will your product be packaged?
Will more than one type of product be produced in this same room/area?
If so, how do you plan to mitigate cross-contamination risks?
Have you defined a facility workflow that maps a product’s process from component parts (ingredients) to processing to packaging to storage and delivery?
This is a very incomplete list but demonstrates the fact that a simple product decision comes with a multitude of related decisions that must be made to successfully implement the production process. For example, your decision on your facilities throughput goals directly impacts your equipment choices. Are you doing artisanal, hand-crafted gummies in small batches or are you producing gummies at scale for maximum throughput?
Do you plan to start with one product and eventually expand to other products? Knowing this in advance allows you to strategically plan for those potential line-extensions. The design of an area in your facility to produce one kind of product does not necessarily effectively translate to the production of a different product. The equipment, space-planning, and process-planning for the production of gummy products is very different from the production of baked edibles or chocolate edibles for example. Knowing what you ultimately want to do can help you strategically design for the future and avoid potentially costly retrofits. There is no “one-size-fits-all” cannabis kitchen design.
Another important consideration is the development of Standard Operating Procedures (SOPs). SOPs are a key component of developing Good Manufacturing Processes (GMP) which is becoming increasingly critical to manufacturing in the cannabis industry. Understanding and documenting how things should be done will give you key insights into what is needed in your overall facility design.
This mindset of working backwards from your goal can be applied to almost every aspect of your operation. This includes things such as labor schedules, purchasing guides, order scheduling, storage, packaging, delivery and more. Define your goals and outputs and then work backward from there.
Space Planning
The first crucial consideration is space planning. It is imperative to account for all operational aspects of the facility, from storage and production to packing and shipping. Ensuring there is adequate space for these activities contributes to the workflow efficiency and helps maintain a safe work environment.
Storage areas should be designed to accommodate raw materials, finished products, and waste materials separately. Temperature-controlled areas may be necessary for perishable ingredients or to maintain product stability.
Production areas need sufficient space to house specialized equipment for cannabis food production. These can include extraction machines, distillation other laboratory equipment, infusion systems, and commercial kitchen appliances for food preparation. The areas should also facilitate the movement of employees and materials.
Packing and shipping areas need to accommodate packing materials, finished product cases, and space for shipping operations. Depending on your scale, this may include room for pallets, forklifts, or other necessary equipment.
Workflow Design
An optimized workflow is critical for efficiency and safety. The design of the facility should facilitate a streamlined flow of materials from receiving to shipping. This ‘one-way’ flow can help prevent cross-contamination and reduce movement of personnel and materials.
Special consideration should be given to the workflow around extraction and infusion processes. These are complex and sensitive steps that involve precise control over temperature and pressure. The facilities should be designed to allow for these activities to be conducted safely and efficiently.
Equipment Planning
When planning for equipment, several considerations come into play. Firstly, understanding the power requirements for the extraction, infusion, and food production equipment is paramount. Adequate electrical infrastructure needs to be installed to meet these demands.
Drainage is another critical consideration. Extraction processes can produce significant waste that needs to be safely disposed of. Furthermore, commercial kitchen operations require a professional-grade drainage system.
Lastly, space must be set aside for regular equipment maintenance and potential upgrades. The rapid pace of innovation in the cannabis industry means equipment can quickly become outdated and need replacement.
Food Safety Best Practices
As a food production facility, following best practices for food safety is a must. This includes implementing Hazard Analysis and Critical Control Points (HACCP) plans to identify potential hazards and establish procedures to mitigate them.
Facilities must ensure appropriate hygiene measures, including handwashing stations and employee changing areas. Special attention should be given to allergen management, considering the diversity of ingredients that could be used in cannabis-infused foods.
Proper ventilation is a key factor in maintaining air quality and controlling odors, which can be a significant issue in cannabis production facilities. An effective ventilation system will also help control humidity, which can impact both the quality of the product and the longevity of the equipment.
Putting It All Together
The design of a cannabis food production facility is a complex task requiring a clear understanding of the production process, equipment requirements, safety considerations, and regulatory compliance. Through thoughtful planning and design, producers can build a facility that not only meets these demands but is also flexible enough to adapt to the ever-changing landscape of the cannabis industry.
Committee Blog: International GxP Considerations When Cultivating Cannabis – Part 1
As the global cannabis industry continues to expand, the importance of international GxP standards becomes increasingly vital. GxP is an umbrella term used to describe the various forms of compliance/standards available: GMP, GACP, GMCCP (Bedrocan), etc. While GMP is typically associated with the manufacturing of pharmaceuticals and other consumer products, it can also be applied to plant cultivation (GACP). These guidelines were developed by the World Health Organization (WHO) in 2003; they help ensure the quality, safety, and consistency of products, fostering consumer trust and facilitating international trade. In this blog post, we will explore the key considerations and requirements for cultivating cannabis in accordance with international GxP standards, allowing cultivators to meet the stringent regulatory expectations across borders.
GMP vs. GACP: What’s the difference?
First, it is important to explain the difference between GMP and GACP: GMP (Good Manufacturing Practice) is a set of quality management and manufacturing guidelines and regulations that ensure pharmaceutical, food, and medical device products are consistently produced and controlled according to quality standards. It aims to minimize risks involved in production and ensures the safety, efficacy, and quality of the final product. GACP (Good Agricultural and Collection Practices) is a set of guidelines and principles used in the cultivation and harvesting of medicinal and aromatic plants. It ensures that the plants are grown, collected, and processed in a manner that maintains their quality and prevents contamination, ultimately ensuring the safety and effectiveness of herbal products derived from these plants.
GxP Best Practices for Cannabis Facilities
Generally speaking, GACP applies to the “cultivation zone” and is less expensive to implement; GMP standards should be used in all “post-harvest zones” and is considered pharmaceutical grade. Below you will find a set of considerations and best practices used in most compliant cannabis facilities.
Compliance with Regional Regulations: Before embarking on cannabis cultivation, it is essential to understand and comply with the specific regulations governing cannabis production in a specific region. Different countries have varying laws and requirements surrounding cannabis cultivation/export, including licensing, permitted cultivation methods, quality control, and product labeling. Familiarize yourself with the applicable regulations (in the country you intend to cultivate in and the country you intend to supply) to ensure full compliance with international GxP standards. Then organize a meeting (pre-audit) with your local audit provider (e.g. ASTM) to develop a proper gameplan.
Facility Design and Maintenance: A crucial aspect of GxP compliance is having a well-designed cultivation facility that prioritizes cleanliness, efficiency, and product integrity. Considerations include proper airflow and cannabis specific HVACD systems (e.g. InSpire.ag or Ceres GH Solutions), dedicated cultivation and processing areas, appropriate lighting, appropriate drying space, automation and adequate pest control measures. Maintaining a clean and organized facility with strict hygiene protocols is essential for preventing contamination and ensuring the quality of the final cannabis products. Water quality, flexible cultivation integration, and sustainability should be top priority when in the design phase of your project.
Crop Management System (CMS): Incorporating an all-inclusive CMS into your agricultural practices brings numerous benefits to crop monitoring and management. Real-time data collection, remote monitoring, disease detection, true seed-to-sale tracking, employee workflow tracking, certificate of growth analysis, predictive analytics, automated irrigation (based on real time plant weight), and historical data analysis collectively enhance a cultivator’s ability to monitor crop progress effectively. By making informed decisions based on accurate data and insights, cultivators can optimize crop growth, increase productivity, and promote sustainable farming practices. Embracing a good CMS (e.g. WeightSense Adapt), while leveraging the power of a Building Management System (BMS) is undoubtedly the best step forward towards advanced compliance, safer product and higher consistency/quality.
Seed and Genetics: Selecting high-quality seeds or clones with desirable traits is vital for successful cannabis cultivation. When sourcing genetics internationally, it is crucial to consider the origin and reputation of the supplier. Ensure that the genetics comply with regional regulations and are free from pests, diseases, and genetic abnormalities. Match phenotypes with your specific environment to naturally defend against some of these risks. Proper documentation and traceability of seed sources are essential for GxP compliance and product consistency. In-house tissue culture labs bring a host of complexity to your propagation department although provide true consistency and reduced disease if carried out properly.
Cultivation Practices: GxP-compliant cultivation practices focus on ensuring consistency, purity, and traceability (e.g. CMS) throughout the cultivation process. Considerations include standardized cultivation techniques, such as appropriate nutrient management, integrated pest management (IPM), water quality control, and sanitation procedures. Documentation of cultivation activities, such as crop inputs, environmental conditions, and pest management interventions, is essential for traceability and quality control purposes. As an example, under-canopy lighting (e.g. Thrive Agritech) can help reduce pests, disease, and labor input, all while increasing your yield and product quality.
Post Harvest Practices: GxP in post-harvest forms the cornerstone of ensuring the quality and safety of agricultural products after harvesting. These practices use a range of vital considerations, including stringent hygiene and sanitation protocols to prevent contamination, comprehensive worker training to uphold proper handling techniques, implementation of effective traceability systems for accountability, meticulous quality control measures for sorting and grading, and the maintenance of optimal storage conditions encompassing temperature and humidity control. The integration of pest and disease management strategies, robust packaging selection, documentation upkeep, and cross-contamination prevention further validate the post-harvest GMP framework. By focusing on these key principles, producers safeguard product integrity, enhance shelf life, and contribute to the overall safety of cannabis in the supply chain.
Quality Control and Testing: International GxP standards emphasize robust quality control measures throughout the cultivation process. Implementing comprehensive testing protocols for cannabinoid potency, microbial contaminants, heavy metals, residual solvents, and pesticide residues is crucial. Regularly analyze samples from each batch to ensure compliance with international quality standards and regulatory requirements. Establishing relationships with accredited testing laboratories can aid in obtaining accurate and reliable test results. Consider SAP analysis and run-off testing if you would like to maximize your situational awareness and plant health.
Documentation and Record Keeping: Accurate documentation and record-keeping are essential components of GxP compliance. Maintain detailed records of cultivation activities, including seed sourcing, cultivation inputs, environmental conditions, pest management, testing results, and batch-specific information via proper SOP (standard operating procedures) development. These records serve as evidence of adherence to GxP standards and facilitate regulatory inspections, product recalls, and traceability in the event of any issues. Most importantly, they help cultivators maintain a safe and stable facility.
In part two of this GxP blog, we explain the matrix between these interlocking subject matters and how/where they relate to GxP based on department (so keep a look out for part two).
GxP Standards: Bringing It All Together
Cultivating cannabis in accordance with international GxP standards is crucial for ensuring the quality, safety, and consistency of cannabis products across borders. Adhering to regional regulations, designing and maintaining a GxP-compliant facility, selecting high-quality genetics, implementing standardized cultivation practices, conducting rigorous testing, and maintaining comprehensive documentation are all integral to achieving international GxP compliance. And of course, engage a local GxP specialist with experience in the cannabis field to help navigate your team to success. By prioritizing these considerations, cultivators can position themselves for success in the global cannabis market while meeting the requirements of regulatory authorities and ensuring consumer confidence in their products. It’s time to be a part of the solution, and help break the stigma that comes with cannabis cultivation and manufacturing.
Committee Blog: Your Voice Matters – Advocate for Crucial Changes in the American Hemp Industry
The Hemp Industry needs your help. The 2018 Farm Bill, which made it legal to grow and process hemp, was a big step forward for the larger Cannabis industry. After the bill passed, lots of growers, processors, and manufacturers started building the Hemp Industry. Like any new industry, it’s had its ups and downs. But there are some big roadblocks that Congress can remove to help the Hemp Industry grow and set the stage for better rules around all Cannabis in the future.
2023 is a crucial year for American hemp producers as the 2018 Farm Bill is due to expire. Congress is now drafting a new Farm Bill that will direct our agricultural and food systems for the next half-decade. During this critical period, the NCIA Hemp Committee is working tirelessly to rally support for amendments that will not only benefit the industry but also our customers. Our requests are as follows:
Update the legal definition of hemp to allow for up to 1% Total THC: This would offer critical protection for farmers and processors, as the current legal limit can sometimes be exceeded naturally in the crop growth process, leading to crop loss and financial hardship.
Support the Growth of the Hemp Industry by Encouraging Banking and Lending Services: The Treasury department should provide written guidance for banking and lending services to hemp-related businesses, removing barriers to growth in this burgeoning industry.
Support HR 3755 for Non-consumable Hemp: By recognizing the distinction between consumable and non-consumable hemp products, we can encourage the development of a wide range of industrial applications for hemp, from textiles to building materials.
Prevent Misuse of THC by Teens and Young Adults: This requires comprehensive educational initiatives to provide accurate information about THC and its potential effects. In doing so, we can ensure that the growth of the hemp industry does not inadvertently lead to misuse of THC among young populations.
During the recent NCIA Lobby Days, we had constructive meetings with influential decision-makers, including members of the Agricultural Committee and their staff. Our team left these sessions with a sense of hope and determination, having shared our top four priorities and discussed other important issues. Now, we’re calling on you, the supporters of the Hemp Industry, to make your voices heard and contact your members of Congress to showcase broad support for these initiatives.
“NCIA Lobby Days provides the stage and podium, and you bring the voice. We meet with decision makers (congressional staff) who ARE interested in our real-life scenarios, and it educates them to educate their Senate and House of Representative leaders. Education is power. It (Lobby Days) also provides an environment to meet like-minded people in the cannabis industry, share our stores, learn/educate, and collaborate. I plan to attend each year as it is enlightening and empowering!” Jillian Johnson
How can you help?
Remember, members of Congress are elected to represent the interests of their constituents – that’s you. But they can only effectively do so when they’re fully informed about the issues that matter to you. Your voice is powerful and essential to our democratic process. By speaking up, you can provide important insights and help shape the future of the Hemp Industry.
As we look forward to the 2023 US Farm Bill, there’s a substantial opportunity to modify the regulations around hemp cultivation and usage. Adjusting these regulations can stimulate the growth of the hemp industry while still ensuring consumer safety. The potential of hemp as an agricultural product is vast, with applications including food, fuel, fiber, building materials, grain, and medical use. It’s important to note that while cannabinoids often dominate the headlines, they make up only a small slice of the industry’s potential size.
Experts predict that incorporating hemp into cosmetics, construction materials, and textiles could catapult the industry to over $1 trillion in annual sales. However, the current regulations pose significant challenges to this innovative industry’s expansion, especially for conscientious farmers. The fear of having their crops destroyed because of slightly exceeding a set THC limit is a serious obstacle.
At present, the definition of hemp rests on a Total THC limit of 0.3%, a figure chosen in the 1970s for classification purposes, not for assessing the plant’s psychoactive effects. Bumping this limit up to 1% Total THC would have a negligible impact on impairment but could have a monumental effect on farmers’ operations.
Research from 2020 by the University of Illinois, University of Wisconsin, Michigan State University, and Purdue demonstrated that more than half of the common hemp varieties could surpass the Total THC limit under certain conditions. However, this research also revealed that only 4% would breach the limit if it were raised to 1%.
Growing hemp that exhibits desirable traits for industrial uses, like a long straight stalk, high fiber, or high seed yield, requires the plant’s full maturation. This maturation is often linked to higher THC profiles. Unfortunately, the current strict conditions and genetic variation restrictions severely limit the plant’s potential applications.
While responsible hemp growers are in favor of state-led regulations for cannabinoid extractions that can cause impairment, it’s clear that an unrealistically low THC limit isn’t the best approach. Other nations, such as Thailand, Mexico, and Switzerland, have already updated their regulations, defining hemp as containing up to 1% Total THC.
By making a small change to the legal definition of hemp, we can unlock the industry’s potential. It will allow farmers across the nation to make the necessary investments to keep pace with an industry set to grow from being worth billions to trillions of dollars. By encouraging this change, we can foster American innovation and boost rural economies, reinvigorating the manufacturing sector in the process. Now is the time to recognize and adapt to the potential of this versatile plant.
How can you help?
Remember, members of Congress are elected to represent the interests of their constituents – that’s you. But they can only effectively do so when they’re fully informed about the issues that matter to you. Your voice is powerful and essential to our democratic process. By speaking up, you can provide important insights and help shape the future of the Hemp Industry.
With recreational marijuana legalized in 23 states, Washington D.C. and Guam, the public continues to broadly favor legalization for medical and recreational purposes. Why then, is it still a challenge for the cannabis industry to access financial services? The short answer: cannabis banking is risky for financial institutions (FIs), and bankers are committed to avoiding unnecessary risk. Historically, FIs have worked to keep funds associated with illegal activity out of their banks and credit unions, so FIs are sensitive to conflicting state and federal cannabis laws. For example, many FIs are regulated by federal agencies, but marijuana is a Schedule I controlled substance.
Navigating the Challenges
However, there are many banks and credit unions that have taken this risk for a variety of reasons, including creating new sources of income, a desire to serve the unbanked in their communities, and supporting the social equity initiatives in the cannabis industry. These FIs are usually discreet about their cannabis banking programs, and it’s often hard to identify them through your typical approach: prowling websites, Google searches or even trade shows (although this has improved over the past 12 to 18 months).
Fortunately, the best approach is also a well-trusted option: word of mouth. Contact lawyers, accountants and bookkeepers in your area. If they represent or work with other local marijuana related businesses (MRBs), they may know who they are banking with or know someone who does. You should also consider contacting the FIs directly, even if you don’t know if they are working with MRBs. You might be surprised to find that they do, and if they don’t, they might redirect you to another FI in the area. Finally, organizations like the PBC Conference team, provide resources to aid your search, including a Cannabis Banking Directory published annually.
Focus your search on credit unions, community banks, and regional banks. We are entering a new phase of cannabis banking with some FIs offering more than just a place to park your cash. A growing number now offer loans, payroll services, business insurance, etc., so take time to see what’s available, compare multiple FIs’ programs, and find the best match for your cannabis-related business’ (CRB) needs.
Be Prepared
Every action taken by an FI, regardless of their location or asset size, is closely scrutinized by state and federal banking regulators, and law enforcement agencies. They want to make sure that banks and credit unions are only working with legitimate and legal state CRBs. Therefore, you can expect an FI to require a combination of the following:
Driver’s license or other acceptable state-issued identification for all account holders
Information on all beneficial owners of the company, not just those who own a percentage of the company above a certain percentage threshold (such as 20%)
Tax returns for the previous year for both the company and the beneficial owners
Financial information such as profit and loss accounts and capitalization tables
A copy of any required state licenses
Operational data such as projected annual sales and number of patients/customers
Corporate formation documents such as articles of incorporation and business plans
Sales transaction data (store reports or invoices) for the past thirty days
Behind the scenes of cannabis banking, FIs must do a lot to ensure that they are onboarding only legitimate CRBs; from collecting and analyzing market transactions to conducting reporting. This means that FIs often have additional staff to fulfill their compliance duties and they invest in software to automate some of their monitoring. FIs invest heavily in banking cannabis and account fees help offset those expenses. This means you can expect to pay account setup fees and monthly account maintenance fees to help cover these costs. Prices have come down in recent years. The days of paying $5,000 per month for an easy deposit account are long gone, but the fees will remain high as long as a lot of oversight and reporting falls on FIs.
Embrace the Journey
FIs are far savvier about detecting MRB activity among their existing customer/member accounts. At this point, it’s not a question of “if” your FI will find out you’re an MRB, but when. Few things are more disruptive to a business than getting a letter from your FI informing you that your account will be closed in thirty days. Don’t put yourself in that position. Additionally, you may be missing out on vital financial and business services by staying “under the radar” and not having a transparent relationship with a bank or credit union. Start looking for a cannabis-friendly bank or credit union today!
The cannabis industry has seen success and achievement in recent years. However, with this success comes a challenge: counterfeiting. Counterfeit cannabis products pose serious risks to consumers and can damage the reputation of legitimate businesses. To preserve authenticity and protect consumer safety, solid anti-counterfeiting measures can be implemented. One crucial aspect of anti-counterfeiting efforts is using packaging solutions that are both secure and reliable. Let’s take a closer look at the types of counterfeiting and the packaging options available to protect brands and consumers.
What is Counterfeiting?
There are two main types of counterfeiting that we’ll focus on:
Packaging Impersonation: Occurs when fraudsters recreate the packaging of popular and trusted brands. The aim is to deceive consumers into believing they are purchasing authentic products from a brand. Counterfeit packaging can closely mimic the design, colors, and labeling of genuine products, making it difficult for consumers to differentiate between authentic and counterfeit items. This poses a risk to a brand’s reputation if counterfeit products are being sold under their name because these fake products usually do not meet a brand’s standards for safety and quality.
Product Tampering: Product tampering involves attempts to alter, manipulate, contaminate, or compromise cannabis products. This poses significant health and safety risks to consumers, especially if harmful contaminants are introduced or if the potency of the product is affected.
Anti-Counterfeiting Options
To combat packaging impersonation, there are a myriad of solutions available. Most solutions aim at making packaging replication difficult. Using holograms on packaging is one option that will increase the difficulty fraudsters will face when trying to duplicate packaging accurately. Holograms can also incorporate additional security features like microtext and unique serial numbers. This further increases the complexity and uniqueness of the package. The complexity, specialized equipment, and materials required to create convincing holograms may deter counterfeiters from even trying to replicate that specific package, as it increases the cost.
Additionally, color changing inks, specifically tamper-indicating inks, can provide a visible indication of tampering. If someone attempts to move or reposition a label, the tamper-indicating ink is triggered and will display a different color indicating that the product may not be valid. Another type of color changing ink technology is photochromic inks. This color changing ink technology can act as an invisible layer of protection. They are only visible under specific lighting conditions and fraudsters may miss adding these to counterfeit packaging. Lastly, digital watermarking is a great option to combat packaging impersonation. These are not visible to the naked eye, but are embedded within your packaging design, for example in your logo. When these watermarks are scanned with specialized software, devices or cell phones, it can allow for verification of authenticity. Not only do digital watermarks help with authenticity, but can add customer interaction as well. When a customer scans the watermark with their smartphone, they can be taken to the brand’s website, a special landing page, and more. To take the level of protection even further, with digital printing it is possible to put a different code in each package which creates unique IDs for one product. These watermarks can even contain important information such as batch numbers, production dates, and more to enable product tracing.
To combat product tampering, a simple solution is using tamper evident bands on containers. Tamper-evident bands fit snugly around the closure of a container and are applied when the product is sealed. The only way the product can be opened is if the band is removed. Tamper evident bands provide visual evidence of tampering to the consumers and also help prevent the container from being refilled and sold. Similarly, tear notches on flexible packaging provide the same benefit that temper bands do. These are small indentations or perforated areas on flexible packaging that provide a visual indicator to consumers if a product has been opened. Both tamper bands and tear notches instill confidence in consumers by ensuring that the product meets brand’s standards for quality and safety. Lastly, using a tamper-evident seal which incorporates color-changing inks to indicate unauthorized access to a package. When the seal is intact, it will remain the original color, however if someone attempts to peel off or break the seal, the ink changes color providing evidence of potential tampering. This technology helps to safeguard products during storage, transportation, and distribution, providing assurance to consumers and protecting against counterfeit or tampered goods.
Best Practices and Conclusion
In addition to implementing the anti-counterfeiting options above, brands in the cannabis industry should consider adjusting their labels and packaging designs to increase the difficulty for replication. Furthermore, educating consumers about the key elements to observe on a brand’s package or label can enable them to detect subtle indications of tampering. By protecting both the packaging and the product, the cannabis industry can preserve its reputation and ensure the success of legitimate businesses.
Committee Blog: The Best Way to Do the Worst Thing – Quick Tips for Demonstrating Empathy in Layoffs
Layoffs are unpleasant for all involved. Not only is it painful for a supervisor to part ways with someone they have hired and trained to be a productive part of the team, but jarring as an employee to suddenly learn that you are unemployed. Although there is no scenario where a layoff is a positive experience, here are some helpful ways to ensure you approach it with empathy and humanity.
Yes, we know it is business, but it is also personal (especially to the employee being laid off).
Think about each person individually and how to make the situation as comfortable as possible. If they work remotely generally, or have a significant commute, consider a virtual meeting. While in-person has generally always been perceived as better, in today’s flexible work environment some employees might be upset about being asked to come into the office, just to be terminated and then drive back home. Think about the physical location you have the conversation (if in-person), as you do not want to put the person in a position to walk past their peers on their way out and offer to ship their personal things to avoid the public packing of the box. Cater your choices to the person being impacted.
If possible, have HR present and give the employee time with HR after the supervisor delivers the news so the employee can ask specific questions about next steps that they may not feel comfortable asking while on the phone with their now previous supervisor. If your company doesn’t have a HR department, consider contracting with someone who can support you if the layoffs impact more than a few people.
Does your benefit plan run until the end of the month after termination? If so, consider planning the separation date toward the beginning of the month so the employee has access to benefits through the rest of the month. Not every company is in the position to provide lucrative separation packages. However, providing a week or two of remote transition time in addition to the severance paid, provides a better transition for the company and also gives the impacted employee more time to job search.
Start the conversation off with letting the person know the discussion will be a difficult one, as this will provide them the opportunity to prepare for the bad news. It can feel disingenuous to have dialogue about work projects, sports, or the weather, and then get into the topic at hand. It is ok to tell an employee who did a great job and contributed a lot, that you appreciate their contributions and that the layoff is not due to their performance. This can matter when they are later reflecting on what transpired.
The communication shouldn’t end after the termination conversation.
Anticipate that it is difficult to process the news that you’ve lost your job and retain what you’ve heard about next steps. Commit to immediately providing the details over email after the discussion so that they can review them whenever they are ready.
Have a separation package prepared that contains all the important information someone might need post-separation. They will want to know about accessing their W2, rolling over their 401k, how long their benefits are active until, how to use their Health Savings Account funds, how to access your HR or payroll system for pay stubs, etc.
Layoffs impact more than those who left.
Make it safe for employees to reach out to those impacted and offer their support and care. When informing stakeholders of the changes, let them know that you wish their colleague well and encourage anyone that wants to reach out, the opportunity to reach out and offer support.
Promises of safety usually cannot be made during times of uncertainty. Often employees will ask “Is that it? Are we done?” These are tough questions in times of uncertainty and caution should be taken when answering them. The worst thing would be to say that there will be no more layoffs, and then someone else gets laid off or terminated. Even if the termination was performance related, it can impact the credibility of leadership if employees feel like the promise was broken.
Encourage leaders to have personal conversations with their team members about how they are feeling. When you are feeling uncertain, you want to hear from the person you trust most. Of course, this needs to come with guidance and support from senior leaders. Senior leaders should role model this, and then their leaders should pay it forward. Tell your most critical players that their role and contributions are important to the organization. If appropriate, explain why the decision was made to reduce or eliminate certain groups so employees can understand the rationale and decide whether that provides them comfort in their position.
Generally, position reductions result in the remaining employees picking up additional tasks. Handle this with care. Have conversations with employees about their workload and include them in the process of solutioning how to cover the tasks.
Unfortunately, “what not to do” lessons are generally learned the hard way when it comes to layoffs, however, through research and reading employee feedback, you can learn a lot from others’ mistakes. If you lead and plan your layoffs with empathy and compassion, you are more likely to avoid major pitfalls.
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