NCIA Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.
By Tara Coomans, CEO of Avaans Media
Member of NCIA’s Marketing and Advertising Committee
You may look at these 6 cannabis PR ideas and wonder what they have to do with PR, but your reputation is holistic and dynamic, and these PR tips add up to big value.
2022 has been a mixed bag for the cannabis industry. If you are feeling the pinch then you’re probably looking for ways to increase revenue without incurring considerable extra costs.
Corrections are quite literally a matter of time – it’s just part of capitalism. But with every correction comes a recovery and THAT’S what you should be planning for right now. It might seem difficult to plan for that day, but now is the time – especially since your competitors are probably cutting marketing budgets, if you maintain yours and mix in these ideas, you’ll be exceptionally well positioned for the happier days ahead.
Here’s some good news, see how the experts are bullish.
MJ Biz projects the cannabis industry’s impact will still be near $100 billion by 2022, and nearly $158 billion by 2026.
According to Viridian Capital Advisors, a financial and strategic advisory firm for the cannabis market, investors are encouraged to invest in cannabis stocks now, because they forecast a 2023 & 2024 with a 25% increase in revenues for the cannabis sector, with flat margins. More good news U.S. cannabis stocks with trade at EV/EBITDA multiples of 5.7x (a 60% increase over 2022) for 2023 and 4.6x (a 50% increase over 2022)for 2024.
If you’re a smaller brand, keep at it, Viridian says MSOs will continue to lose share to small operators in 2022.
According to Gallup, the percentage of U.S. adults who say they have tried marijuana is sitting at 49%, the highest measurement to date.
These projections show some pretty impressive growth – so don’t act too rashly yet. But, you should absolutely consider adding these tips to your planning so you can excel during this time and maximize brand value. Frankly, you should do these things in the best of times too, because they’re fruitful and evergreen ideas.
“People will forget what you said, people will forget what you did, but people will never forget how you made them feel.” -Maya Angelou
Right now, we need to commit to the industry associations that are actively working to improve and defend our industry on the local level and the national level. When you join, ask how you can more actively support the organization. By supporting the organization, you’ll not only strengthen its mission, but you’ll also be able to get to know the people better too. Double down with your time and you’ll find the returns are immeasurable. Take full advantage of the membership benefits, if there are ways to share your point of view, maximize those. As the industry consolidates, people are looking to do work with people they trust and the best way to encourage trust is to be present, take part, show your commitment to the organization, the mission, and the people who are contributing to the industry. At Avaans Media, we’re big fans of the way National Cannabis Industry Association (NCIA) treats its members.
When was the last time your CEO attempted to make budtenders feel special? Now is a great time. Budtenders, like it or not, are the face of your brand to the consumer and trust me, they feel stressed about the cannabis industry’s challenges too. Why not do something no one else will do for the front line during when things get rough: treat them with respect. Small efforts can go a long, long way right now. I’m not talking about training, I’m talking about thinking of ways to thank budtenders right now, genuinely show your appreciation. It could be as simple as a surprise visit to every dispensary with gift cards. Sure you can go bold and that’s fantastic too, but if you can’t be bold, that’s not an excuse to do nothing. Everyone else will do nothing, do more and get more.
While we’re at it, let’s talk vendors. Sure, go ahead, negotiate good terms – AND uphold your end of the bargain. No one will forget that you drove a hard bargain, but that’s business. But go the extra mile and hold up your end of the deal as if your life was on the line because, from a brand perspective, it is. The last thing you want right now is lackluster partners or partners who don’t really love you, what you want right now is passion, the vendors who are going the extra mile for you-but to do that, you need to treat them well too. Any partner who will go through the craziness of a correction while looking out for you is worth their weight in gold, treat them that way. Pay on time, acknowledge their efforts, and the importance of the relationship. Put a little free-but-important muscle into it and watch how that pays dividends.
If you have to separate from employees or partners, do it with class. Be communicative and as fair as you can possibly be. Anything you do when severing a relationship, especially when it’s abrupt, will be especially remembered. So take a hard look at what your brand is worth and treat goodbyes with respect and dignity. If you’re letting employees go, be sensitive to timing. If you’re canceling a contract, have a real discussion with your partner about how to do it fairly. It’s easy to feel shame about these conversations, but don’t hide from them. Yes, these conversations are the worst kind to have, but during the tough times, it’s what you do more than what you say that people will remember.
Customers are the obvious driver of revenue. Now is a great time to make being your customers more fun. Think about what’s REALLY important to your customers. What drives their motivations? Reward cost-conscious customers with small incentives like purchase cards that can be turned in for promotional products. If your customers are creative, how can you encourage them to spend their creative energies on their brand commitment? It could be making the inside of your packaging a game, it could be encouraging them to share your brand through social media. And by the way, track your most passionate brand advocates on social media and never forget to celebrate them and acknowledge them. No cannabis brand is too big to thank its customers right now.
“When they go low, we go high,” -Michelle Obama
You might not have had the time last year to really see where your best success stories were, but now is the time to look – and celebrate – what worked by actually increasing the heat of what’s doing well. Invest in things that are working well. Increase ROI of the things that are already returning value by committing to them at a whole new level. If your brand is great at social media, keep at it and make it better. Issue a special version of your most popular product line. Really taking a stand and focus on something you do well will make you stand out from the pack and return more ROI as your competitors struggle to figure out how to manage the dynamics of this marketplace.
Consumers know, especially your most passionate consumers, they can tell when you’ve made substitutions and formulation changes. As tempting as it may be to cut corners on the product right now, don’t. Keep your customers happy by maintaining quality while your competitors decrease theirs. Keeping the quality up doesn’t cost extra, but decreasing quality will cost you in the short and long run.
Incentivize your sales, marketing and PR teams & vendors with trackable KPIs and hold them accountable. Self-serving as this sounds, if you devest cannabis PR, marketing and sales now, you’ll struggle to regain market share when the market starts its inevitable upward tick. Resist the urge to reduce these expenses because the hidden costs are ginormous and tend to extrapolate themselves in silent but deadly ways over years, not months. I’ve seen this happen over and over again, eliminating these roles, or worse, hiring someone for cheaper, costs companies more. Instead, attend sales, marketing, and PR meetings and show that you’re in touch with the marketplace and work collectively to address issues early. Make sure you’re keeping a close eye on benchmarks and competitors so you have a real idea of how you’re faring in comparison.
Kindness, professionalism, and time don’t cost extra, but they can be the difference-maker. Now is a great time to really make your brand stronger. Now is a good time to focus on the solutions that will bring you the most value and even increase trust so you can maximize your opportunities during a rebound.
Tara Coomans, is CEO of Avaans Media, a digitally forward PR agency that specializes in emerging industries, from startup through IPO, including cannabis PR, since 2015. Services include bespoke PR for ambitious cannabis companies as well as PR Sprints exclusively for consumer brands and products. Avaans Media is based in Los Angeles, with distributed team members around the country including Washington D.C., New York, Oregon, Illinois, and Colorado. Coomans is on NCIA’s Marketing & Advertising (MAC) committee and leads the MAC Experts Directory subcommittee for 2021. Coomans is a frequent writer and speaker on public relations, marketing, and social media topics.
If you want to take your industry involvement to the next level, now is the time to get involved with one of NCIA’s 14 member-driven committees! NCIA is excited to announce that from now until November 11, we are accepting applications for the 2023 term!
APPLICATION EXTENSION INFORMATION:
Committee applications for the 2023 committee term HAS BEEN EXTENDED and is now open through November 25th, 2022! All NCIA members are encouraged to apply!
*Due to overwhelming interest we can not guarantee a committee assignment.
All NCIA annual members in good standing are invited to apply for an NCIA committee seat for the 2023 committee term.
NCIA Committees enable current NCIA members to engage their vast and varied areas of expertise and passion to:
See the full list of committees here.
APPLY TODAY
Just two short weeks ago, the NCIA’s Marketing & Advertising committee proudly announced Claybourne Co. as the winner of the second annual Best of 420 Award for the brand’s “Rolling with Claybourne Road to 420” campaign live from the MGM Grand in Las Vegas during MJ Unpacked.
During a wonderful evening hosted by Michael Kauffman, MAC member and Executive Director of the Clio Music and Clio Cannabis programs, Kary Radestock, MAC committee chair, presented the Claybourne Co. team with a Clio trophy recognizing the brand’s creativity, community impact, and the overall success of their “Stash and Grab” merch drops spread throughout California highlighting the launch of the brand’s statewide delivery program.
Claybourne Co. celebrated California locations which have very few dispensaries, also known as “Pot Deserts,” and gave the cannabis community an opportunity to come together.
The MAC committee had many in attendance including Vice Chair Eric Becker of MadisonJay Solutions, Chair Kary Radestock of Hippo Premium Packaging, committee member and Clio Cannabis Executive Director Michael Kauffman, Committee Organizer Allison Disney of Receptor Brands, Best of 420 subcommittee lead Tara Coomans of Avaans PR and member Vanessa Valdovinos of HUSH.
Congratulations to all the nominees and we look forward to celebrating the “Best of 4/20” again in 2023! Stay tuned for more details to be announced in the coming months as we’re excited to continue providing this platform to elevate the industry’s most successful, creative, and community-focused campaigns next year.
If you’re interested in contributing to these efforts (and other special projects like it) then we invite you to join the association and apply to participate on one of our 14 member-led committees this coming term. Complete details will be released later month and applications to apply for the 2022-2023 term will open up in early December for all annual NCIA members in good standing.
Don’t forget! Blooming and Evergreen members are automatically guaranteed a seat (single or multiple) on one of our 14 sector committees. If you want to take your industry involvement to the next level, now is the time. Don’t pass up this opportunity to enhance your team’s leadership skills and expand their professional networks all while providing the opportunity to effect change and develop best practices to shape the future of our industry.
What happens in Vegas certainly stays in Vegas but if you’re really looking to relive the magic then you can view the full album of 2022 Clio Cannabis Award winners here. Plus learn more about the other 2022 Speciality Award recipients honored at the event including NCIA’s Best of 4/20 marketing campaign contest here.
Thank you once again to the Clio organization, all of the volunteers who worked to put this together, sponsors Cannabis Insurance Wholesalers, Hippo Premium Packaging, and Receptor Brands, along with media sponsor Honeysuckle Magazine. We truly can’t thank everyone involved enough for elevating this program to new heights this year.
In this edition of our NCIA Committee Insights series originally aired on Wednesday, September 28, 2022 members of NCIA’s State Regulations Committee convened a panel of government affairs, business development and licensing experts for an in-depth discussion focusing on cannabis ballot initiatives up for a vote this coming November.
They provided a detailed overview on the status of each campaign so that you’ll learn how best to position yourself for success and what you can do to help push these efforts across the finish line. If you’re considering business Arkansas, Maryland, Missouri either of the Dakotas then this session is specifically geared for you.
At the conclusion of the discussion they hosted a moderated Q&A session to provide NCIA members an opportunity to interact with leading minds from the cannabis regulatory and licensing space, join today to contribute to future conversations!
Learning Objectives:
• Provide practical information to NCIA members about the cannabis ballot initiatives and potential new business opportunities.
Presentation Slide Deck: https://bit.ly/3RD8ivn
Panelists:
Sumer Thomas
Director of Regulatory Operations
Canna Advisor
Nicola Batten
CEO & Founder
koLaB Consulting
Larry Luksha
Government Relations & Business Development
Veritec Solutions
Joseph Smith
Senior Managing Associate
Thompson Hine LLP
by Mike Lomuto, NCIA’s DEI Manager
Over the past few months, the NCIA has been hard at work in social equity and the emerging New York market. NCIA’s Diversity Equity and Inclusion Committee has organized an ongoing roundtable discussion with various ally organizations including NYC NORML, Minorities for Medical Marijuana (M4MM), Minority Cannabis Business Association (MCBA), The People’s Ecosystem, the JUSTUS Foundation, Black and Brown Economic Power in Cannabis (BBEPIC), and the Social Equity Co-Chairs of the New York City/Hudson Valley Cannabis Industry Association (NYCCIA/HVCIA), and Unified Legacy Operators Council (UNLOC), and social equity cannabis business owners from existing markets.
These discussions have centered around the proposed New York regulations, policies, and concerns. We all share a common goal to provide sensible and workable solutions to the state famous for “stop and frisk” in alignment with the goals of New York, to create a diverse, inclusive, and socially equitable cannabis industry.
What emerged from our roundtable discussions over the last few months are robust proposals regarding key regulatory changes and solutions to the New York regulators as they deliberate their proposed rules that will affect the industry. If our proposed comments were to be adopted, we are confident New York will see more equitable pathways for folks who potentially would be left behind otherwise. In particular, we strongly recommend their definitions of justice be broadened and we included proposals to that effect. We also encourage the regulators to create more pathways and solutions for legacy operators still in the shadows to be able to enter the legitimacy of the industry. Further, we proposed sensible changes to align New York to more national standards in labeling, advertising, packaging, licensing, and operations.
Our coalition roundtable based our recommendations on combined decades of experience on the frontlines and in the communities that will be impacted by these regulations. Our proposals are workable solutions the state of New York can incorporate in order to solidify equity in the industry as they come online.
As a roundtable coalition that is New York focused but with national reach, we’re proud to be able to work alongside our allies to create a think tank that will affect future markets beyond the big apple as they struggle with the concept of good and effective social equity programs. For far too long, the road has been paved with good intentions that fall short of the destination needed for true social equity. Our New York Social Equity Roundtable has brought together people from various sectors and organizations who fundamentally understand that and who are passionate about bridging the disparity all too prevalent in the cannabis industry.
by Kameron Richards and Steven Schain
Members of NCIA’s Banking & Financial Services Committee
Obtaining legitimate, cannabis-friendly financial services is among the cannabis industry’s biggest hurdles. Obtaining financial services is challenging for dispensaries, marijuana grows, and testing labs but it could also be an obstacle for non-plant touching businesses or individuals engaged in the cannabis industry. Without cannabis-friendly financial services, individuals and businesses related to the cannabis industry are deprived of simple financial solutions, like checking accounts, resulting in large amounts of cash being held at company facilities or the operator’s residence, posing significant risks.
Because only a small amount of insured banks and credit unions offer cannabis businesses financial services, finding cannabis-friendly financial services offered by FDIC or NCUA/CUNA institutions is challenging, and following a certain approach may fortify the longevity of a relationship with a financial institution.
Thorough onboarding initiates the account opening process for cannabis companies seeking financial services. Cannabis-friendly financial institutions exercise enhanced due diligence at account opening for compliance purposes, which will be further discussed in this article.
Financial institutions may require information on state licensing, corporate structure, and governance documents. Institutions generally collect information regarding the company’s underlying products and whether those products or services violate The Controlled Substances Act (“CSA”). Information collected during the onboarding process often determines the institution’s fee, risk-based categorization, and willingness to provide financial services to a particular cannabis company.
During the onboarding process, cannabis companies should determine if the financial institution provides all services necessary for its specific operation. The services offered by cannabis-friendly financial institutions may vary based on its risk tolerance.
Financial institutions serving the cannabis industry must comply with The Bank Secrecy Act’s (“BSA”) requirements set forth in the Treasury Department’s Financial Crimes Enforcement Network’s (“FinCEN”) BSA Expectations Regarding Marijuana Banking (FIN-2014-G001) (“FinCEN Guidance”). To mitigate the possibility of money laundering, institutions assemble extensive risk-based BSA programs centered around assessing the risk of each cannabis account and detecting and reporting “Red Flags” set forth by FinCEN Guidance.
To understand the constraints under which financial institutions are forced to operate, cannabis companies should familiarize themselves with relevant cannabis industry regulatory guidance and, if possible, structure its operations to ease its financial institution’s compliance efforts. Further, cannabis companies should understand any contractual terms and operation of any specific cannabis programs required by its financial institution (e.g., participation in cannabis-specific programs to support loan approvals, liquidity management or the coordination of cash courier services).
FinCEN Guidance requires institutions to perform enhanced due diligence on cannabis companies, because the risk category of each cannabis account is determined during the onboarding process, institutions are required to obtain corporate and state licensing documentation and detect any negative news on the potential account signers and the business.
Because there is no mandated risk-based structure for institutions to follow, it is critical that cannabis companies know its institution’s specific risk-based structure. Further, if a cannabis company is utilizing more than one institution, it should understand that each institution’s risk-based categorization may have specific factors or considerations. Some institutions use a tiering structure (which can vary by institution) or make this determination based on the direct or indirect relationship that the account’s source of funds has with cannabis prohibited by the CSA. An institution’s risk-based categorization could determine an account holder’s compliance obligations or eligibility for financial services such as lending, treasury services, payment processing, and 401(k)/retirement solutions.
After completing the onboarding process and placing cannabis accounts in the requisite risk profile (which may vary among institutions), institutions are obligated to conduct ongoing enhanced due diligence on cannabis accounts in accordance with the risk each account poses.
This enhanced due diligence encompasses staying abreast of corporate changes, confirming that all licenses are up to date and conducting periodic negative news checks that indicate FinCEN Guidance “Red Flags.” It can also include a litany of happenings that cannabis account holders may not be aware of. While cannabis account signers may be compliant, without any negative news on them or their business, their institution could also close an account due to adverse information from tax and state licensing authorities or wrongdoing by employees or vendors. Cannabis account holders should also be aware of transactions prohibited by its institution’s policies and procedures like commingling funds between non-plant touching and plant touching accounts or transferring funds to and from vague accounts at unaware institutions unwilling to serve the cannabis industry.
Cannabis account holders with multiple relationships should be aware that each institution’s closure protocol may vary in response to adverse information or conducting transactions prohibited by internal policies and procedures (account termination terms are often contained in the depository agreement between the institution and cannabis account holder).
Beyond assisting a business’ core functioning, maintaining relationships with legitimate financial institutions leads to strategic advantages for a cannabis company and its owners and operators, like financing or payment processing.
Further, because FinCEN requires institutions to monitor and report cannabis account transactions and file a Suspicious Activity Report (SAR) when a cannabis account is opened or closed or if “Red Flags” are detected; cannabis companies can protect their accounts and businesses by knowing applicable laws and regulations and their institution’s cannabis-specific programs’ policies and procedures.
by Mike Lomuto, NCIA’s DEI Manager
NCIA is proud to announce that for the first time, thanks to the support of our members, we have awarded nine Lobby Days Equity Scholarships to support our Social Equity members with travel expenses to attend NCIA’s Lobby Days in Washington, D.C., on September 13-14. These Social Equity applicants and operators from around the country are leaders and active contributors to NCIA’s Sector Committees, our DEI Initiatives (particularly policy-related ones), and to advocacy efforts in their local and/or state municipalities.
Lobby Days provides the opportunity for NCIA members to come together to advocate for the issues most important to small cannabis businesses — from SAFE Banking to federal de-scheduling — and to share their personal stories with national lawmakers.
Our delegation includes:
Dr. Adrian Adams, Ontogen Botanicals CBD
Ambrose Gardner, Elev8
LaVonne Turner, Puff Couture
Michael Diaz-Rivera, Better Days Delivery
Osbert Orduña, The Cannabis Place
Raina Jackson, Purple Raina
Toni MSN, RN, CYT, Toni
We asked our DEI delegation why attending Lobby Days was important to them. Here are some of their responses:
“I want our elected officials to hear my story which gives a voice to so many others, who like me, grew up in areas that have disproportionately borne the brunt and weight of cannabis enforcement. Children and young adults, whose only crime was being poor and of color, faced the indignity of being stopped and frisked hundreds of times. Now after paying the ultimate entry price, we can not get in the door of the cannabis industry because of a lack of banking and lending opportunities that continue to shut us out of the cannabis market.
The de-scheduling of cannabis, the passing of SAFE Banking, or the repeal of IRC 280E all would immediately increase the opportunities for small cannabis businesses like mine to have a true opportunity for success, growth, and economic empowerment of our communities.”
– Osbert Orduña, The Cannabis Place
“As the industry grows and moves towards federal legalization, our elected officials must hear constituents’ voices. It’s important that my energy, face, and voice are present, representing the need for safe banking, health equity, and policies that support federal legalization. As states continue to legalize adult recreational cannabis usage, there will be an increased need for cannabis health equity to address the social, political, and economic conditions in underserved communities.
I’m committed to increasing awareness of the importance of education, employee retention, and community wellness in these communities.”
– Toni MSN, RN, CYT, Founder of Toni
NCIA’s Education Committee & Health Equity Working Group
“I have begun to work on lobbying at a local level. Federal legalization, descheduling, decarceration, social equity, health equity, and safe banking are some of the areas that I would like to learn how to lobby for at the national level.”
– Michael Diaz-Rivera, Owner/Operator, Better Days Delivery
“We should not stop at using the SAFE Banking Act merely to provide legal and regulatory protection for financial institutions. That will enable, but not ensure, increased banking services for minority-owned cannabis and hemp companies.
As the regulatory gaps between state and federal governments are addressed, there must be mechanisms to prevent predatory practices while opening access to capital.”
– Dr. Adrian Adams, Ontogen Botanicals CBD
It is important to the NCIA, and its membership for Main Street Cannabis to continue to develop in as diverse, equitable, and inclusive a manner as we can achieve. As the industry has thus far failed at creating tangible Social Equity, it’s important to ensure our efforts this September to include these voices and the communities they represent.
As the official DEI delegation, the Lobby Days Equity Scholarship recipients will provide a foundational understanding of matters related to DEI in the industry for all NCIA members present at Lobby Days. The DEI delegation will ensure that there are members present speaking up on matters of DEI from within an important national trade association and within the context of Main Street Cannabis.
NCIA’s Government Relations team has organized a full day of meetings with Lawmakers and their Offices. New citizen lobbyists will receive online training before the event and are grouped together with experienced industry leaders who can help them find their voice. There will be an opening networking reception for all attendees, and a closing event featuring some of NCIA’s most important allies in Congress.
We are still accepting sponsorships to fully fund Lobby Days Equity Scholarships to ensure our recipients have their travel and lodging expenses covered while in Washington, D.C. Contact MikeLomuto@TheCannabisIndustry.org for more information.
Let’s keep building a better industry together, as we bring our voices to Washington, D.C.
NCIA Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. This week Bethany is joined by NCIA CEO Aaron Smith to talk about the importance of having your voice heard on Capitol Hill at our upcoming 10th Annual Cannabis Industry Lobby Days on September 13-14. Join us every other Thursday on Facebook for NCIA Today Live.
NCIA’s editorial department continues the Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
I am a first-generation Latino of Colombian descent, Spanish was my first language and my dad spent most of my youth incarcerated. I grew up in NYC Public Housing projects, and I have first-hand knowledge of the indignity of what it feels like to personally be stopped and frisked nearly 100 times which is what happened to me as a kid and young adult for doing nothing else than being a poor Latino growing up in the hood. I was an Education Opportunity Fund scholar and the first in my family to go to college, where I received a degree in business, and a graduate certificate in law. I earned the designation of Disabled Veteran while serving in Iraq with the United States Marine Corps, and I am also a 9/11 first responder. I retired after a career in public service, and have worked as an entrepreneur for over 10 years, and know what it takes to start a business from scratch, without a rich uncle, generational wealth, or rich financial backers.
In late 2020 and early 2021, I had the opportunity to visit 50 non-MSO recreation and medical dispensaries in five states on the east and west coast. I wanted to learn more about dispensaries and best practices across the industry, but my trip opened my eyes to a different reality. Forty-nine of the dispensaries were owned by white males and one was owned by a white female, not one owner looked like me or shared a similar background. None of these dispensary owners had been stopped and frisked hundreds of times for no other reason than just because they lived in an area with historically high rates of arrests and enforcement from over-policing. Yet they were now engaged in an industry that seemed to exclude us. My trip left me sad but determined to enter the cannabis market so that people who look like me who came from the struggle of the streets, and were collateral damage in the war on drugs could have a chance. I was determined to create a positive example for Latinos and others to follow.
The Cannabis Place offers a unique value proposition which is our commitment to launching as a union cannabis dispensary on day one. As of yet, we are the only dispensary in the state of New Jersey and the nation to propose this. By launching our business as a unionized shop we are being a partner to our Jersey City, NJ community. Our value proposition promises that we will be a responsible and proactive member of the community that provides union career opportunities with true living wages that will empower our team members to provide upward mobility for themselves, their families, and the greater community. Furthermore, we are engaged as a Workforce Development partner with Cornell University, the Workforce Development Institute, and Hudson County (NJ) Workforce Development Board. With these partnerships, we will develop standardized training modules that will be utilized to train prospective dispensary workers and provide opportunities for those seeking cannabis careers in this new and emerging industry.
Our mission: To provide high-quality cannabis to clients with a consistent product and first-class service they can trust. To build our brand on the core values of client service and care, while maintaining the highest standards of quality, integrity, and community outreach.
As the CEO of The Cannabis Place, our primary goal for the greater good of cannabis is to advocate and support a proactive approach to adult-use by providing a local and safe environment to dispense cannabis products. We operate as a social impact cannabis brand and are dedicated to providing consistent access to safe and reliable cannabis products that are ethically grown and sourced. Our aim is to launch the first unionized cannabis dispensary in New Jersey, leading by example, and demonstrating to other businesses that true success is based on placing people over profits.
Our goals are as follows:
Our advocacy at The Cannabis Place is based on workers rights, especially organization, fairness and quality healthcare. We believe that it should be easier for people in all job fields to organize. At The Cannabis Place we support the implementation of legislation that will raise the minimum wage floor for all workers in our community, to provide for true living wages that place people over profits. Workers in all industries deserve more from the moment they are hired. Like many others I grew up as part of the working poor, in public housing with limited minimum wage job opportunities, without healthcare and with minimal alternatives to life on the streets. At The Cannabis Place we believe that by providing our workforce with union careers with true living wages and full benefits, our team members, their families and their communities will feel the immediate difference of financial stability, long-term growth, and the impact of upward financial mobility to help them support their family and to build a better life.
Latinos are consistently underrepresented in terms of business owners throughout all industries. Now when you focus specifically on cannabis and look at a national level, just 5.7% of all license types are held by the Hispanic community. I have seen challenges in the cannabis industry in two key areas, access to capital and the real estate market. It takes money to make money so if you grew up poor, without generational wealth, no rich uncle, no hedge fund connections or oligarchs to call on, how do you raise funds to have the millions that are needed to launch a dispensary or grow? Next and along the same lines is real estate. A lot of landlords won’t lease to cannabis businesses but unfortunately, our experience has been that again a predatory market exists where cannabis rental rates are 2 to 10 times the normal lease rates for the area. The other option is to buy a commercial parcel which brings us back to issue #1 – access to capital. I am ever the optimist, and I see the Latino community growing in the legal cannabis industry as entrepreneurs, c-suite members, and as leaders in the industry bringing our unique insight and sabor to the industry while creating opportunities for generational wealth for our community. In order to get there, we need to bridge the gap through social equity grants and loans that can help Hispanic cannabis entrepreneurs raise enough capital to start their business, and receiving financial education is also crucial for Hispanic entrepreneurs in multiple phases of the cannabis business planning timeline.
We are a Disabled Veteran and Latino-owned company with a core focus on community impact through social impact so the ability to be a Social Equity Scholarship recipient in an organization like the NCIA, a group who are actually dedicated to ensuring that small cannabis businesses have a seat at the table in Washington, D.C. and beyond, was super important to us. We look forward to learning new information and utilizing networking opportunities to help us grow and succeed in the cannabis industry.
The fact that NCIA is leading change to protect the legal cannabis industry, advocate for our state laws, advance federal policy reforms, and to make this a more inclusive and prosperous space by working together to defend the responsible cannabis industry. Creating more opportunities for small businesses rather than just the wealthiest few is the most important thing for us as members of the Social Equity Scholarship Program.
The Cannabis Place 420 Corp is the first ever Disabled Veteran and Minority Owned Business enterprise to successfully navigate the Jersey City, NJ municipal cannabis dispensary approval process in this new and emerging cannabis market.
By Jodi Green, Miller Nash LLP; Shay Gilmore, The Law Office of Shay Aaron Gilmore
Members of NCIA’s Risk Management and Insurance Committee
Although the concept of state-legal cannabis has been around in some shape or form since 1996, cannabis remains illegal to consume in most public places. In other words, legal cannabis consumption remains relegated to back alleys, derailing efforts to “normalize” cannabis use. Tourists visiting popular cities where weed is legal are caught in the unenviable Catch-22 of being able to purchase, but not publically consume, the product. And those who attempt to use cannabis in public still face criminal penalties in some states, with minorities three times more likely to be targeted for arrest, perpetuating racial disparities at a tremendous social cost.
Enter the cannabis lounge. Cannabis lounges — also known as “consumption lounges,” cannabis cafes, or some variation on that theme — are in simplest terms the cannabis equivalent of a bar or restaurant. Depending on state and local regulations, lounges offer users the chance to congregate in a public place and smoke a joint, try out a $500 gravity bong, or sip on a cannabis drink. With any luck, consumers may enjoy their cannabis with a snack or dinner, but mixing with alcohol is typically not allowed.
As with any “new” risks, some cities, states, and insurers are… concerned. Despite some obvious tax and social benefits, detractors cite a host of reasons to prevent lounges from coming to a city near you, including at the forefront: fears of public nuisance (odors, theft, and disruption) and overconsumption — especially because most states insulate cannabis cafes from liability for harm caused by obviously intoxicated or underage users, unlike dram shop laws for alcohol.
As another NCIA member recently pointed out, even in states that do allow cannabis cafes, regulatory bodies continue to struggle with how to shape the laws and regulations governing lounges to afford adequate consumer protection while allowing businesses to thrive. Moreover, without a better understanding of the regulatory landscape, some insurers — whose business model hinges on the ability to accurately price a risk — may be unwilling to play in this new cannabis lounge market.
Alaska led the country in 2019 in licensing on-site consumption. A handful of states and localities have followed Alaska’s guide, and more are anticipated to join this year, including Michigan and New York. We compare a few regulatory schemes below and also consider the impact of dram shop legislation on risks faced by the industry.
California, governed on the state level by the Medicinal and Adult Use Cannabis Regulation and Safety Act, delegates to localities the right to open consumption lounges. Put simply, cities have to affirmatively “opt in” to allow lounges. With a few contingencies — including that patrons must be 21 or older and no alcohol or tobacco can be sold on premises — “a local jurisdiction may allow for the smoking, vaporizing, and ingesting of cannabis or cannabis products on the premises of a” licensed retailer. See BPC § 26200(g).
To date, only a few localities have opted in to allow cannabis lounges, including San Francisco, Oakland, and Palm Springs. West Hollywood, in efforts to create an epicenter for canna-tourism, plans to allow up to 16 lounges within its jurisdiction. Because state law provides little regulatory guidance for lounges, localities generally provide more specific guidance. As an example, West Hollywood’s local municipal code requires security guards on site, as well as within a two-block radius surrounding the business during operation, and allows the sale of cannabis to an individual “in an amount reasonable for onsite consumption.” West Hollywood Municipal Code §5.70.041. Only one lounge is currently open in West Hollywood, the Artist Tree’s Studio Cannabis Lounge, which offers not only lounge access but cannabis yoga, live music, and comedy shows, along with a revolving selection of local art. The Woods, another West Hollywood dispensary with a soon-to-open courtyard lounge space, is also slated to open in 2022.
Although California law significantly limits third-party liability for alcohol-related accidents, it does not afford cannabis owners the same protection. For example, California Civil Code §1714 explicitly states that furnishing alcohol “is not the proximate cause of injuries resulting from intoxication,” which has essentially absolved bars, restaurants, party hosts, and most others of potential liability for selling or furnishing alcohol to customers and guests with an exception for liability arising from the furnishing of alcohol to an “obviously intoxicated minor.” See California Business & Professions Code § 25602.1. Without similar protections for cannabis lounges, injured parties could attempt to sue under a negligence theory if a business or employee serves an intoxicated patron who causes harm.
As of January 1, 2020, local jurisdictions in Colorado can opt-in to the state’s cannabis hospitality business license regime (Colo. Rev. Stat. § 44-10-609), and as of March of 2022, the City of Denver has approved cannabis hospitality businesses for operation. Denver operators include the first social equity applicant in Denver approved for a hospitality license, the Tetra Lounge, although from its website Tetra Lounge’s website describes itself as “a private lounge,” requiring a monthly or annual membership fee and a liability waiver to gain access.
As to dram shop liability, although Colorado law authorizes damages against a licensee for willfully and knowingly selling or serving alcoholic beverages to a visibly intoxicated person, the Colorado Legislature caps liability at $150,000 (Colo. Rev. Stat. § 12-47-801 (3)(II)(c)). This damages cap improves (i.e., reduces) the ISO hazard grade, resulting in the improvement of insurance options available for liquor liability. The legislature has not adopted the same or a similar damages cap on liability for cannabis consumption establishments.
In June 2021, Nevada’s Governor signed Assembly Bill 341 into law, authorizing the Nevada Cannabis Compliance Board (“CCB”) to license and regulate consumption lounges across the state, subject always to local approval. The State plans to issue up to 65 lounge licenses (40-45 for lounges attached to existing dispensaries, 20 for independent lounges) with 10 reserved for social equity applicants.
Most recently, on June 28, 2022, the CCB voted to unanimously approve a host of regulations for cannabis consumption lounges. Nevada’s extremely detailed state regulations prohibit the sale of “single use cannabis products” with more than 3.5 grams of “usable cannabis” and 10 mg of THC for edibles; prohibit the removal of any cannabis products from a lounge; require a mitigation plan for impaired driving and detailed employee training for overconsumption; and require consumer education and warnings to customers, among other things. As with other states, Nevada allows local jurisdictions to prohibit consumption lounges and to implement more stringent regulations than state law.
Unlike other states, however, Nevada law carves out protections for cannabis lounge operators just as it does for alcohol. Nevada law already protects businesses that serve or sell alcoholic beverages from injuries inflicted by an intoxicated person. And while any person who knowingly furnishes an alcoholic beverage to any person under 21 years of age is guilty of a misdemeanor, the law provides only for criminal penalties, not civil liability. The Nevada Supreme Court has repeatedly refused to impose responsibility on vendors selling alcohol absent a legislative provision. See Snyder v. Viani, 885 P.2d 610 (Nev. 1994) (holding consumption is the proximate cause of alcohol-related injuries and dismissing the negligence claim against a tavern owner for alcohol service). The same rules will apply to cannabis operators.
Over two years after full legalization of adult-use commercial cannabis in Illinois, cannabis lounges in Illinois are still relatively rare, with the first Chicago-area marijuana consumption lounge opening on April 20, 2022. Like other states, the State of Illinois does not directly license lounges, but it allows local governments to opt in.
Illinois creates a cause of action against sellers for injury by an intoxicated person. § 235 Ill. Comp. Stat. 5/6-21. The standards for liability under the Illinois dram shop law include: (1) sale of alcohol to any person who, while intoxicated, causes injury, and (2) any person owning, renting, leasing, or permitting the occupation of any building or premises with knowledge that alcoholic liquors are to be sold therein, severally or jointly, along with the person selling or giving liquor. In Illinois, the Dram Shop Statute provides the exclusive remedy for alcohol related injuries. See Charles v. Seigfreid, 65 NE.2d. 154 (Ill. 1995). The Statute also provides stringent limitations on recovery of damages. There is no equivalent in Illinois for cannabis entities.
As with cannabis law generally, lounge operators face a patchwork of state and local regulations that vary tremendously by jurisdiction. In most places, cannabis lounge owners are not protected by dram shop/gram shop laws that otherwise insulate bars and restaurants from liability for overconsumption. This means that companies must be vigilant in protecting themselves from liability by instituting compliance and risk-management procedures.
In some instances, such as California’s West Hollywood, which has far fewer safeguards and guidelines than Nevada, operators are largely left to their own devices in implementing adequate risk transfer and risk management, compliance, employee training, and consumer education to limit risk of liability. While the West Hollywood municipal code requires lounges to limit cannabis sales of cannabis “in an amount reasonable for onsite consumption,” the “reasonableness” standard is rife with ambiguity and could lead to disputes regarding liability and assumption of risk if a patron overconsumes.
Evaluating and preventing overconsumption and intoxication will be particularly difficult for cannabis when: patrons have varying experience levels with cannabis; products can be sold in more than a single serving, and no specific consumer education is required. Thus, even in locations that have more stringent regulatory oversight, companies would be wise to consult with experienced counsel and consultants to avoid or limit potential risks associated with regulatory uncertainty, civil liability, and government penalties for non-compliance.
This brings us full circle to the question of insurance. Even in the states that allow consumption lounges, very few insurance companies provide coverage for on-site consumption (although some do). If an exclusion prohibits coverage, the company may not have coverage for important and sometimes catastrophic events, such as property damage by fire, theft/robbery, cyber events, sexual harassment or discrimination claims by employees or others, and bodily injuries to, or caused by, patrons (on and off premises).
Most existing property, general liability, products liability, and other insurance policies — including those written for the cannabis industry — expressly exclude coverage for on-site consumption or bodily injury caused by intoxication. In fact, some existing cannabis insurance companies include a “health hazard” exclusion in their policies, which exclude coverage for any bodily injury arising in any way from the use of cannabis, including any health injury. Cannabis insurance policies may also exclude coverage for intentional or illegal acts, which some insurers may try to apply to any claim involving cannabis on the basis that the sale of cannabis violates federal law (the Controlled Substances Act), even if it is state legal.
For current licensees that are planning to open an attached or adjacent consumption space, current insurance policies may not cover injuries arising in the lounge space. Further, any failure to identify a change in business type could prompt an insurance carrier to deny coverage for subsequent claims based on a theory of misrepresentation.
In closing, cannabis owners should attempt to negotiate separate and/or broader coverage that carves out coverage for their cannabis-related activities, including on premise consumption, with their current insurer or seek to obtain coverage from a different carrier. Experienced insurance coverage counsel can assist with identifying reputable insurance brokers and negotiating policies that provide such coverage. Because of the limited options, companies would be wise to begin the process of identifying experienced insurance coverage advisors at the beginning of their licensing journey.
Where are they now? This month, NCIA’s editorial department continues the monthly Member Spotlight series by following up with three of our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
For reference, previous member spotlights
First off, we have rebranded. We are now Cannvas Events. The name change was part of our evolution and maturation as a startup. As we scaled, more resources became available for things like branding. We brought in Greg Hill of Brand Birth to deploy the science of branding and the end result was a new name, new logo, and new understanding of where we were situated in the regulated cannabis ecosystem. The transformation led to the planning and production of our signature Cannabis Event 2.0 offering, the inaugural Saturnalia Canna Carnival, taking place at the Trinity Health Arena in Muskegon, MI on August 2oth. We are powering a traditional indoor/outdoor carnival – rides and attractions included – with a hassle-free, normalizing consumption solution. If you’re in the Midwest, come join us as we celebrate the first year of an iconic, perennial cannabis festival. Tickets and info at cannvasevents.com and follow us @saturnaliacannacarnival
The Spotlight feature presented tremendous value. The first year of the cannabis startup journey is devoid of financial revenue. Unless you’re needle-in-the-haystack lucky, it’s not even a consideration. The money is flowing in the opposite direction. So, the only available revenue, or currency, are the relationships. If you’re fortunate, these become renewable resources upon which you can draw repeatedly, and managed properly, they have no expiration date. You can bank them like any currency and you have much more influence on their stability, than on fiat currency. For me, that one relationship was with Michael Schwamm, who leads the Duane Morris cannabis practice out of New York. Michael opened doors for me and got me into rooms that I was previously unaware existed. That access has made all of the difference for me, personally, and for Cannvas Events. And had it not been for the Spotlight, I would have never been in position to enjoy that access.
I’m impressed by the brilliant folks on the committee, and their dedication to making cannabis equitable. It takes time out of our grueling work days to contribute time on these committees but the contribution to making the industry better is crucial during these developmental years of cannabis. Perhaps our current misguided, harmful CA cannabis policies could have been prevented with more early participation from stakeholders who are stewards of the plant. However, there were many factors involved with the way CA policies were created, including special interest money from those who don’t care or want to see the industry fail.
It’s been a painful journey living through the consequences of these challenging policies as a cannabis operator. It takes a long time to change once it’s been passed. However, companies who are willing to work together in these important processes will survive and write a new path to move forward. Most of us can’t wait anymore for things to change so we need everyone’s active participation now, whether it’s writing an email to your constituents or being a part of NCIA!
Overburdensome taxes and high barriers to entry for licensing throughout the state are most obvious right now. The lack of diversity and equity, consumer education, state and federal funding for further research and development also play a huge role in CA’s struggles. I’m frustrated that the State doesn’t understand that those who have been dedicated to the industry, collaboration and this plant are the only ones who can truly guide this industry forward.
NCIA members can lend support by truly including legacy, equity, and other diverse teams into your conversations and partnerships, and opening our eyes to value brought to the table by different communities. I would also encourage members to think about ways we can create awareness to our consumers to make better buying decisions. We have left all the medical properties of cannabis while legalizing, and that’s also why the industry is failing. Lastly, we need to keep pushing for more consumption lounges and events!
At Endo Industries, we built our company on principles of collaboration, science, equity and inclusion. Most notably, we offer critical supply chain support through our tissue culture services, and certified virus-free clean clones for growers, breeders and brands. If you know good operators who could benefit from our support, please send them our way. I cannot stress enough that the work Endo is doing is crucial for the success of the supply chain right now.
We’ve gotten great exposure for being featured in Spotlight. Endo and myself are more internet searchable, which in this day in age means we are real people!
People started sharing the link to the Spotlight to use as an introduction to Endo and myself as a founder. We’ve been told by clients who decided to work with us because they came across the feature when researching Endo. It solidified their desire to pick us because we are bullish about our values because our business model is strategic and collaborative.
It’s great to be co-signed by a credible organization like NCIA, and it goes a long way for a small business that doesn’t have an abundance of marketing and PR resources. I’ve hid in the shadows for far too long. My journey and passion for cannabis needs to be told and celebrated. Endo as a company needs exposure so we can reach a larger audience. I’m grateful for NCIA and look forward to our continued relationship.
There is a lot new in the world of Next Level since our Equity Spotlight in September of 2021. In December, we had a booth, sponsored by the awesome team at The People’s Ecosystem, in Moscone Center at NCIA San Francisco. It was our first time attending an expo, let alone having a booth, and it was a great opportunity to grow our brand while creating relationships for future business opportunities. In the second week of the new year we launched our 1000 mg full spectrum coconut oil in Ivy Hill Oakland. And, later that month, we were welcomed into the Third Cohort of Momentum, Eaze’s Cannabis Business Accelerator. Two weeks before classes began, in early April, we launched our infused fast-acting brown sugar in 7 Star Holistic Healing Center. And in May, we attended MJ Unpacked NYC with other graduates of Our Academy.
California Cannabis is facing challenges on many fronts. Countless unnecessary hurdles to legal entry, political red tape, and excess packaging waste to name a few. But the biggest challenges are around security. Every week there is news of a new dispensary, farm, distributor, and friend being burglarized. High tech security systems, gates, and cameras are no match for organized thieves and slow police responses. Until we can get a portion of our excessive taxes dedicated to funding police divisions that specifically targets cannabis thieves, the best solution to combat this is to support your favorite brands by purchasing their products through legal cannabis retail sources.
Being in the Spotlight helped our company tremendously. It allowed us to grow our cannabis network as plant-touching and ancillary companies reached out from all over the country. In addition, the visibility it provided us helped connect with the team at The People’s Ecosystem which led to our booth at NCIA’s Cannabis Business Summit and our new supply chain partners. It provided the traction we needed to help us get to the next level.
by NCIA’s Education Committee
Brand drives revenue. Companies – in any industry – with a strong brand are able to sell their product at a premium price over the non-branded (or perhaps generic) products in their market or sector. Think of a few of the household names with strong brands (e.g., Apple, Tide, Chevron, or Peet’s Coffee). These companies have direct competitors but they are able to charge a higher price point because of their brand and the loyalty that comes with a positive brand experience. The companies also draw customers for repeat business every time they are in the market for the product. Loyalty drives repeat business. Revenue increases from investing in your brand far outweigh the costs, and many of those revenue increases are rewarded directly from training and developing employees.
Continuing our theme from a previous blog, investing in your employees has a direct correlation to building a strong brand, which leads to increased profits. Brand for most consumer products is experiential. Your customer has an experience from which they establish their association with your brand – both positive and negative. The experience may start with where the purchase was made, how the employees (e.g., budtenders) explained the product through the experience of using the product, and finally disposing of the product. Each touchpoint creates a personal brand experience and demonstrates the importance of training your employees throughout the sales and use cycles to provide exceptional customer service and education. Some key reasons cannabis employers should invest in their employees with a focus on brand include:
A strong company culture of collaboration, employee investment, and thoughtful branding increases your product’s value in a highly competitive market. Customers want to invest, via their purchase power, in businesses that value their employees through a commitment to the personal and professional success of their workers. A company that is able to and focused on enriching its staff is reaping the benefits of flourishing profit margins. The cannabis industry, and general industry as a whole, needs to focus beyond a feast or famine mindset. Investing in your employees builds trust, respect, and loyalty; this can be translated to customers. Building a stable and balanced community of educated employees and happy customers that is sustainable provides repeat sales.
Well-educated and trained employees work as teams, supporting each other and your business. They give back to their employer in many ways both tangible and intangible. For example, they will go out of their way to assist a customer, work a little faster towards the end of the day to get through the line of customers or help to recruit their friends to work at your company, minimizing hiring and onboarding expenses. Invest in your employees, and your teams will succeed. Training doesn’t require extensive budgets. Check here for access to a set of learning tools offered by NCIA. Team members will help each other, not let others fail. They will also drive product recommendations to the products they know (e.g., have been trained on the benefits). Happy employees reward their employer with increased profits by creating a positive brand association to your customers.
NCIA’s Education Committee assists with the design and development of educational programming for NCIA, and helps identify emerging topics in the cannabis space. Learn more about our members here.
NCIA’s editorial department continues the Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
My name is Adolfo Castillo. People who know me call me Ace. Before I started my first cannabis business, I had a 10-year career in the banking industry. I started in a call center as a customer service associate. I then moved into a traditional banking center where I learned sales and eventually became the assistant manager. It was at the end of my tenure in 2008 that my Tia Eloise was diagnosed with terminal cancer. At the request of my mother, she asked me to get some cannabis in hopes that it would help her sister eat. Although it did not cure cancer, it really helped her appetite and gave her a bit of relief. Unfortunately, my Tia Eloise lost that battle, but it was the relief that I was able to provide that helped bring me peace when she passed away. This all happened around the same time that bill SB 420 was signed into California law, establishing statewide guidelines for Prop. 215. This law paved the way for cooperatives and collectives to begin operating legally in my city. It was at that moment that my love for cannabis became a passion. I felt a need to help more people gain access to cannabis, so I partnered with a friend of mine who sold weed and I took what I had learned about business and applied it to opening my first medical cannabis dispensary.
I named the dispensary Banyan Tree after an experience I had in Maui about 13 years ago. It was my first visit to Maui so I decided not to bring any cannabis products to avoid any problems at the airport. When I arrived, I asked a few locals where I could find some good smoke and they all pointed me to the Banyan Tree. It was true. As soon as I found the Banyan Tree, I could tell this was the place to be. The smell was in the air and I met some really nice Hawaiians who were happy to hook me up. I want our guests to have the same experience when they visit our dispensary. Banyan Tree is a destination. A place where friends can meet to find quality cannabis.
As a local native, I understand the cannabis culture in my town. The legacy market has thrived for so long in Fresno. One of our biggest challenges will be convincing medicinal users and cannabis connoisseurs to buy their cannabis from a licensed facility and not from the streets. In order to create the best experience possible, it starts with a well-trained, knowledgeable staff. I am lucky to have two educators on my team who have helped me put together a robust employee development program that will ensure that the Banyan Tree staff will be primed for success.
My goal for Banyan Tree is to be the #1 dispensary to work for. I truly believe that the success of your business relies heavily on its employees. I want our employees to have purpose and feel proud of the work they do. Banyan Tree was built upon the idea of helping our surrounding community achieve wellness and enjoyment through cannabis. When you come to Banyan Tree, you will not be rushed, you will feel safe, your questions will be answered, and the price you pay will not shock you.
I am hopeful that I will see full legalization in my lifetime. As a cannabis business operator, I would like cannabis to be recognized as a normal commodity and not this taboo substance that has so much negativity around it and red tape. As a business owner, I would like cannabis commerce to transact and be accepted without any special rules in regards to banking and filing federal income tax. As outdated stereotypes are finally fading away, more and more consumers view cannabis as an integral part of their health and wellness routine. I’m confident that in 20 years we will look back at the history of cannabis and just laugh at all the nonsensical rules surrounding cannabis in the early 2000s.
Most cannabis operations are running all-cash businesses because mainstream, national banking institutions are not willing to support a federally illegal industry. A small number of state-chartered banks and credit unions have offered financial services to compliant operations, but establishing these relationships continues to be a significant challenge for operators.
An equally frustrating financial challenge is IRS Tax Code 280E, which states that “no deduction or credit shall be allowed in running a business that consists of trafficking a controlled substance.” This archaic code impacts cannabis businesses across the nation, causing unnecessary fiscal and operational stress.
I joined NCIA through the Social Equity Scholarship program to extend my network of cannapreneurs and to help develop best practices and guidelines that will shape the future of our industry. I would say for me, the best part of being a member of NCIA is the synergy. One of my favorite parts of the program is the “Power Hour.” Each week, Mike Lomuto hosts a zoom meeting dedicated to Social Equity members. It is where we have an opportunity to share ideas and find solutions to the issues we all face in our industry. I am very capable, but I recognize that by fostering relationships and collaborating with others in my industry, I can achieve far more than I could ever achieve on my own.
By NCIA’s Facilities Design Committee
The cannabis industry is an emerging and dynamic industry, but just how leading edge is it in your community? If you are considering constructing a new facility it is important to understand the experience level and “hot buttons” of the Authority Having Jurisdiction (AHJ). Navigating the waters of a new market is different from that of an established market, but both can be treacherous.
In a new market, you may be part of the first round of projects that the AHJ has reviewed for this industry. Codes are meant to be interpreted and every AHJ has a different interpretation. Although this may seem like agriculture, it most likely is not seen that way in the eyes of the AHJ. The facility’s classification (commercial, industrial, agricultural, etc.) is key in driving the balance of the facility design, and it will have a significant impact on schedule and costs.
Many new markets will utilize established markets as a model and plan reviewers may be trained to emulate the existing model markets for code interpretation. It is well worth the research to understand if there is a model market being utilized, as it will create footsteps to follow even if you are the first one on the path.
Whether it is a new market or an existing market, each AHJ has its “hot buttons.” Do your homework to not only determine what these hot button issues are, but understand why, and how it is based in code. Many jurisdictions provide for a “round table” or a pre-submittal review. Take advantage of these processes to ferret out key issues. Do this early in the design stage to avoid surprises later in the process.
When the AHJ takes issue, or has a unique or overly conservative interpretation of the code, take a breath. Choose your battles wisely. If you have a strong case and it is a hill to die on then there are opportunities to work with the AHJ to find a more reasonable interpretation. However, this must be done with a positive and collaborative approach. Don’t win the battle and lose the war. If you have been in the cannabis industry but have not experienced a traditional entitlement process before, there will be many requirements that seem unreasonable. Common sense and past practices are always trumped by current code interpretation unique to each AHJ.
Pick your design and construction team wisely, spend smart money to assemble a seasoned group that has specific specialty knowledge in this industry. When assembled, listen to your team, know your strengths, and recognize theirs. Being part of an emerging industry creates many opportunities and challenges. Your ability to navigate these uncharted waters determines your success.
In a perfect world, we would purchase existing facilities that are of the proper construction type or a green field site to construct a purpose-built facility. Given the nature of our industry this rarely, if ever, happens. Typically we must make do with the properly zoned leftovers. Understanding how your operations will interact with your existing building’s envelope is key to creating a successful facility.
Creating and maintaining the ideal environment is the ultimate focus, but how your plants function in this environment is only part of the equation. Understanding how your building will function in this unique environment is key to having a successful operation. A major component of this is water vapor – you may not be able to see it but it is all-powerful.
If you are contemplating constructing an indoor cultivation facility in a region that experiences cool temperatures, then you and your team need to understand the concepts and principles involved in a Hygrothermal Analysis. This analysis examines the movement of heat, air, and moisture flow through building enclosure assemblies (walls, roof, floors etc.). Without an understanding of these principles, you risk having significant condensation issues which can result in mold growth, deterioration of building components, and ultimately significant facility costs to properly address.
Since most existing building envelopes were not designed and are not suited to maintain this environment, in most cases the best solution is a “room within a room.” Constructing grow rooms out of insulated metal panels (IMP, think walk-in cooler panels) solves most of the issues. These panels not only provide a complete vapor barrier, but they reduce the volume that must be conditioned and provide ideal wash-down conditions. Thermal bridging is eliminated, and you are provided with an extremely well insulted, controlled, sanitized space.
You may not be able to select the ideal existing building for your facility, but knowing its limitations and appreciating the uniqueness of the environment that is being created is fundamental to your facility’s success. Utilizing products such as IMPs is just one of the methods to address the various pitfalls when working with existing buildings and making the most of the leftovers.
The structure of project funding is extremely important to not only manage a large number of funds properly but to foster an environment that encourages contractor interest while providing security for your investor partners. The continued federal prohibition has eliminated most of the financial mechanisms that other industries utilize when constructing facilities. This coupled with a less-than-stellar initial track record of timely payments to contractors has created a serious issue in our industry, however, there are solutions.
Show me the money… it is literally that simple and the mechanism for this is an escrow account. An escrow account is an account that is set up specifically for the project costs and funds can only be accessed with authorization from both parties (owner and contractor). This ensures that the funds are available and will remain available for the purpose intended. However, parking all the funds required for a project that will take many months or possibly a year to construct has a significant cost of money aspect, but there is a solution.
Contractors generally get reimbursed for work in place 30 days in the rears, if there is an issue with financing, it can take another month to two months to close down a project. Therefore, a contractor’s financial exposure is three months of project cash flow. In lieu of placing the entire project’s funds into the escrow account, three months of cash flow is deposited and then replenished with each monthly draw until the balance in the account equals the cost to complete of the project. This approach minimizes the amount of funds that must be parked in the account while ensuring the funds are available for the contractor.
This topic must be addressed at the onset of the project to ensure that you receive the full benefit of this approach. While you are in the process of selecting your general contractor partner this should be a topic of discussion. Knowing this mechanism is in place will increase contractor and subcontractor interest and may result in lower fees as the approach reduces contractor risk. The structure of project funding and utilization of financial mechanisms outside of mainstream financing is a key component of a successful project.
NCIA Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.
Profit margins are tight for every business in the cannabis industry. From plant through product development to retail sales at a dispensary, keeping a keen eye on costs and managing those costs can be the difference between profit and loss in any given month. The concept of investment – in employees, in technology, in building a culture for success – can also be elusive in an environment when private equity wants their multiple and the taxman is always around the corner. However, successful companies invest in their people and successful teams drive revenue growth. This is as true in the cannabis industry as it is in every industry.
Employee expenses, including salary, are significant for every company in the cannabis industry. A line-level employee costs about $4,100 to hire and onboard according to the Society of Human Resource Management. Senior-level leadership is exponentially more expensive. According to the 2022 Cannabis Industry Salary Guide, “the costs of acquiring and keeping quality team members keep rising fueled by competition for available talent and nationwide salary inflation. Cannabis salaries rose 4% on average in 2021 with compensation for senior executives rising as much as 10%.” Salary is just one component of a successful employee/employer relationship. Hard costs such as benefits as well as soft costs such as culture, training, and long-term development need to be factored into the decision to hire an employee.
The savvy business owner realizes that hiring is just the first step in developing a successful employment program, and just the beginning of the investments required. Training and developing your employees has significant benefits for your corporation. Business owners will reduce turnover, increase sales, and improve morale – all key components of driving profit – through investing in their employees. Let’s outline a few key benefits of training employees with a specific focus on cost and lost revenue:
Paying competitive salaries may seem like enough to keep a happily employed workforce with your company, but it’s not enough today. Easy employee mobility and the expectations younger generations have of their employer require a more nuanced approach. The risks of not investing in your employees’ future are analogous to buying a car and never changing the oil. Complete engine failure is exponentially more expensive than adhering to the maintenance schedule. Your employee relations are similar. Providing training, development, and growth opportunities may have a short-term cost, but the long-term benefit is that your cannabis company will produce revenue for many years to come.
As the cannabis industry matures, more and more training resources become available to enrich your staff, invest in their professional development, and educate them so they are able to perform at their highest level onsite. As an NCIA member, your company has access to a plethora of blog posts, webinars, podcasts, and in-person events which can be shared with employees. Utilizing these readily available resources will bolster company culture and impress upon workers their value and importance to your business.
NCIA’s Education Committee assists with the design and development of educational programming for NCIA, and helps identify emerging topics in the cannabis space. Learn more about our members here.
by Ann Allworth, Ph.D. and Cynthia Shelby-Lane, M.D.
Members of NCIA’s Scientific Advisory Committee
There is abundant anecdotal evidence showing that people can live with cancer for decades after diagnosis. Several books and films describe various alternative approaches to traditional medicines that patients have used to help them heal, many citing the use of cannabis. For example “Weed the People” is an excellent film documenting the cannabis experiences of children with cancer and advocating for the sorely needed research on the healing potential of this powerful plant.
This blog will explain how cannabis can help our cells and the endocannabinoid system (ECS) components work together to weaken the ability of cancerous cells to survive. Let’s begin with a quick overview of cells and how they work. Cells are the smallest living unit in the body. There are about 200 different types of cells that come in different shapes and sizes, depending on their job. All cells are enclosed by a cell membrane which holds the cell’s contents and houses receptors, structures that allow cells to communicate with each other via ligands. Ligands carry specific messages and include, but are not limited to, neurotransmitters, hormones, growth factors, endocannabinoids, and phytocannabinoids. They circulate throughout the body in our bodily fluids and bind to specific receptors. Receptors have a binding site with a distinct shape that matches the shape of specific ligands. In other words, each ligand is like a key that fits a lock to “open” the receptor so that the message the ligand carries can be received and transmitted to the cell.
Receptors and ligands are two of the main components of the ECS. Even though it is called a system itself, the receptors and ligands of the ECS are found in other systems of the human body, such as the neurological, gastrointestinal, and immune systems. This means most cells in the body contain cannabinoid receptors, known as the first cannabinoid receptor, CB1, and the second cannabinoid receptor, CB2. These receptors are activated by cannabinoids our body makes itself, known as endocannabinoids [anandamide (AEA) and 2-arachidonoylglycerol (2-AG)], cannabinoids made by plants, known as phytocannabinoids, and some enzymes [e.g., fatty acid amide hydrolase (FAAH) and monoacylglycerol lipase (MAGL)].
This is an excellent basic understanding, but the ECS is much more complex. It is incredibly important to human health as its function is to maintain balance throughout the body and it helps to regulate many facets of physiological, behavioral, immunological, and metabolic functions in humans. The vast medicinal value of cannabis comes from the mixture of cannabinoids, terpenoids, and flavonoids that interact in some way with the ECS. Although research is still being performed to better explain how the ECS is involved with cancer, it has been demonstrated in animal and cell experiments that cannabis stops a number of vital functions in cancer cells, including proliferation, angiogenesis, and metastasis, and also causes apoptosis of malignant cancerous cells.
Proliferation is the scientific term for how quickly a cell can divide into two cells. Cancer cells can quickly proliferate because the molecules that regulate how often a cell can divide and create new cells have been disabled. This process allows cancer cells to grow in an uncontrolled fashion and to compete with healthy cells for space and nutrients. Animal and cell studies have shown that the compounds in cannabis can stop cancer cell proliferation in a wide variety of cancer types including breast, lung, prostate, liver, pancreatic, and many others.
Angiogenesis means the formation of new blood vessels. As cancer cells multiply and form large clumps, they secrete chemicals, many of which are ligands, that bind to receptors on cells in the tumor microenvironment. These cells receive the messages and begin building blood vessels. The newly formed blood vessels guarantee the growing clump of cancer cells will be fed all the nutrients and oxygen it needs to survive and flourish. A growing number of studies demonstrate that cannabis can inhibit angiogenesis in experimental cancer models.
Metastasis occurs when cancer cells spread to another part of the body other than where the cancer began. Cancer cells physically extend into the normal cells in their microenvironment, or they can pass through the walls of nearby blood or lymph vessels to get to distant locations. When they stop moving, they secrete messages that direct angiogenesis. Metastasis is a feature of more advanced cancer stages, such as stage 4 cancer. Experimental data shows that cannabis can hinder metastasis.
Apoptosis is a form of programmed cell death. Apoptosis is a process that cells perform if specific genes are turned on. The cell then goes through a series of steps that end in its death. Cannabis has been shown to induce apoptosis, which is an excellent fate for a cancer cell. Although the experimental data here is predominantly from animal and cell cancer models, it is likely that these critical cellular processes are happening when cancer patients improve using cannabis.
Hopefully soon, more research will help scientists elucidate the exact mechanisms by which patients experience relief using cannabis!
Ann Allworth Ph.D. is founder and CEO of Cannabis Education Solutions. In her first year of undergrad, Ann Allworth Ph.D. developed a great interest in embryology while taking Anatomy & Physiology. After graduating, she enrolled in a Ph.D. program in cell biology and studied mammalian eggs and embryos. For several years after completing the program, she continued this research at Tufts University Health Sciences Center while working as a Gross Anatomy instructor. Next, Ann worked as an assistant professor at Howard University College of Medicine, continued teaching Gross Anatomy and began studying breast and ovarian cancer cells.
After 19 years in medical academia, Ann did a 180 and moved on to the natural product industry, where she learned there were many alternatives to pharmaceuticals to achieving health. And among other topics, taught the immense value phytonutrient rich foods and herbs have to optimal health and well-being for almost 15 years. Upon learning of the existence of the endocannabinoid system (ECS) in March 2019 she was shocked she had never heard of it, but she is far from alone. The general public is for the most part clueless about the ECS and the medical establishment by and large ignores its existence. So, she decided to create a company dedicated to illuminating minds to the expansive nature of the ECS and its unparalleled importance to human health.
Cynthia Shelby-Lane, MD, is an emergency physician, board-certified in anti-aging and functional medicine, and a certified Marijuana Doctor practicing medicine in Detroit, Michigan. Dr. Shelby-Lane has certified more than 10,000 medical cannabis patients in the State of Michigan. She coaches patients on their use of cannabis in conjunction with their current medications and medical conditions. She has been a member of NCIA and the Scientific Advisory Committee for the past five years, in addition to membership in multiple cannabis associations and organizations. She speaks at conferences/webinars and in the community on the use and benefits of cannabis and the evolving landscape of cannabis research. Dr. Shelby-lane has worked closely with the Last Prisoner Project.
NCIA Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.
Happy Juneteenth, Happy PRIDE!
The Clio Cannabis Awards, September 29, 2022 in Las Vegas at the MGM Grand
During the winter of 2021, when vaccines were not yet widely available, and many people were still in lockdown, the NCIA Marketing and Advertising Committee was determined to shine a light on those in our community who were fueling opportunity and growth during a difficult time for many businesses.
MAC Chair Kary Radestock of Hippo Packaging assembled a subcommittee tasked to amplify top member marketing efforts and thus the Best of 420 Award program was born. The 2021 event received dozens of submissions from all over the U.S. across all business sectors and budget sizes and was conducted and presented virtually. See last year’s winners here.
For 2022, NCIA and the Marketing and Advertising Committee are bringing it back and this year, it’s going to hit differently.
Through the guidance of our subcommittee co-chaired by Melinda Adamec of Gabriel Marketing and myself, Tara Coomans of Avaans Media, we’ve also enlisted Michael Kauffman of the Clio Awards, Angela Wong of The People’s Ecosystem, and Vanessa Valdovinos of Hush Chicago to provide support to this year’s process and expand this award.
The winning honoree will be presented live at the 2022 Clio Cannabis Awards to be held on September 29th at the MGM Grand in Las Vegas.
NCIA invites all cannabis companies and brands, both B2B and B2C to submit their 420 campaigns—NCIA membership is not required. Budgets of all sizes and companies of all types, B2B and B2C, are encouraged to apply.
It’s still FREE
A jury of NCIA members and peers who will evaluate submissions and recognize the top entry.
Winners: There will be one winner and this winner will be chosen based on three criteria.
Criteria: Judges will evaluate entrants in three ways: Community Impact, Creativity, and Results.
Community Impact: How did your campaign bring your community together? How did it highlight the best of the cannabis community to others? Did it support an advocacy campaign such as DEI, sustainability?
The cannabis industry is showing the world how an industry-aligned can create positive change. How does your campaign positively impact either the cannabis industry, your customers, the environment, underserved or unrecognized cannabis users, or businesses?
Creativity: How creative was your overall 420 campaign? How creative are you in getting out your message and implementing the campaign?
Results: Was it an effective campaign by your own goals and KPIs?
This category is one of the most important because our judges will judge the results based on your goals. Regardless of budget size or market size, show us your results. Results are those KPIs that are important to YOU. Make sure you grab those baselines so we can see your progress!
Selected from a diverse slate of NCIA members, including past winners and NCIA committee members from a cross-section of perspectives, including the Sustainability Committee, the Diversity and Equity Committee and the Marketing and Advertising Committee.
Submit your company’s campaign today by following the link below! Act fast as entries will be collected over the following six weeks, with a deadline to submit by Friday, Jul 22, 2022.
Good luck to everyone and have a fantastic 420! Submissions are being accepted now! We look forward to seeing your exceptional campaigns!
About Clio
Clio is the premier international awards competition for the creative business. Founded in 1959 to celebrate creative excellence in advertising, Clio today honors the work and talent at the forefront of the industry in a variety of specialized fields, including: sports, fashion, music, entertainment, cannabis, and health. As a leading authority on the diverse and ever-changing creative landscape, Clio celebrates creativity 365-days-a-year via its global ad database Ads of The World and its content platform Muse by Clio.
https://clios.com/
https://musebycl.io/
https://www.adsoftheworld.com/
About Clio Cannabis
Expanding on Clio’s enduring reputation for establishing best-in-class programs honoring creative ideas in a variety of specialized verticals, Clio Cannabis celebrates the creators at the forefront of cannabis marketing and communications. Launched in 2019, Clio Cannabis sets the bar for creative work in a rapidly growing industry, builds a greater understanding of a developing category, and elevates creative contributions from top talent and agencies.
https://www.cliocannabisawards.com/
For hints and tips on winning award programs, with hints and tips from the entire Marketing and Advertising Committee, listen to the replay of our recent webinar:
By NCIA’s Marketing and Advertising Committee,
Helen Mac Murray, Mac Murray & Shuster LLP, and Dan Serard, Cannabis Creative Group
The requirements and restrictions surrounding paid advertising on social media are hardly a secret. Cannabis businesses have to tread carefully to avoid getting shut down or banned completely from online platforms.
However, there is one popular way to leverage the power of social media without risking your account: Influencer Marketing.
An influencer is any public figure, celebrity, creator, or individual that has the power to affect the purchasing decisions of others because of their authority, knowledge, position, or relationship with the audience. Influencers are typically content creators that actively engage in a select niche online, such as Lifestyle, Fashion, and even Cannabis.
Influencer marketing is a fantastic way for cannabis brands and dispensaries to leverage the power of social media without getting tangled up in the mess of rules and regulations. However, that doesn’t mean there are no rules and regulations for influencer marketing.
Here are some do’s and don’ts of cannabis influencer marketing on social media:
Marketers and business owners can be quick to forget that influencers are not just marketing tools, but rather, people as well. In that regard, influencers are their own brand. Their entire digital presence is curated carefully to align with their unique values and interests.
This means that when cannabis brands are interested in working with influencers, they have to be extremely careful who they choose. Not only does their character reflect on your brand, but also because it’s going to cost you a pretty penny.
Therefore, focus on building meaningful relationships with influencers and popular creators. Add value to their community and don’t view them as a tool in the toolkit. When you manage these relationships the right way, you turn one-time influencers into long-time brand ambassadors.
If you are partnering with someone who will be making claims about your brand or promoting your product in any way, be sure to:
One of the biggest benefits of influencer marketing across industries is that it is a relatable way to sell products. If your influencer partners or brand ambassadors do not actually use and love your product, the partnership will lose its value. Both your brand and the influencer will lose credibility.
When selecting influencers to partner with on campaigns, take time to do your research. Observe their regular social media activity as a follower, be patient during the agreement phase, and understand that this is a long-term partnership.
After the Borat debacle in Massachusetts, cannabis brands have (rightfully) become paranoid about using influencers or celebrities in their marketing campaigns.
While memes on social media are perfectly fair game, a disclaimer or two never hurt anybody if you want to cover your tracks. However, paid ads are a completely different ball game.
For those who are wondering what you can and can’t do when it comes to using a celebrity or cannabis influencer’s image or likeness, here’s a general rule to keep in mind: Do not run or re-run any paid advertising with a public figure without express legal consent.
When it comes to influencers, this means you need to be very specific on the terms of your engagement. For instance, if you are simply looking for a one-time product endorsement on their own channels, you can share these assets from their account to yours. However, you are not allowed to take those assets and use them in future campaigns, especially paid ones, unless you have explicit permission from the influencer.
In other words, if you want to be able to run any cannabis advertising campaigns with partner content, be sure to let the influencer know during the agreement phase, and prepare your budget accordingly.
Disclaimers are extremely important on social media and other marketing platforms when working with influencers. They provide your audience with transparency and protect all parties from any legal backlash.
If you have any relationship with a cannabis influencer of any kind (celebrities, bloggers, etc.), make sure they disclose that to their own audience when engaging in formal partner campaigns with your brand.
These disclosures should be clear and unambiguous and made directly within the endorsement content. Some ways they can do this are by:
Disclosing material connections with a brand is an important requirement for influencers, but brands are also liable for influencer posts that violate the law. You never want your cannabis brand to be associated with anyone that might find themselves in hot water, so be sure to make these terms clear when partnering with influencers.
This may go without saying, but when it comes to paid advertising in cannabis, throwing spaghetti at the wall and seeing what sticks isn’t really a good idea. When you’re running ads – whether it is on a traditional medium, like a billboard, or a digital medium, such as pay-per-click ads – it is important to do your due diligence.
Don’t wait to prove your product claims until after the ads have run. Not only will this get you in trouble with the FTC, but you will appear deceitful to your customers and quickly lose their trust.
Instead, ensure you have third-party lab testing, credible experts (like cannabis doctors or budtenders) able to speak to your specific product, and/or the receipts to back up your claims if challenged.
Existing customers are the best marketers for your brand. Using reviews to show social proof of your product is a great idea. In fact, any cannabis marketing professional will tell you that it is encouraged to show off testimonials on social media, websites, email lists, and more.
However, do be cautious when using these testimonials to sell your product.
Only use the words of your customers if you have express permission to use them on other channels, or if they are already posted in public forums, such as Google Reviews.
It is also highly recommended that you only use testimonials if they reflect the results of most of your customers. You can’t use consumer testimonials if you do not have substantiation that the endorser’s experience is representative of what consumers will generally achieve unless the advertisement clearly and conspicuously discloses the generally expected performance in the depicted circumstances, and the advertiser must possess and rely on adequate substantiation for that representation.
While it’s always helpful to highlight benefits that real people have experienced, disclaimers should always be made if anything sounds too close to a health claim. For instance, if a customer comments on an Instagram post that your product has made their anxiety disappear, you’ll want to gain express permission from them to use their words as a testimonial, and you should add a note when posting that such claims one customer’s unique experience and can’t be interpreted as medical advice.
Cannabis marketing agencies are a powerful tool for a brand or dispensary. From social media and email marketing to search engine optimization, branding, website design and development, and more, these companies are experts at crafting a digital presence for your business.
However, good marketing only goes so far. Even the best cannabis marketing professional or influencer can’t cover up for false information, a bad product, poor customer service, or just bad business overall.
Additionally, even when marketing companies have industry-specific expertise, they are not lawyers. As a brand, you can’t rely on your agency to know the exact letter of the law.
Instead of using social media or your marketing efforts as damage control, be intentional about building a high-value brand and bringing on a marketing agency that can make you stand out from the crowd in good conscience.
That means, start from the ground up, provide accurate information, and protect yourself and your brand from any liability by being cautious of any cannabis advertising and marketing rules and regulations.
Developing a strong presence on social media isn’t just impressive, it’s important for your audience and potential customers to buy into your brand. Whether it’s paid or organic, influencer marketing is a great workaround to some of the more harsh realities of social media rules and regulations for cannabis brands and dispensaries.
When you harness the power of these public figures and their engaged communities online, you can take your brand to new heights.
by NCIA’s Facilities Design Committee
Jacques Santucci, Brian Anderson, David Vaillencourt, and David Dixon
Continuing our five-part series on the behind-the-scenes workings of the legal cannabis industry. This series focuses on all of the inner dealings and industry advice from established professionals to craft this unlimited How-to-Guide to assist you in setting up your own facility. These articles cover cultivation, extraction, infused products, and retail facilities as well as support activities. In general, remember to be compliant with all local rules and regulations and contact a licensed contractor and industry expert.
Retail and dispensary design presents challenges that are distinct from the other areas of cannabis production and manufacturing. The biggest difference is that the design must now account for customers as well as employees. Listed below are a number of issues that an operator should consider as they are in the process of designing their retail or dispensary operations. Always remember to be compliant with all local rules and regulations.
Most states require a hundred percent minimum security coverage in any area where marijuana products are stored, displayed, or sold. Designing a camera system and placements to avoid “dead spots’ ‘ (i.e. areas with no camera coverage) can be challenging, especially if the operation is taking over an existing space, as opposed to building a new facility from scratch.
Bonus Consideration: Think about having an HVAC system specially dedicated to your security room. Security rooms for video monitoring and storage can sometimes be an afterthought. But these locations should be treated more like computer server rooms as opposed to standard office space. And with the amount of technology placed in a (typically) small space, things can overheat rather quickly. This can lead to damage to the system and ultimately, you could be out of compliance for video storage and retention.
Another Bonus Consideration: do not forget about placing security cameras to cover the entrance and exit points to the parking lot. Think about the field of view around doors, especially if the door is near the corner of the building or if there are other obstructions that can block the camera’s view of the area. Multiple cameras may be needed for this critical function. Contact a licensed professional.
Video storage and retention requirements for cannabis facilities are fairly stringent. Typical requirements include 90-days of on-site storage and up to five years of off-site storage. Off-site data storage is required for future legal needs. Many states require a minimum video resolution of 1080p. The video storage needs for even a moderately sized facility can amount to petabytes of data. For this reason, many facilities outsource this function at least in some measure. If you do decide to handle this all yourself, you should be sure that you have the technical expertise on your staff to handle this potentially complex technical issue.
Like it or not, retail cannabis facilities will probably always be targets for crime. Having a security system probably seems like a no-brainer. But simply having an alarm system isn’t typically enough. You will need a system that is actively monitored. This allows the company to initiate actions on your behalf depending on the alarm status (e.g., call the police or fire department in response to a remote alarm). Your alarm should be monitored by at least one reputable company. Redundancy might not be needed, but check to be sure that you are in compliance with local rules and regulations. Talk to your licensed professional.
Customers should only see the public retail area of the location. Customers should not see the back-of-house operations. There is no need for them to see how business is conducted other than at the sales counter. Similarly, there is no need for customers to be able to view the offices, inventory areas, working areas, employee break room, etc. Keeping these areas private helps to avoid bad actors from learning operational routines that might make it easier for them to exploit.
This is an easily overlooked area but can definitely get your dinged upon inspection. Be sure you have the appropriate amount of first aid kits and burn kits onsite as reunited by local regulations. Pay particular attention to the regulations about the placement of these kits as they are sometimes required to be within visual distance of specific rooms within your facility. It can be a hard pill to swallow to not be able to get your operation certificate for forgetting such a simple item, but it happens all too frequently.
Having a non-customer door or access point is a best practice. Non-customer access points are where employees and products are brought into the facility without customer line-of-sight. In some states, this is a requirement so check to be sure your facility is in compliance with laws and regulations.
Getting cannabis products into a retail facility is a critical part of the merchandise flow and one of the most vulnerable points for theft. For maximum safety and control, consider the use of an air-lock/man trap/sally port door arrangement. If not possible due to location or architecture, planning for business hours separation and process can keep customers separated from deliveries.
The counters where transactions occur in a cannabis retail setting can pose some risks especially since most facilities are cash-based operations. An open style counter can open up opportunities for theft. Consider a security barrier counter. The idea is to attempt to prevent customers from having access to products, cash, or employees where possible.
Customer flow can be somewhat challenging, especially in facilities that have a registration lobby that is physically separated from the retail sales floor. Having separate entry and exit doors for customers can help with the flow of customers. Not a requirement but potentially a good customer experience design.
Dispensaries and retail locations can be busy places at times. In COVID times, this can be a big issue. But even under non-pandemic circumstances, there may be a need to control the number and spacing of customers for both safety and privacy. Social distancing- the process of limiting the number of customers for the available space within the building- can be enhanced through various design elements. These can range from the use of rope and stanchion barriers, to signage and floor stickers.
Lobby design for restricted access – if access to the sales floor is restricted to registered customers, a secure lobby space should be provided with a separated check-in space and access-controlled doors both for customer entrance and egress.
And do not forget bathroom access for customers. You can have a single facility that is unisex but it should also be ADA compliant.
Unfortunately, like most other retail spaces, cannabis retail still generates a significant amount of waste. And much of it may be recyclable. Business recycling bins should be provided.
Energy-saving considerations can also be important for retail facilities. Motion detecting light systems can reduce energy consumption in non-occupied spaces. At the very least, interior lighting switches should be located in the same area for easy use upon space exit. HVAC systems should have an occupied and unoccupied night setback capability.
Depending on the total number of employees and customers you anticipate visiting your business at its peak times, you will need to design a minimum number of accessible parking spots.
If curbside pickup is legally allowed in your area, be sure to map out and reserve spaces exclusively for this activity. It should be close to the exit door where the product will be delivered to the customer. Remember to keep parking spaces for handicapped people and even maybe for motorcycles.
Check Out These Related Articles for More Top Things to Consider When Planning:
Part 1 – Cannabis Cultivation Facilities
Part 2 – Cannabis Extraction Facilities
Part 3 – Cannabis Food Production Facilities
Part 4 –Cannabis Retail & Dispensary Facilities
Part 5 – Cannabis Facility Support Areas
Happy PRIDE! NCIA Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.
Make the investment, take the time, and do the work to position yourself for success in the Empire State!
Join us on the “Insights & Influencers: NY Opportunity Tour” coming to Albany, Rochester, and NYC next week!
NCIA’s editorial department continues the Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
Hello, I’m Adrian Adams, EdD. I spent a decade teaching Biology and Chemistry as well as coaching football. I chose to spend several years as a stay-at-home dad (the hardest job by far) and then worked in the pharmaceutical industry. I know many of the physicians in my area. While at dinner one night with a couple of doctors, the conversation revolved around having to combat the misinformation that patients come in with from “Dr. Google.” Minutes later, one doctor asked the others what they were saying to the increasing number of patients who come in asking about cannabis therapy. There was a prolonged silence until another doctor said “I just tell them I don’t know anything about that and to look online.”
Another doctor said, “me too.” The irony within the few-minute span was worthy of a fork drop. The FDA has approved CBD as a medicine. To me, not educating a patient about a legal, safe, and effective treatment option meant they just didn’t have the cannabis knowledge. That also meant more legal, safe, and effective products needed to be made for doctors and their patients. In that moment, Ontogen Botanicals CBD was born.
We offer reduced costs, which can be a barrier to entry for consumers. And a deep knowledge of the intersection between cannabis and medicine. Physicians are a choke point for the industry that is overlooked. Simply put, doctors are good people. Most of them have simply had zero training on the endocannabinoid system as it was only identified in the 1990s. Ontogen Botanicals believes if they knew better, they’d do better. We offer doctors the information to make an informed decision on the utility of cannabis for their patients. We also offer the ability for doctors to provide legal cannabis products for their patients right in their office as part of a sound treatment plan.
Ontogen provides effective CBD products that are truly full-panel lab tested for safety. We strongly believe in starting at a low dose, which also lowers cost. Using the least medication necessary is part of medical training. Low-dose products work for many people and reduce the cost barrier of entry to try CBD and other cannabis products.
We want to increase the healthcare provider and patient knowledge of what this plant can do, as well as provide quality of life-improving products. Now we’re expanding to help the population at large. Medically speaking, cannabis is as good as advertised. The more people use it, the more legitimate the industry becomes.
Cannabis gets a bad rap for being a gateway drug to the opioid crisis. In fact, doctors are beginning to address the pain that often starts and underlies chronic opioid use. You cannot pull opioids and not address the pain that drives many folks back to opioids. Regulated cannabis can reduce pain without the many harmful side effects of opioids – especially unregulated heroin.
With industry growth, and Ontogen Botanicals‘ growth, will come the capital for Ontogen to address the challenges that poverty creates for people who may have much less access to healthcare and prescription drugs to get the medicine they prefer. There is enough money in cannabusiness to use it for social good.
A big problem for any small business is finding the right people to do business with. Minority business owners face discrimination and mistrust when trying to do business in general. Now add cannabis to the equation. I’ve been asked for $5K just for the right to open a business checking account.
Groups like NCIA, MCBA, and Minorities for Medical Marijuana help us find each other to do business with as well as bridge the gap between us and traditional business communities like banking for access to capital.
This industry has shown the ability to help remediate the cannabis criminalization harms done to minorities during the war on drugs. Big tobacco and many other industries are already investing and awaiting federal law changes. I fear that once the flood gates open to large companies investing billions of dollars, the feeding frenzy will create an extinction-level event for smaller minority-owned companies. We need federal and state-level legislative dams in place before then to protect minority-owned smaller businesses.
I joined to try to help advocate for social equity and social justice for minorities to have a once-in-a-lifetime chance to start an industry. The best part about the NCIA Social Equity program is that it brings minority entrepreneurs together weekly to support each other. We’ve locked elbows, pick each other up in hard times, and celebrated the good.
NCIA Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every other Thursday on Facebook for NCIA Today Live.
by NCIA’s Risk Management and Insurance Committee
Matthew Johnson, Quadscore Insurance Services
Cannabis is America’s riskiest business.
Cannabis itself is a highly valuable commodity, but cannabis businesses also deal largely in cash – making them a prime target for thieves across the country. Recent headlines have reported a rash of unsolved robberies in the Bay Area and Washington State, not to mention the seizure of cash from Empyreal’s fleet of armored transport vehicles (fortunately, that cash has now been returned by the police).
This is a national problem, which begs the question… What should cannabis businesses do to stay safe during these trying times?
There are many different means of minimizing the risk faced by your modern cannabis business, but we’re going to focus on the big three today – security, technology, and compliance. Through careful consideration of these three tenets, cannabis businesses can take significant steps to mitigate risk and protect their employees. Appropriate investments can yield tenfold savings in the form of fewer stolen assets, lower insurance premiums, peace of mind, and safer employees.
Let’s start with the topic that gets the most attention during a crime spree – security. In cannabis, security means a number of things… video cameras, man traps, motion sensors, hardened glass, ID checks, and more. When building or retrofitting a facility for cannabis operations, it is crucially important to consult with security experts like Sapphire Risk Advisory Group or Cannabis Compliant Security Solutions.
“In many areas, it’s not a question of ‘if’ a cannabis business will be robbed – it’s ‘when,’” cautions Chris Eggers, CEO of Cannabis Compliant Security Solutions. With 13 years of experience as a law enforcement officer in the Bay Area – including several years working as an undercover narcotics officer – Chris is uniquely qualified to address the ongoing issues in Oakland and other areas along the West Coast. “There’s a question of how you navigate and survive an incident, but beyond that, how you ensure that your business will survive too.”
There’s an important distinction between security consultants like CCSS, security integrators, and vendors. To achieve best results, cannabis businesses should work with a security consultant who can identify ways to protect the business – without being tied to commission-based sales contracts or a specific ‘brand’ of security solutions.
Physical security aside, there are a number of high-tech security tools that can help cannabis business owners protect their operations. For example, let’s take a look at the biggest security company you’ve never heard of – an organization called 3SI Security.
3SI Security began their journey over 50 years ago as the original producer of dye and smoke packs intended to deter bank robbers in the 1970s. Technology has evolved over the years, and so has 3SI’s product offering – now, their GPS tracking tech is ubiquitous throughout banking, pharmaceuticals, luxury retail, and telecommunications.
As VP of Business Development for 3SI, Carlos Casas works to connect cannabis businesses with this tech to protect their assets and employees. “According to a Forbes report from July 2020, an estimated 70% of cannabis businesses are cash-based. This is a staggering statistic which shows the real risk to the industry is on an upward climb.” With the SAFE Banking Act still in the works, savvy business owners have to explore alternative solutions like 3SI’s technology to ensure their business stays safe.
Apart from 3SI, there are a number of technology companies that provide technology to make the cannabis industry a safer place. ADT Security has recently launched a cannabis-focused divison of ADT Commercial to provide critical security technology to cannabis businesses around the country. After spending three years keeping HERBL’s fleet secure on the west coast, Andy Fleet now leads ADT’s efforts to provide security solutions to the cannabis industry.
According to Andy, “Security planning is critical for any cannabis organization. Take the time to evaluate all the risks within your establishment and build a robust plan that ensures all areas of physical safety and security are considered and protected.” Underscoring the points above, Andy continues, “Working with a licensed, experienced consultant will ensure adherence with all relevant regulations and help keep your employees safe while having technology do the heavy lifting for you.”
Next up, everyone’s favorite topic: compliance. In this sense, we’re not talking about adhering to the myriad regulations imposed on cannabis businesses wherever they operate – but rather, making sure that your operation complies with the protective safeguard requirements in your insurance policy. Non-compliance with or material misrepresentation of your active protective safeguards could result in an uncovered or denied claim – and could even cause problems with your investors. If you’re buying insurance, you want to make sure that your policy will pay out when stuff hits the fan!
Theft Sublimit – Most cannabis insurance policies will only cover theft losses up to a certain ‘sublimit’ depending on the quantity of cash/cannabis being stored, the physical location of the cannabis business, and any relevant losses that the insured business may have sustained due to theft. Make sure that you are comfortable with the sublimit provided and, if you aren’t satisfied, work with your insurance broker to see if you can secure higher limits.
Protective Safeguards – Virtually all cannabis insurance policies carry some warranties around protective safeguards that can impact your coverage in the event of a claim. Make sure to read the Protective Safeguards endorsement and check that all of your security systems are functioning in compliance with these requirements.
Motor Truck Cargo – Similar to the protective safeguards warranty, make sure that you study your policy to ensure that any requisite safeguards are in place. For transportation operations, these safeguards are likely to include vehicular telematics, buddy systems for drivers, GPS tracking, and possibly even an escort vehicle to accompany the transport unit.
Security guards – When hiring security guards, it is recommended to employ a third-party guard service that carries appropriate limits of insurance. Make sure that your business is listed as an additional insured on their insurance policy to ensure coverage in the event of an altercation at your business!
Financing – Lenders and VC firms will often stipulate that the companies accepting their funds will need to adhere to certain requirements, like securing Directors & Officers insurance for the officers and executive board. Beyond insurance, it’s important to make sure you are actually doing what you promised to do in terms of safeguarding the property and not just so that you may be eligible for coverage, but also so that you are not held liable for losses suffered by third parties, such as lenders and investors.
Joseph Cioffi, chair of the Insolvency+Finance practice at the Davis+Gilbert law firm in New York advises, “Operators typically make certain representations to investors, lenders, and other capital providers, and undertake certain activities intended to preserve asset and collateral values. The operator is looking at default if it’s in breach of contract, but worse, the operator and its principals could be sued for misrepresentations made in obtaining funding – and be held liable for losses that flow from those misrepresentations.”
Like an onion, there are many layers to a risk management program for cannabis businesses. Through careful implementation of security measures and protective technology, many businesses will be able to prevent damage to their business with proper planning. In case all security measures fail, a comprehensive insurance policy should be able to help make a business whole again after a claim. Make sure to work with the proper insurance, security, and legal experts when building or restructuring a cannabis operation!
NCIA’s Retail Committee is looking to gauge what educational material may be the most useful in order to better direct our efforts on content creation for all cannabis retail employees.
We would like to hear from those who are most affected by training and continued education, in hopes of being able to provide tools that will enable all retailers and retail staff to grow and develop.
If you can please share this quick questionnaire to your staff, we would greatly appreciate it!
*All submissions are completely anonymous*
This site uses cookies. By using this site or closing this notice, you agree to the use of cookies and our privacy policy.
by