NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday on Facebook for NCIA Today Live.
This month, NCIA’s editorial department continues the monthly Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
I was born in Hayward, California and spent most of my childhood in Mesa, Arizona, and in the Bay Area, in Northern California. After high school, I spent some time at The Farm (Stanford) and graduated from The House (Morehouse College).
Next Level was started almost 10 years ago. During a particularly trying part of my life, a medical professional recommended antidepressants and anti-anxiety medicine for symptoms I was experiencing. Taking these drugs made me feel slightly better, but came with a host of other problems; twitching, irritability, weight gain. I needed another solution.
In college, I experimented with cannabis and as an adult, I found that it alleviated my symptoms without the side effects. Unfortunately, the halflife for cannabis is only 90 minutes which wasn’t nearly long enough to cover my full workday. I learned about edibles and how they can last for 4 to 6 hours and I was really attracted to their lack of smell. As a business professional, a deal could be broken if I smelled like cannabis. Edibles did not have a negative connotation and were perfectly discreet for my work environment.
Unfortunately, edibles only came in two different types at this time period: tasty, but completely lacking on potency, or absolutely disgusting and potent. No one should ever need a chaser for their edibles. The industry was ripe for a company with absolutely delicious products that could also provide a strong dosage.
Next Level empowers people to infuse any food or beverage and accurately dose it for higher tolerances. With our products, the home cook can imbue any dish her heart desires and the morning warrior can add a kick to his favorite hot beverages.
When we started this venture, there was not much information out there about equity cannabis companies. Realizing there are probably many other minority entrepreneurs trying to start a cannabis business, I started a Facebook group called CES (Cannabis Equity Success) to help disseminate information about equity programs across America and to raise the profile of equity companies to support. In addition, I’ve been assisting new entrepreneurs to get connected with resources to see their vision come to light. As a minority-owned business, it is very important that we celebrate and support other businesses owned and operated by women, veterans, those with disabilities, and people of color.
It is Next Level’s vision to support these minority-owned businesses. Partnering with women-owned businesses, like Changemaker Creative, not only makes good business sense as they are local leaders in the industry, but also allows us to gain key insights into our target market. The owner and head creator, Lilli Keinaenen, is able to provide details and cater designs that appeal directly to her demographic. Other awesome women-led companies that are our strategic partners include our copacker, the Galley, and Supernova women.
In our distribution chain, we work with BIPOC owned companies like Local Equity Distribution and Breeze which provide jobs and revenue to the people and communities negatively impacted by cannabis arrests.
The biggest challenge we face in the industry is getting dispensaries to buy small company products. We are a small “mom and pop” owned by family members from Oakland, CA. It’s more challenging to get dispensary buyers to sit down with us because they prefer to save their time and shelf space for the larger established brands. One possible solution for this problem is to have each dispensary dedicate a certain portion of its stock to legacy brands/small mom and pops/equity companies.
The other challenge we face is getting access to capital. This is a bootstrapped venture, and issues in cannabis take a lot more time and money to solve than other industries. Unfortunately, there are not a lot of angel investors or investment companies putting money in cannabis and even less in minority entrepreneurs. The solution for this is to make the investment world much more equitable and inclusive.
I joined NCIA through the DEI Scholarship Program for an opportunity to learn best practices for my industry and to network with the finest minds in cannabis.
By Kara Bradford, Viridian Staffing
Chair Emeritus of NCIA’s Human Resources Committee
It’s that time of year again, the busy fall harvest season. While indoor growers can harvest year-round, the fall can create significant workforce challenges, especially for outdoor producers and processors. Here are three tips to make sure you are ready to go for the fall harvest!
Plan ahead! If you have not already thought through your fall harvest plan, you will want to figure this out immediately. Most cannabis companies need additional workers during harvest season, unless their grow schedule is structured where they are harvesting on a regular basis, depending mostly – if not entirely – on their permanent employees for harvesting, de-leafing, trimming, etc. However, given the increased demand for workers by outdoor growers, even in a normal year, the demand for labor often exceeds the supply, placing added pressure on anyone competing for this talent.
Every fall we receive a rash of calls from producers, who failed to plan ahead, requesting workers that same week, if not the same day. Unfortunately, by this time, nearly all the available labor, especially those with experience and skill, have already been scheduled and committed elsewhere. In rare cases, staffing companies might be able to provide workers if they had another client in the area back out, at the last minute due to a heavily damaged crop or not being ready for harvest at the time they originally projected, however, cannabis growers shouldn’t count on this. A good rule of thumb is to provide at least 2-3 weeks’ notice, minimum, to request your harvest crews during the fall, and the further in advance the better. Many cannabis companies that have struggled in the past with worker shortages during the fall have started locking in their fall staffing as early as spring.
COVID-19 has created an even more significant labor shortage. Before 2020, we saw thousands of workers coming into the United States from other countries to take their ‘vacations’ working on unregulated market farms doing harvest work and trimming and getting paid cash. Due to COVID-19 travel restrictions keeping much of this seasonal labor out of the U.S., the regulated and unregulated market were increasingly forced to compete for the same domestic talent with the unregulated market often winning this battle as they were paying tax-free cash at higher wages, given their relatively lower costs compared to the regulated market. Thus, many cannabis companies ran into situations last year where, unless they were able to pay premium rates for harvest workers, their in-house staff were forced to work a ton of overtime to make up for the shortfall. We hope that in 2021 this won’t be the case, however with COVID-19 numbers rising again, this is something that cannabis companies should plan and budget for just in case.
If your cannabis operations are relatively remote or not within an easily commutable distance from a large population center, you may need to go the extra mile to make it easier for workers and staffing companies to assist you. If nothing else it is essential to take an inventory of nearby resources and be prepared to communicate them easily. For example, if you can’t provide lodging to your seasonal workers, you will want to create a list of local hotels/motels, RV Parks, and campgrounds that offer services. Many of these workers are accustomed to traveling from site to site in RV’s, camping, etc. Create a list of grocery stores, gas stations, and other retail establishments the crews may need to access. If there aren’t any lodging options close to your farm, and you have the means, you might want to consider buying some land nearby and building some basic lodging. We have even seen some cannabis companies open a cafe or restaurant close to their farm when there weren’t any good or healthy options in the area so that workers would have a place to go on their lunch breaks or after work. The more of a positive experience you can provide to these workers, even though they are seasonal, the better. Production will typically be quicker, you may gain a customer and even an ambassador for your product, and that worker may be excited to return for years to come, which will keep you from having to deal with some of the labor shortage issues other producers struggle with.
Have a contingency plan. Many of you already know this, but you should always have a plan B and plan C, maybe even a plan D. 2020 and 21 have definitely been years of fires, hot temperatures, and floods. If air quality is deemed especially poor in your area, due to smoke, many harvest workers won’t be able to work outdoors as worker’s compensation policies won’t cover workers laboring in such conditions and few people will want to. We’ve also noticed an uptick in state governments coming out with restrictions and safety guidelines during times of poor air quality or extreme heat. If you’re in an area that has a fire season, you’ll want to have a plan for workers during this time. Perhaps you will need to have them work indoors when the air quality is poor, focusing on things like bucking, trimming, and packaging; then back outside to continue the harvest when conditions allow.
Given the increase in COVID-19 cases, you’ll definitely want to have SOPs and contingency plans in place in the event your crew is exposed to COVID-19. To be proactive, you should also take precautions to protect workers from exposure before it occurs including having masks and hand sanitizer supplies on hand in abundance. Contingency plans could include having a partnership with a staffing firm to provide workers for your fall harvest or offering overtime and bonus incentives for your regular workers to pick up the slack, if necessary. If you’re working with a staffing company, most crews of harvest workers will have a team lead who is there to assist with any HR-related issues that might come up (i.e., sick workers, injury, etc.). However, if for some reason there is not a team lead assigned for your crew, you’ll want to make sure that the workers have a point of contact at your company for any HR-related issues that come up.
Last but not least, if you’re looking for great, experienced harvest talent, especially when it comes to trimming, you will need to budget for the kind of talent you want. With the most talented crews, you’ll likely need to pay some form of a retainer upfront as many of them have trimmed more seasons than adult-use has been around and have not always been paid for their work. Last year, we typically saw trimmers making $15-$25/hour. This was before bonuses. Companies who want to incentivize things like speed and quality increasingly offer bonuses for the quantity and quality of output. This has resulted in the best workers making nearly $50/hour!
The Godmother of Cannabis Industry Recruiting, Kara Bradford, MBA, MM, is Co-Founder & CEO of Viridian Staffing. Founded in 2013 as the first professional, full-service staffing, recruiting & HR consulting firm in the Cannabis industry, Viridian Staffing has led the way in providing temporary, temp to hire, direct placement & HR outsourcing services. Kara has been an HR professional, specializing in Talent Acquisition, Talent Management, Workforce Planning, Employer Branding, Compliance, Federal/State Employment Laws, and Organizational Design for over 15 years. Her career has spanned multiple Fortune 100 companies & start-ups in a wide variety of industries. More importantly, she has more experience recruiting in the cannabis industry than any other Recruiter globally. Kara has an MBA in Human Resources & Organizational Behavior and is LinkedIn Recruiter Certified. Kara is active in many organizations, including NCIA, The Cannabis Alliance, Women of Weed, etc., and was the Founding Chair of the NCIA’s Human Resources Committee.
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday here on Facebook for NCIA Today Live.
By NCIA’s Retail Committee
Have you ever wondered where or how a cannabis retail business banks? You should know that it’s complicated because of federal prohibition. So what do you do? Some are finding workarounds and loopholes, others are able to obtain services with smaller financial institutions for exorbitant costs, while many others struggle to maintain an expensive, risky, and dangerous cash-only ecosystem.
The 2020 elections set the creation of four new regulated state cannabis markets in motion, and four more state legislatures followed suit in the first half of 2021, making the last year arguably one of the most consequential and momentous periods for the cannabis industry and policy reform.
However, cannabis is still illegal at the federal level, classified as a Schedule I substance under the Controlled Substances Act, despite state-level regulated cannabis markets in more than half the country. This prevents banks from doing business with cannabis companies because of fear of prosecution or reputational risk, as these businesses aren’t viewed as legal under outdated federal laws.
The cannabis industry is optimistic about the future, though, thanks to an increasing interest in cannabis, public safety, and economic development in Congress. Lawmakers in both chambers are actively debating comprehensive legislation to remove cannabis from the schedule of controlled substances and regulate it federally while repairing some of the harms caused by prohibition, but there are also incremental reforms in play that have a track record of success in the House as well as bipartisan support. Chief among them is the Secure and Fair Enforcement (SAFE) Banking Act, which would provide safe harbor for financial institutions that wish to work with state-legal cannabis businesses and allow them to provide services to the industry without fear of prosecution. This legislation originally passed the House in 2019 and was the first piece of standalone cannabis policy reform legislation ever to receive a vote or be approved by a full chamber vote.
Since then, cannabis banking has been approved in the House three more times in various forms, mostly recently when it passed the SAFE Banking Act again – and with record bipartisan support – earlier this year. The bill is now awaiting consideration in the Senate, but has yet to be taken up by the Senate Banking Committee.
Loans, capital markets, and credit card processing are common interests for cannabis companies. Access to traditional lending is particularly important for small businesses that usually lack connections to angel investors and venture capital. However, some of the benefits of this legislation are of special interest to cannabis retailers. Check out what some of the Retail Committee members are considering to be important aspects of broadened access to banking and financial services:
“As a retail cannabis business operator, safety is of our top priorities as it directly affects our staff, our patrons, and our bottom line,” said Larina Scofield, director of retail operations at Lucy Sky Cannabis Boutique dispensary chain in Colorado and vice-chair of NCIA’s Retail Committee. “We are required to operate as a predominantly cash business in a high-risk industry that can sometimes lead to criminal targeting; this can put not only our business at risk but also the potential individuals on-site if a targeted crime were to take place.
“There is also no doubt that operating a cannabis business is costly, due in part to the fact that we do not receive the same benefits and protections that other businesses have; cannabis companies are also subject to higher fees in order to get similar services, if those services are available at all. Lucy Sky is fortunate enough to have banking and armored services, as well as a cashless ATM service to allow for safer money handling, but this does not come without a price… a high price. Our company pays top dollar every year in order to have banking and secured payment delivery (something that is not seen in traditional businesses), in order to provide safety for our business and to the individuals who frequent our facilities.
“SAFE Banking would mitigate that and allow for retail cannabis companies to operate without having to “constantly look over their shoulders” so to speak. It would provide an enormous sense of security in an already high-risk business, it would allow for small business owners to receive proper funding to allow for safer operations, and it is truly crucial in the progression of the industry as a whole.”
“Less cash during COVID-19 is always a plus. The goal is to limit contact, and we all know cash is constantly being passed from person to person. There are plenty of studies highlighting how many germs really are on physical cash. Researchers found plenty of questionable microbes on $1 bills in a more recent study. In a world where we are all concerned about our physical health, the time is now to reduce physical cash in cannabis businesses. Or at least, give people the choice to go cashless if they want to. Let’s also not forget the security benefits of carrying less cash on the premises”, said Byron Bogaard, CEO of Highway 33, a cannabis dispensary in Crows Landing, California, and chairperson of NCIA’s Retail Committee.
“Golden State Greens had a spike in deliveries during the COVID pandemic but were still forced to collect cash and signatures from customers. When online orders can process card transactions we can make a true contactless delivery where both payment and signature are managed from the customer’s device. This will increase the safety of our drivers by maintaining safe distancing practices and allow new types of deliveries to drop boxes or to customers’ homes similar to Amazon,” said Gary Strahle, chief growth officer for California dispensary Golden State Greens.
Beyond these major issues, there are a number of potential outcomes that could impact retailers as well.
Revamping the relationship between cannabis businesses and banks will likely trigger higher competition for banking services, resulting in lower fees. This would clearly benefit small businesses but could also have an impact on the frequency and nature of mergers and acquisitions in the cannabis space.
Regulatory frameworks will certainly change, and outstanding litigations will most definitely become more complex. Chargebacks from credit transactions will be a constant problem, due to the level of surveillance and data collection they will more easily be disputed.
Better access to banking also positions technology companies for success, as there will be a high demand for mobile wallets, online ordering, and automatic recurring memberships. We can’t predict everything, and there might be more hurdles to cross than we realize, but the technologically-agile retailer may benefit most. Studies show that most of the Top Fortune 500 Companies use software platforms such as Salesforce to manage their enterprise, however many of the canna-specific solutions are missing much of the integration and scalability needed to immediately handle broadly increased access to the banking system.
The SAFE Banking Act is critical to the cannabis industry’s success, and your voice will tip the scales. Reach out to your members of Congress, especially your Senators, and tell them what safe banking means to you as a cannabis retailer. Remember, policy needs to support logic over emotion. Emotions are important, but remind Senators of the logic behind implementing safe banking solutions for cannabis businesses:
If your senator already supports the SAFE Banking Act, please politely ask them to prioritize this legislation in the current session.
Social equity can be boiled down to a way of seeking remedy for the harms caused by the racist war on drugs and to help individuals, families, and communities that have been disproportionately impacted by prohibition. A big part of this is making sure that no one is left behind by the economic developments created by making cannabis legal. As local, state, and federal governments continue to grapple with implementing policies that effectively address this issue, there is a lot the industry can – and should – do to help make sure that the opportunities in regulated cannabis markets are inclusive and equitable, and to help support businesses owned by members of marginalized communities.
As many as 70% of consumers want brands to take a stand on social and political issues. That’s a 66% increase from 2017, according to Sprout Social’s 2019 #BrandsGetReal survey. Customers are more likely to purchase from companies that take a stand on causes aligning with their values and more importantly, companies hold the power to make a difference; even if it’s encouraging people to take baby steps towards a larger solution. Data shows they might already be doing that, because 67% of consumers say brands are raising awareness around just causes, and 62% believe brands are educating them on important topics.
Here are just a few ways that cannabis retailers can help be a part of the social equity solution to economic unfairness created by the failed war on drugs:
Cannabis arrests or convictions can erect barriers in someone’s life. More specifically, they can affect housing, education, and career prospects. Consider partnering with city, state, and national programs and organizations that are creating pathways to cannabis ownership and employment – including the formerly incarcerated – to create job opportunities for underserved communities.
Reach out to a local law firm or social justice organization and talk about hosting “expungement days.” Your efforts will help provide free legal measures for expunging low-level cannabis-related convictions. The Last Prisoner Project is a cannabis reformation project seeking to release prisoners currently convicted for cannabis-related crimes and help them assimilate back into society. However, local organizations may often have direct experience with this work in your communities and have well-established relationships with them to help better connect with the people who need these services the most.
Reach out to them and see what they recommend before planning your expungement day. You can also find out more information about expungement efforts nationally at the Collateral Consequences Resource Center.
Socially conscious companies should show equity and racial justice on your stores’ shelves. Whether it is making a “social equity section” or finding ways to educate budtenders on the merits and stories behind the products, you will be moving sales in the right direction and promoting socially conscious consumer patterns. You can also provide tabling space for brand ambassadors to help promote social equity company products that you carry. This not only helps the brands but also creates greater loyalty to your store.
Find products that are both socially equitable and fit your dispensary’s needs. That way, you push the product because you love the product, not just because it’s trendy. But in doing so, you are contributing to positive social change and acceptance, and driving commerce toward BIPOC-owned companies. Remember, the goal is equity.
Are you a retailer, cultivator, or production company? Maybe you’re a vertically integrated, multi-state operation. You might not even touch the cannabis plant at all, but provide services to those who do. No matter who you are in cannabis, find ways to partner with social equity companies and help increase their recognition. Maybe it’s mutually beneficial joint venture projects on brands or another arrangement, but find ways to form fair and collaborative relationships.
In the end, authenticity is key, and to take a stand in a way that inspires customers: your message can’t be filled with empty words. If you’re a company that’s looking for causes to rally behind, keep it in your wheelhouse and make sure your audience will resonate with the partnerships you’re creating.
Retail businesses have the power to become change agents and inspire customers to take action in their own backyards. Seek out opportunities like the ones we mentioned and provide opportunities for wealth generation, education, and social restoration in marginalized communities.
According to statistics, you’ll make a lasting impression on your audience, increase sales, and you’ll be a force for positive social change as you impact lives in your community and beyond. What’s better than that?
by NCIA’s Cannabis Manufacturing Committee
From the taste of your fruits and vegetables to the aroma that travels from trees and flowers in bloom, terpenes are the organic compounds that play a vital role in the flavors and smells we experience daily. Terpenes are common ingredients that are used in many industries such as food, cosmetics, tobacco, and pharmaceuticals. Therefore, the information on the safety of terpenes in these industries can be used for determining the safe use of terpenes in a wide range of product applications.
Terpenes are currently being introduced into a variety of adult-use and medical cannabis preparations across the U.S. and hemp-CBD markets around the world for both flavor and functional purposes. Much research has been and still is being conducted on the therapeutic effects of terpenes and their synergistic effects when used in conjunction with cannabinoids. The strong research background supports the benefits of infusing terpenes into cannabis extracts, both in reference to endogenous terpenes found naturally in the plant and those terpenes that have been added back into preparations from other botanical sources. Therefore, almost every manufactured cannabis product contains a percentage of terpenes. However, the clear lack of understanding of the full potential of the terpene profiles, and misuse of these volatile, fragile compounds bring up various misconceptions regarding terpene safety versus their efficacy in creating an elevated user experience.
As terpenes make a significant contribution to the quality of cannabis products, which varies from one consumption method to the other, it is highly important to utilize the most advanced knowledge regarding terpenes in order to maximize their potential while maintaining product safety.
Terpenes are a naturally occurring constituent in resin cannabis extracts. Terpenes have been incorporated into vaporizable formulations in the form of pre-filled cartridges. These terpene formulations are designed to produce specific effects based on the creator’s intentions, or the terpenes are simply reintroduced to mimic the source material since the extracts are often refined to the point that they have little or no taste (i.e., lost their original essence).
Inhalation of these volatile molecules leads to quick absorption of the compounds via the lungs and directly into the bloodstream. The high solubility of monoterpenes in the blood and hydrophobic medium suggests a high respiratory uptake and accumulation in fat tissues ( Falk 1990a). This was confirmed by recent studies of uptake and elimination of a-pinene and 3-carene in humans (Falk 1990b, Falk 1991b). The bioavailability range via inhalation of alpha pinene, camphor and menthol has been studied and reported to be 54-76% (Kohlert 2000) which is relatively high compared to oral bioavailability. Therefore, terpenes via inhalation are an efficient route of administration which allows low dosage of terpenes.
When examining terpene infusion, the points below should be taken into consideration:
By using position papers such as the ANEC Position Paper on E-cigarettes and e-liquids, suggestions regarding terpene limits can be made for cannabis inhalable products. It is important to mention that the final decision on added terpene amounts and determination of product safety is the sole responsibility of the manufacturer based on their assessments, internal procedures, and local regulations.
The following numbers are the suggested infusion percentage of specific terpenes in E-liquid. This suggestion was calculated by using DNEL (Derived No Effect Level) levels in inhalation as well as frequency of puffs a day.
On average, E-liquid users take 500 puffs a day (ANEC position paper), whereas cannabis users take around 9 puffs a day. Therefore, the suggested terpene limit percentage in cannabis inhalables may be higher than E-liquid due to the lower daily usage.
| Substance | Suggested Terpene Limit in E-liquid According to ANEC |
| Linalool | 0.34% |
| Menthol | 7.8% |
| Beta Pinene | 0.7% |
| Alpha-Terpineol | 1.1% |
| Geranyl Acetate | 7.4% |
| Carvone | 0.14% |
Terpene presence in foods of plant origin and in herbs with functional properties has led to further exploration of their bioavailability following oral consumption. The research on terpenes’ bioavailability is commonly done through medicinal plants since they are subjected to digestion within the mouth and stomach before accessing the small intestine. Bioavailability through oral ingestion is affected by mechanical actions, enzymatic actions, and different pH conditions, Transformations into usually more water-soluble and more readily excreted in the urine compounds affect this process as well. These transformations appear mainly in the liver, but also in the gastrointestinal tissue, lungs, kidneys, brain, and blood ( Furtado 2017) Several studies have shown that terpenes consumed orally are absorbed through the gastrointestinal tract and are bioavailable as soon as 0.5 h after intake, reaching their peaks between 2 and 4 h (Furtado 2017, Papada 2018).
Terpenes are commonly used as flavor ingredients and their usage guidelines are clear when used in foods, such as the FEMA values table below. However, when terpenes are used for therapeutic purposes, the suggested dose in food is not fully researched, and the balance between flavor and functionality is still yet to be determined. Basing the dosing according to flavor guidelines is a good place to start. Upper limits should be defined by safety limits such as the DNEL values table found below. It is important to use natural, Food Grade terpenes that are backed up with certificates of analysis and are safe to ingest.
The Flavor and Extract Manufacturers Association of the United States (FEMA) has developed an innovative program utilizing the GRAS concept to evaluate the safety of flavoring substances. The FEMA GRAS program began in 1959 with a survey of the flavor industry to identify flavor ingredients then in use and to provide estimates of the amounts of these substances used to manufacture flavors. This database provides information on all ingredients that have been determined to be “generally recognized as safe” under conditions of intended use as flavor ingredients. According to The FEMA GRAS assessment – aromatic terpenes used as flavor ingredients are ubiquitous throughout the food chain; and therefore, not surprising that they serve as effective flavoring ingredients.
The below table presents the average maximum usage levels of terpenes used as flavors in several product types as provided by FEMA.
| Product | Lime Terpenes
Average Max (ppm) |
Orange Terpenes
Average Max (ppm) |
Grapefruit Terpenes
Average Max (ppm) |
Limonene Average Max (ppm) | Myrcene Average Max (ppm) | Linalool Average Max (ppm) |
| Beverages, Nonalcoholic | 750 | 1,550 | 500 | 31 | 4.4 | 7 |
| Beverages, Alcoholic | 1,000 | 1,000 | 1,000 | NA | NA | 50 |
| Chewing Gum | 20,000 | 20,000 | 20,000 | 2300 | NA | 200 |
| Hard Candy | 5,000 | 5,000 | 5,000 | 49 | 13 | 400 |
| Soft Candy | 5,000 | 5,000 | 5,000 | NA | NA | 10 |
| ppm is an abbreviation for “parts per million” and it also can be expressed as milligrams per liter (mg/L) or in a percentage where 10,000 ppm is 1%. For example, the maximum suggested infusion for orange terpenes in chewing gum is 2%, where the suggested infusion in hard candy is 0.5%. |
*Point of thought*: Since terpenes in the cannabis industry are mostly infused in cannabis-based products, the frequency of usage of such products is lower than regular food products.
Additional safety data can be gathered from reviewing reports from governmental agencies such as European Chemicals Agency (ECHA). The following data about the DNEL (Derived No Effect Level) in the category of General Population was collected from ECHA website. These numbers may be used as a guideline for maximum daily intake via oral administration:
| Substance | DNEL (Derived No Effect Level) | Calculated Daily DNEL for 70kg subject (mg/day) |
| Linalool | 0.2 mg/kg bw/day | 14 |
| Menthol | 4.7 mg/kg bw/day | 329 |
| Beta Pinene | 0.3 mg/kg bw/day | 21 |
| Alpha-Terpineol | no hazard identified | no hazard identified |
| Geranyl Acetate | 8.9 mg/kg bw/day | 623 |
| Carvone | 69.4 µg/kg bw/day | 4,858 |
| For example, a 70 kg person consumes a 1g cookie that is infused with 1% Pineapple Express terpene formulation and Linalool constitutes 10% of the formulation, then there will be overall 10mg of terpene formulation in the cookie, out of the 10mg there is 0.1mg of Linalool which doesn’t exceed the DNEL level. |
Terpenes are lipophilic, small, and nonpolar molecules that are considered to be the largest group of natural fragrances. Terpenes can easily penetrate the skin and enhance transdermal delivery (Aqil 2007) and can potentially aid cannabinoid transdermal delivery. Terpenes are also known to have several dermal benefits including anti-inflammatory (Maurya 2014), wound healing (d’Alessio 2014) and anti-acne (Yuangang 2010). Terpene bioavailability via transdermal delivery ranges between 3-12% depending on the type of terpene, medium and application (Brain 2007, Gilpin 2010). Following topical application, maximum plasma levels of terpenes are reached within 10 minutes (Kohlert 2000).
While some terpenes are known as dermal irritants, the severity of the irritation may depend on their concentration. These should not be used on any inflammatory or allergic skin condition and should always be appropriately diluted. The oxidation of terpenes can increase risk of causing skin reactions because the oxides and peroxides formed are more reactive. This can be seen with (+)-limonene, δ-3-carene and α-pinene and arise due to the formation of oxidation products, some of which are more sensitizing than the parent compound. For this reason, proper storage of terpenes is required to preserve their effectiveness and decrease the risk of adverse reactions.
The table below lists commonly known allergenic terpenes, and for this reason, should be declared on the packaging or in the information leaflet if the concentration of these allergenic fragrances is higher than the permissible concentration of 0.01% in shower gels and baths (rinse-off products) and higher than 0.001% in body oils, massage oils and creams (leave-on products)
| Allergenic Terpenes |
| Citral |
| Citronellol |
| Eugenol |
| Farnesol |
| Geraniol |
| Isoeugenol |
| D-Limonene |
| Linalool |
The International Fragrance Association (IFRA) defines which compounds represent a potential allergy risk and determines their maximum concentration to produce safe cosmetic products. IFRA also issues recommendations for the safe use of fragrance ingredients, which are published in the IFRA Code of Practice and its guidelines. In the below table, there can be found specific infusion recommendations for specific terpenes.
| Substance Name | Restriction Limits in the Finished Product (%) according to IFRA: | |||
| Lip Products | Body Lotion, Cream & Oils | Hand Sanitizer & Hand Cream | Body Wash | |
| Citronellol | 2.20% | 12.00% | 3.20% | 24.00% |
| Citral | 0.11% | 0.60% | 0.15% | 1.20% |
| Farnesol | 0.21% | 1.20% | 0.29% | 2.30% |
| Eugenol | 0.45% | 2.50% | 0.64% | 4.90% |
| Geraniol | 0.85% | 4.70% | 1.20% | 9.20% |
| Alpha Bisabolol | 0.42% | 2.40% | 0.60% | 4.60% |
Testing of terpenes in dermal products can be achieved safely by making a sample product with terpene formulation infused at 0.5% to 5% concentrations in petrolatum. Patch testing can be a useful technique to detect and avoid skin reactions.
Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday on Facebook for NCIA Today Live.
by Ann Allworth, Ph.D. And Cynthia Shelby-lane, M.D.
Members of NCIA’s Scientific Advisory Committee
No part of the following information should be construed as medical advice on the part of NCIA.
As a cannabis industry professional, you’ve probably been asked the question: “Is it true that cannabis cures cancer?” If we know someone who has cancer and benefited from using cannabis, we may say “cannabis aids in the treatment of cancer.” However, medical research has not indicated that cannabis cures cancer. NCIA’s Scientific Advisory Committee is reviewing the scientific data related to cannabis as an additional treatment to traditional care in the management of cancer.
Our three-part blog aims to give you accurate and up to date information about cannabis and cancer by looking at the federal regulations governing cannabis research; reviewing past, current, and future research; a review of how our cells and the endocannabinoid system (ECS) work together to disable cancerous cells; and looking at institutions involved in cannabis studies.
According to the CDC, cancer is the second leading cause of death in the United States and second on the WeedMaps list of most common conditions that qualify you for a medical cannabis card. This is interesting, but really not a surprise as archeological evidence suggests this sacred plant has been used for medicinal purposes for thousands of years. According to the Pen Tsao Ching, written nearly 5,000 years ago, cannabis is recommended for many of the same diseases and conditions that occupy the current composite qualifying lists in the states where cannabis is legal for medical purposes. This history magnifies the significance of the endocannabinoid system, a little-known, but incredibly important system that maintains balance in our bodies at the cellular level.
Cancer is a disease that begins when the cells of our body go completely out of balance. Instead of following the instructions of their genes, cancer cells become destructive to the body they live in. Cancer starts when one or a small group of cells begin growing out of control. It takes many forms, including blood cancers (leukemia, lymphomas), bone cancer, skin cancer, and solid tumors (e.g., stomach, lung, breast, prostate, ovary). Depending on how aggressive the cancer is, it may metastasize, meaning it can spread throughout the body.
If you or someone you know is diagnosed with cancer, always get a second opinion. Be sure when choosing a doctor or Cancer Center that they have solid knowledge of all treatment options for your type of cancer, and understand that diet and lifestyle are critically important for healing.
If you want to use cannabis as a cancer treatment, find a doctor who is knowledgeable about how cannabis can affect the metabolism and effectiveness of chemotherapy and understands the invaluable medicinal benefits. For example, cannabis can alleviate symptoms associated with cancer treatments including pain, nausea, vomiting, weight loss, numbness, tingling, and anxiety. A summary of patterns of cannabis use among cancer patients in the United States can be found here, along with a brief review about patterns of use of medical cannabis among Israeli cancer patients.
Cancer treatment depends largely on the type of cancer, its stage, and what your doctor recommends. The most common treatments are surgery, chemotherapy, and radiation therapy. There are several more advanced treatment options but few insurance companies cover them. Chemotherapy and radiation therapy have significant and unpleasant side effects because healthy cells are often destroyed in the process of killing cancer cells.
Under the existing political and legal landscape, cannabis research has faced multiple hurdles. Currently, little to no research on the medical benefits of cannabis has been done in federally funded institutions due to its federal illegality.
The most serious hurdle is the lack of experimental data proving there is great medicinal value in the plant. Even so, there are numerous physicians, scientists, and other professionals who believe there is no plant on earth with greater medicinal value than cannabis.
Hopefully, more clinical trials will be performed as political and legal requirements are improved and clarified.
The National Cancer Institute hosted a “Cannabis and Cannabinoids and Cancer Research Symposium” in December 2020 to “address current barriers to research and strategies to navigate these hurdles to ensure the feasibility of rigorous studies designed to address gaps in knowledge as well as potential research opportunities in the area of cancer-related cannabis research.”
In essence, we’re missing consistent and reproducible evidence that cannabis can treat cancer and treat the side effects of conventional cancer treatments. Also, we need more doctors educated on cannabis use amongst patients with cancer. Oncologists (cancer doctors) want more information about medical marijuana and cannabis.
Recent surveys reveal 30% of oncologists feel they can advise their patients about cannabis formulations in conjunction with their therapy.
The majority of oncologists as well as the American Cancer Society state, “do not forgo conventional therapy in favor of cannabis products only.” Dr. Donald Abrams, an integrative oncologist, discussed this issue in an article, “Should Oncologists Recommend Cannabis?’
In our next blog post, we will explain how the ECS and cells in our bodies interact with cannabis to disable threats from cancer cells.
Ann Allworth, PhD, is a cell biologist, who for more than 35 years has been educating adults, first in medical schools as an anatomy professor; then in the natural product industry, teaching the immense value of phytonutrient-rich foods and herbs to optimal health and well-being. Upon learning of the endocannabinoid system, she founded Cannabis Education Solutions, a company dedicated to illuminating minds to the vast nature of the endocannabinoid system and its unparalleled role in human health. Ann is now semi-retired and will soon be making a transition to a partnership in a new organization involved in medical cannabis advocacy.
Cynthia Shelby-Lane, MD, is an emergency physician, board-certified in anti-aging and functional medicine, and a certified Marijuana Doctor practicing medicine in Detroit, Michigan. Dr. Shelby-Lane has certified more than 10,000 medical cannabis patients in the State of Michigan. She coaches patients on their use of cannabis in conjunction with their current medications and medical conditions. She has been a member of NCIA and the Scientific Advisory Committee for the past five years, in addition to membership in multiple cannabis associations and organizations. She speaks at conferences/webinars and in the community on the use and benefits of cannabis and the evolving landscape of cannabis research. Dr. Shelby-lane has worked closely with the Last Prisoner Project.
by NCIA’s Cannabis Manufacturing Committee
As the cannabis industry scales and more states legalize for adult-use, the demand for consumable cannabis products increases. To keep up with the demand, manufacturing facilities have to not only scale, but stay ahead of the curve as far as conserving resources, constantly innovating facility design to meet regulations and third-party compliance, e.g., ASTM Cannabis Certification Program and Good Manufacturing Practices (GMP).
Here are a few areas of environmental, product quality, and worker impacts to consider when planning for the future of your manufacturing facility.
As with any manufacturing facility, cannabis manufacturers pull power from shared electrical grids, meaning there is increasing pressure to reduce energy usage as they scale their operations. There are many design strategies for facilities to consider, whether they retrofit or build new, to reduce environmental impacts and position their operation for a sustainable future. One example for the cannabis industry is to recapture and repurpose heat generated from the processing equipment used for manufacturing products. Another example is incorporating climate control technologies to reduce the amount of energy required in extreme environments. More and more energy companies are starting to incentivize cannabis operations to reduce their energy usage and offer guidance on how to do so. Furthermore, regulators are beginning to enforce energy usage requirements for manufacturing facilities.
There are many ways to reduce your facility’s energy usage from efficient lighting to control system maintenance and making sure your odor and emissions control systems are designed to your facility’s specific emission load and mechanical design. Whenever possible, installing cloud-based smart systems with the ability to capture energy usage and system maintenance data will help to improve your facility’s energy efficiency. More areas of impact and best management practice guidance can be found in the NCIA’s Environmental Sustainability Report, released in October 2020.
Manufacturers of Infused Products, or MIPs, are Colorado’s manufacturing facilities, which is one example of a market segment facing regulatory enforcements for air quality control. The large-volume use of solvents for extraction leads regulators to monitor the volatile organic compounds (VOCs) emitted from the use of these solvents, as VOCs are contributors to low-level ozone formation, poor air quality, and public health issues. These solvents are also potential contributors to water contamination if wastewater is not discharged properly from the facility and are consequently on the radar for regulators to tightly monitor. The EPA states “the main concern indoors is the potential for VOCs to adversely impact the health of people that are exposed. While VOCs can also be a health concern outdoors, EPA regulates VOCs outdoors mainly because of their ability to create photochemical smog (or low-level ozone) under certain conditions.”
Luckily, smart technology such as cloud-based platforms using the Industrial Internet of Things (IIoT) for control equipment is increasingly being installed in manufacturing facilities, allowing for the collection and monitoring of facility data, such as emissions. Furthermore, the same technologies that are used for odor mitigation, such as molecular filtration systems (aka carbon scrubbers) also remove VOCs in the facilities’ air space from both the products and the solvents in the facility. The ability to prove this removal to regulators with real-time data will help reduce facilities’ contributions to VOC emissions when regulators require reporting.
In addition to environmental impacts from VOCs, along with other emissions inside of a cannabis manufacturing facility, there is also the issue of indoor air quality and worker health. There is not a lot known about the potential impacts of the processing of cannabis on indoor air quality. What is known is that terpenoids that are emitted in the cultivation and processing of cannabis can contribute, through a series of atmospheric reactions, to the production of known air pollutants. Terpenoids, such as monoterpenes (C10H16) and sesquiterpenes (C15 H24), are highly reactive compounds with atmospheric lifetimes ranging from seconds to hours. These compounds on their own are non-toxic. However, the atmospheric reactions they participate in can result in a range of low volatility products that create aerosols or ozone. These two compounds have clear implications for indoor air quality and thus occupational health.
Uncertainty remains as to the extent of the formation of these pollutants since previous studies have been hampered by a lack of reliable data and are predicated on conditions and practices prevalent in illicit operations. Given that the methods employed in these illegal operations are driven by different needs, the methods currently used in legalized facilities may produce vastly different conditions. This speaks to the urgent need for rigorous new scientific research and evaluation to aid this new industry and relevant regulatory bodies in assessing the current occupational environmental threats of marijuana processing and provide solutions to mitigate those impacts.
The competitive licensing process, regulatory requirements, and lack of knowledge on scaled cannabis production has contributed to facilities that were not designed to properly ensure control of environments, the process flow that minimizes risks of cross-contamination and the adequate storage for the many types of raw materials, work in process, and final products. The result is an inefficient operation that may have been spared significant Capital Expenses (CapEx), but requires significant Operational Expenses (OpEx) to maintain.
The concept of Quality by Design (QbD) was first developed by the quality pioneer Dr. Joseph Juran. It posits that quality should be designed into a product and recognizes that most quality issues are a result of poor initial design. It is supported by long-standing evidence that increased testing does not necessarily improve product quality.
Currently, there is an overarching emphasis on final product testing as the determinant of whether cannabis products are safe for release into the marketplace. This has pitted labs, regulators, and producers against each other, leading to accounts of lab shopping, exclusive contracts, and other nefarious activities. This approach does not serve anyone, and is in stark contrast with the concept of Quality by Design.
Transitioning from our current processes into a proactive Quality by Design approach requires an understanding of Good Manufacturing Practices or GMPs. The first set of GMPs for finished pharmaceuticals were established for enforcement by the United States FDA in the Federal Register in 1963. Since then, GMPs have been created for and adopted globally for nearly all products that can be consumed or applied for human and veterinary use –- categorized under dietary supplements, food, cosmetics, and of course, pharmaceuticals. GMPs represent the minimum sanitary and processing requirements to ensure safe and consistent products. Consider the road map and cross-over between major FDA cGMP (current Good Manufacturing Practices) by industry sector.
GMP regulations are written by the FDA and adopted in the code of federal regulations under the authority given to the FDA by various laws. Almost all of these regulations are performance standards. There are dozens to potentially thousands of substantially different products regulated under each category of GMP standards. It is up to each manufacturer to ensure their unique processes meet the GMP standards. In this way the regulations are flexible yet force all manufacturers to operate with a minimum level of rigor that includes programs that proactively mitigate risks that can lead to product failures and cannot be controlled simply through final product testing. They take a holistic approach to facility operations, starting with the facility culture, design, layout, placement, and selection of equipment, along with ongoing training, supplier qualification, environmental monitoring, and executive commitment.
The current status quo of manufacturing facility design has been built on a quality control approach. Most facility owners believe cannabis will be assigned a cGMP category based on the final product type and have been trying to build compliant facilities under this assumption. Some States have incorporated by reference the federal GMP regulations. However the competitive application process and focus on final product safety via testing has created an environment in which facility owners feel compelled to do as much if not more than the other facilities in order to meet regulator expectations and all focus is on the final product, not the process. In order to win the application, businesses want to look ‘better’ than the other applicants so they tack on as many hazard controls as they can think of. This has given regulators unrealistic expectations as to the best practices required to operate responsibly. Instead of quantifying hazards by collecting data and making informed decisions as to how to best eliminate risks, facilities are simply copying hazard controls they have seen used in other industries with hopes they meet the regulators’ expectations of what a GMP facility looks like. This culture of adding as many hazard controls as possible is a quality control approach focused on the final product, not a Quality by Design approach focused on the process. As a result, envelope in an envelope style facilities in which the manufacturing process is entombed in layers of energy and resource consuming hazard controls are commonplace.
There are other ways of designing compliant facilities; ways that could be more efficient and use less energy and resources. With a Quality by Design approach, these options become explorable. With quantified hazards the process can be approached holistically and significant design questions asked, e.g.. how much energy goes into the outer envelope and how much product quality/safety is gained from that?
In the Southwest deserts, there is consideration given to opening canopy/atrium style extraction spaces that would use less energy while providing the safety of unconstrained open atmosphere ventilation. The important question to ask when considering alternative facility designs is – How much energy/resources goes into containing human contamination versus the likelihood and the actual consequences? Perhaps manufacturing facility workers can wear long sleeves, pants, and hair restraints and that will be sufficient versus wearing a full body gown?
Quantifying the processes and proven hazards of the cannabis manufacturing industry will allow for more informed design and operational choices versus prescriptive solutions that may potentially over-mitigate the risks and possibly introduce additional risks. Moreover, this data would provide validation that the design and operational choices made are in fact the best practices. Instead of scrambling to follow each standard in a quality control approach, Quality by Design considers the whole process, how the 10 principles of GMP standards apply and focuses on finding the most efficient strategies to eliminate risks.
Training is vital for the manufacturers to know the next steps and why they are critical for the future of cannabis extraction and post-processing. Knowledge is required to put valuable technology, tools, and equipment in place with the least operational downtime. Further, it is necessary to accept guidance from verified knowledgeable support, such as from a vetted supplier. Lastly, risk mitigation education is necessary to highlight the reality of long-term savings and sustainability versus the common short-sighted tendency for immediate cost savings, which can result in significant consequences for a business such as TerrAscend Canada’s 2021 recall of infused gummies due to mold contamination.
by NCIA’s State Regulations Committee
Contributing authors Jennifer Gallerani, Erin Fay, and Elise Serbaroli
This is the second in a three-part blog series. The first part can be read here.
Highly regulated industries typically require key information to be readily available to regulators related to the production, movement, and sale of products, which is the case in the cannabis industry. The two main reasons for “seed-to-sale” record keeping are (1) to reduce the diversion of cannabis products to the unregulated market and (2) to protect consumer health with an efficient track and recall product method.
However, cannabis operators are facing many challenges with the state-mandated track-and-trace requirements, causing their business operations to suffer inefficiencies, delays, and sometimes even interruptions, which can ultimately impact consumers and patients. This is the second blog in a series highlighting the issues that cannabis operators and regulators are facing with the current centralized state-mandated track-and-trace model from NCIA’s State Regulations Committee, Technology and Compliance Sub-Committee.
The point of frustration begins with the method in which the track-and-trace requirements are implemented. Most U.S. states with some form of legal cannabis sales (medical and/or adult-use) have selected a single mandated technology platform that all operators must use to track and trace their cannabis seeds, plants, and products. The track-and-trace system selected by the state is independently configured to match the adopted cannabis regulations for that region. Because each state has adopted different cannabis regulations, there are variations in what can and cannot be accomplished within the selected track-and-trace systems, even within the states that have selected the same technology provider.
While the definition of an API may seem complex, at its most basic level, the API is the communication pathway between two systems. API stands for “application programming interface,” which means that it is a software intermediary that allows two systems to “talk” to each other, meaning communicating and sending or receiving information. The communication pathway is intended to be two-way, with third-party business management software being able to retrieve (“GET”) information in the track-and-trace system, as well as send (“PUT”) updated information back into the system.
Let’s turn to an everyday example of an API integration that most consumers would be familiar with: travel booking applications that aggregate flight information. Let’s say you are planning a flight for a summer vacation and you have two options: go directly to each airline website to search for and compare flight options, or use a third-party travel booking application to simultaneously access all flights across all airlines within your search parameters. The ability to search and review all the available flights, across many airlines, is because of the airlines’ and applications’ APIs. When you use the travel booking application, it sends the search parameters to the airlines it is connected with via the API. The airline API then sends available flights, seats, and prices to the travel booking application. In the more sophisticated travel booking applications, you can also purchase the ticket for your flight through the travel booking application, which then also utilizes other APIs for your secure banking/payment information. If all of the APIs are open to send and receive data between the systems, then the transaction is seamless, and all of the required information (identity verification, payment method, etc.) is shared with the airline for your booking.
State regulators intend for the cannabis track-and-trace technology to serve as a way to accurately collect and record information about the flow of goods in the cannabis industry from seed to sale. What is consistent across all states, regardless of the track-and-trace technology selected, is the acknowledgment from regulators that the mandated systems are not intended to serve as an operator’s compliance solution or business management software system. The state-mandated track-and-trace systems are not built in a way that would allow a business operator to manage day-to-day operations and transactions between operators and retailers to consumers.
This acknowledgment of the business management limitations within the track-and-trace systems and the need for interoperability with operators’ own software is often stated outright by regulators and policymakers and/or codified in regulations, such as in California’s Business and Professions Code (Clauses (b) and (c)). Instead of directly managing operations within the track-and-trace systems, cannabis businesses utilize third-party software that has been vetted and certified to connect with and communicate important transaction details to the state systems. Cannabis operators are then relying heavily on third-party software and API integrations for the communication and transmittal of that important information and data.
Now let’s think about how cannabis businesses utilize APIs on a regular basis: for example, point-of-sale (POS) software. Regulations require that the cannabis retailer record all sales in the central, state-mandated track-and-trace system, but the actual on-site transaction is conducted through POS software at checkout. The retailer is therefore encouraged to use POS software that provides the necessary sales tools and controls that make running the business manageable for all employees, while also providing API integration with state-mandated track-and-trace systems.
Without the API integration, a retailer would be forced to manually enter all of the details of all of the POS transactions into the track-and-trace system on a daily basis. Hundreds of daily sales without an API integration means many hours of data entry and countless opportunities for human errors in the track-and-trace system. Opportunities abound for inaccurate reporting in the track-and-trace systems with manual entry. Regulators rely on the track-and-trace system they selected to ensure compliance and consumer safety, although operators are essentially utilizing third-party software to communicate with the track-and-trace system. This is exactly why it is important that the cannabis industry has an open and operating track-and-trace system API at all times. Any time the track-and-trace API malfunctions (limited in communication pathways, delayed in responding to POS requests for information, or just completely down), the cannabis retailer operations are severely impacted, if not altogether halted.
In current situations where the state has mandated a specific software provider, the vendor approves specific POS and other software vendors, but the agreements the vendor has with the state does not allow for direct support to the approved vendors. This causes challenges as a licensee’s POS vendor cannot talk directly to the vendor to get API issues resolved. There is also no direct line of communication to the approved vendors about changes happening in the state-mandated software provider’s system that affects the API. These types of issues can cause the licensee (cannabis operator) to be out of compliance without even knowing it.
Imagine that you are a budtender trained on your employer’s POS software, compliance and track-and-trace requirements. Very rarely will you access the statewide system directly because the POS is fully integrated with the track-and-trace API. You are working during your daily shift processing retail transactions through the POS, but unfortunately, the track-and-trace API is experiencing high call volumes from all of the other retailers in the state, and the API is not responding to your POS requests. You cannot complete the transaction in the POS as usual, so you are forced to complete and track the transaction manually. Later on, you have to spend hours manually entering which unit of product came from which box in the back storeroom, along with all of the customer’s information and time stamps. This takes hours of labor and could lead to mistakes (hey, we’re human!). As we stated, manual records and entry invite human error. Now the inventory listed in your POS software does not match the statewide track-and-trace system. You spend many more hours trying to find and correct this mistake. The circle of conducting sales transactions, recording and tracking it manually, and fixing errors, widens, all putting your cannabis business at risk.
Because cannabis businesses at every point of the supply chain (i.e., cultivation, manufacturing, distribution, and retail) rely on third-party software to manage their operations effectively and efficiently, a hiccup in the track-and-trace API has ramifications for an entire statewide industry at once. While this sounds like a “perfect storm” scenario that only happens every once in a long while, in reality, track-and-trace API performance issues happen on a regular basis.
In California, a group of third-party software integrators reviewed track-and-trace API performance over a period of six months (April 2020 through October 2020) and found that the API was generally up and fully responsive approximately 91 to 98 percent of the time. While an API performance ranking in the high nineties may seem acceptable, the technology industry considers 99.999% uptime as the standard for high availability. An availability of 94 to 98 percent means 2-6% downtime, which is effectively 3 to 8 hours of downtime per week. More recently, the California Metrc API (CCTT-Metrc) experienced consistent outages for approximately 17 consecutive days (February 16, 2021 – March 5, 2021). This extensive outage caused all third-party software integrators serious Metrc-sync issues for packages, transfers, and more. Operators were forced to keep their staff on extensive overtime for more than two weeks in order to manually enter and/or correct information that was entered into the system while sync issues were occurring. As a result, cannabis businesses suffered as operations were interrupted, additional labor was required, and additional costs were incurred that had to be absorbed by the business.
Cannabis is a highly regulated industry and regulators are very concerned about the path from a cannabis seed to final sale to a consumer. The perceived public safety concerns are immense, which is what prompted the implementation of, and requirements, around track-and-trace. Put simply, regulators rely on the track-and-trace system they selected and the system is only as good as its uptime.
Many regulators focus on the track-and-trace server uptime reporting from their technology providers as an indication of how well things are running. If the server is up, then an operator can still access and update the track-and-trace system manually, and that is where most regulators stop in their understanding of the issues. API connectivity and performance is just as critical as track-and-trace server uptime in order to ensure business continuity and accurate data; and accurate data is the entire intent of the state’s mandated technology platforms. It is important that regulators assign key technical leads with the sole responsibility of reviewing track-and-trace API limitations and performance issues for their regulated industry.
Without skilled technical staff on the state’s side, when the track-and-trace API has issues, no one is aware of the problem besides technical teams at third-party software providers. The onus is on the software providers to notify all operators and inform the regulators. This leads to a delayed and fragmented flow of information to operators who are scrambling because their third-party business platforms are shut down. The responsibility of transparent notification around API performance should be on the state-mandated system provider, and no one else. The current lack of transparency on API performance and downtimes also leads to complete blind spots for the regulators, having also not been timely notified that cannabis operations in their state have halted due to API connectivity. The operators and the state should know the health of their track-and-trace systems at all times so that they can attempt to mitigate the amount of damage an outage inflicts on businesses. As with many other online platforms with APIs (i.e., SAP, Twitter, Intercom, etc.), this is typically done through the establishment of an API status page. At this time, there are no current API status pages for key track and trace vendors and, as stated above, performance issues are largely tracked and reported to regulators by the operators. In California, there are currently no performance reports required of Metrc for their system’s API availability (not including general server/equipment uptime).
The performance deficiencies of track-and-trace API’s are burdensome to the entire legal cannabis industry because it can cause third-party inventory management applications to collapse. Then operators are forced to duplicate and/or correct entries directly in the track-and-trace system. This amounts to countless hours lost and perpetuates inaccuracies of the data being entered into the system. Ultimately, the effectiveness of the track-and-trace system diminishes with any amount of downtime. Unfortunately, downtime and interruptions are all too common and the cannabis industry’s needs as a highly regulated industry demand a much higher success rate for its systems.
In our next blog in this series, we will compare the current centralized state-mandated track and trace model with the alternative distributed model.
Interested in joining us in establishing an effective and scalable track and trace framework for regulators and operators in the legal cannabis space? Click here to stay updated on the State Regulations Committee, and the efforts that its Technology and Compliance Subcommittee are taking to improve and advance track and trace nationally. Let’s close the information gap between operators and regulators, and help the entire industry move forward together.
Stay tuned for the next blog post in our multi-part series!
#cannabisindustry #legalcannabis #trackandtrace #wearethecannabisindustry #cannabiscompliance
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday on Facebook for NCIA Today Live.
by Elise Serbaroli of Strimo, interview conducted May 2021
Elise Serbaroli is a member of the NCIA’s State Regulations Committee, “Informing Local Governments” subcommittee, which aims to bridge knowledge gaps between operators and regulators in the cannabis industry. This is done through interviews with current cannabis regulators in various U.S. states, sharing best practices and lessons learned.
Dasheeda Dawson is a cannabis regulator in Oregon and co-founder of the Cannabis Regulators of Color Coalition (CRCC). As cannabis czar for the City of Portland, she is the highest government official overseeing and advising on cannabis regulation for the municipality. Ms. Dawson brings an incredible breadth of experience to the cannabis space. A self-proclaimed “corporate to cannabis crossover”, she is perfectly positioned to navigate and lead the complexity that is the legal cannabis industry. Before becoming a best-selling author (“How to Succeed in the Cannabis Industry”), she held leadership roles at Victoria’s Secret and Target. Her career is built off of a solid educational foundation, including a Princeton degree (Molecular Biology & African-American studies) and an MBA from Rutgers.
For the five years prior to formally getting into the industry, I was what you would call a “closeted cannabis consumer/patient.” I have early signs of MS and my mom was actually the one that insisted I give it a try. At the time, I was working at Target in Minnesota. Cannabis was my saving grace for maintaining productivity and overall capabilities. My mom passed away unexpectedly in 2016 and it jolted me out of the standard corporate trajectory I had been on. I ended up moving to Arizona and became a medical cannabis patient there, jumping into the advocacy side of the industry. Arizona legalized adult-use this past November!
Certainly not! Straight out of the gate, I got a lot of work as a consultant in the industry, using everything that I had done in my corporate career, including business strategy and supply chain management. I had owned everything for my categories at Target and when you’re the business owner, you lead and oversee the entire cross-functional team. I applied that to the cannabis space as quickly as I could, working for a lot of clients and gaining an entrepreneurial education from working with large cannabis enterprise clients, small operators, multi-state operators, Native American tribes, even government. I gained the truest sense of how NOT to do it. In a corporate role, you usually write a report about what you have learned, insights, etc., and then you move forward. My workbook, now in its 3rd edition, was really built off of those lessons learned.
When COVID hit, my book tour was abruptly stopped overnight! At the same time, I was selected to become the Cannabis Program Supervisor for the City of Portland. I was only the third Black woman at the time to be selected to oversee a cannabis regulatory office. I believe that now there are more, but women and people of color are scarce in these positions. Most of the regulators are white men, many of whom come from another regulatory agency, like liquor or law enforcement. In order to assure that cannabis regulation is equity-centered, you need people at the table that will center equity. This last year has been amazing. I have a lot of runway and support to be exactly who I am, which is the Weed Head (TM). I refuse to be anything else and I’m in a bureau that allows me to do that.
On the state level, the Oregon Liquor Control Commission is currently passing legislation to become the Oregon Liquor AND CANNABIS Commission (OLCC), primarily because cannabis is providing substantial revenue for the state. Most of those people are liquor regulators, and they have organized a sub-group, focused only on cannabis. It started off with four people and now there are 50!
As Portland’s cannabis czar, I am a municipality leader, similar to Cat Packer in Los Angeles, and operate independently of the OLCC. Portland represents approximately 40% of the total cannabis revenue for the state and I oversee the entire cannabis program, including regulatory, licensing, compliance, community impact, and equity initiatives for Portland’s medical and adult-use programs.
In the city of Portland, cannabis regulation and oversight was placed in the Office of Community and Civic Life, as opposed to in the Office of Finance and Revenue or the Office of Business Development Services, which is where they license other businesses. This placement is partly due to the idea at the time that the cannabis industry was going to be disruptive to the community. Many individuals were worried about safety for communities. Our office has been trying to decrease the stigma and canna-phobia around the plant, offering education and equity initiatives. We were the first city to have community reinvestment grants tied to our cannabis tax revenue. These grants are administered through the SEED (Social Equity and Educational Development) Initiatives and grant fund.
CRCC and CannRa are two independent organizations, which happened to both launch at the same time. This caused some confusion in the industry. They are not mutually exclusive memberships! In fact, two of our founding members are also founding members of CannRa. The regulators roundtable was the predecessor of CannRa and that association aggregates insights and learnings state by state. The Oregon Liquor Control Commission (state-level) is a member of CannRa.
CRCC centers equity and support of legalization, while also aggregating insights and learnings state by state. If you are a regulator of color, at the state or local level, it makes sense to join the Cannabis Regulators of Color Coalition. We know that legalization is a requirement to start to undo the harm done through the war on drugs.
Centering equity involves re-thinking how we regulate this industry. One challenge is getting people to realize that this is a regulatory agency, like any other government regulatory agency. The Department of Motor Vehicles (DMV), a regulatory agency, gives out licenses and adjusts to assure that no group is precluded from access (adjusting for wheelchairs, visual and hearing impairments, etc.). Yet, in cannabis, we are regulating the industry without dealing with the inequities in the industry. Some of these inequities are directly linked to the historical prohibition of cannabis and the war on drugs, which we define as the racially-biased enforcement of cannabis prohibition.
Supporting equity also includes gender inequities, economic inequities, and disability inequities, to mention a few, that will positively impact everyone in the industry, including and especially patients themselves. Exclusionary practices would not be tolerated if it was an agency like the DMV. With cannabis, we are over-regulating the industry and excluding many people from participating, which is to the detriment of the market and the community. CRCC is focused on equity-centered regulation for the cannabis industry.
Well, there’s a misconception about the size of companies in this industry. As an industry, we have to be careful about supporting legislation that only benefits large corporations. More than 75% of cannabis businesses have annual revenue of $2 million or less. Compared to small businesses in other industries, for example, in agriculture ($6 million or less) and retail ($14 million or less), cannabis businesses are very small, so everyone needs to push for legislation to benefit these small businesses in whatever regulatory framework is set up on a federal level. This is one step in leading the industry towards a more equitable path.
One aspect of inequity is how cannabis businesses of different sizes are treated. On average, very small cannabis companies have an after-tax rate of 70%, so when you’re going to the table for the regulatory framework, push back on the tax structure, push back on mechanisms that are inherently disadvantageous to small businesses. Surprisingly or not, most Black, Indigenous, or Latinx businesses are also small businesses, so you are positively impacting racial equity.
If you, as a cannabis business, think you’re a big fish, trust me, Big Tobacco, Big Alcohol, Big Pharma, Big CPG (“consumer packaged goods”) – Target has $70 billion in annual revenue – are coming, so a big fish in this cannabis pond is setting itself up to be eaten by much bigger fish and bigger sharks. If we leave back doors open for the larger cannabis businesses, we’re leaving that same back door open for a Walmart or an Amazon. Large corporations are already investigating and supporting cannabis. They plan years in advance for large takeovers and once it starts, it’s a stampede of well-financed, organized strategic efforts.
At a state level, the industry and those who want to support the industry, need to be careful to not overtax the small businesses and to vote to provide a framework of support mechanisms for small cannabis businesses.
Some of the early legalization efforts required vertical integration. Because of the way the state and local jurisdictions are regulating and taxing, forcing vertical integration is not a small-business-friendly approach to licensing. This was the case in some earlier states, but we’re also seeing newer states like Georgia taking this approach.
By breaking up the licensing into different parts of the supply chain (like California), you open up possibilities for smaller businesses to operate. If the state is giving out micro-business licenses, there should also be a track to grow into a larger size so that there is no ceiling on those businesses’ growth prospects. For example, in New Jersey, advocates fought to amend provisions that failed to create a way to sell out of a micro-license for a growth event.
Everybody has a different opinion depending on which economist you talk to about how you tax up and down the supply chain. I’d like to see states have tiered tax by production weight. Once you start doing it by the percentage of THC, you’re negatively impacting businesses and patients. It’s meant to be a deterrent and is an example of the government intending to overregulate in an area that it doesn’t fully understand. But usually, those penalties wind up impacting the smaller craft businesses. Too many people are assuming that consumption in the adult-use market is just for recreational purposes, but there are plenty of small niche operators aimed at a specific medical community and they are producing small batches, for example, with high THC, but their clientele may be negatively impacted, simply as a function of the way the tax law was written.
It’s certainly a long and hard process when dealing with big issues and change. For operators, NCIA is a good place to start. There is also the M4MM and the MCBA. Folks should really try to connect with the local- and state-relevant organizations. Building and operating in coalitions can be very powerful. On a national level, be sure that any group you are part of is actually going to D.C. and is having conversations with the legislators, because at the end of the day, whether it’s cannabis or any other business, you need to be involved with influencing the policies that impact your industry. Everything starts with the law and civic engagement.
Elise Serbaroli leads Global Business Development at Strimo, where she provides cannabis businesses with software solutions around inventory management, cost accounting, QA, and compliance. She’s back in the USA after over a decade of experience in Spain, Germany, Switzerland and Ecuador.
Understanding the importance of efficiency, scalability, and profitability, Elise created solutions to financial and legal processes for the R&D team at CPW, a joint venture of two of the world’s largest food companies, Nestlé & General Mills. As a systems coordinator, she gained a deep appreciation for food safety, GMPs and regulatory compliance. Her supply chain software experience builds off of her Business Development role at Tradeshift, the world’s largest network for digital B2B payments.
The cannabis industry is one of the fastest-growing industries in the U.S., maturing at more than 25% annually. As the cannabis industry continues to emerge and flourish from state to state, there remains uncertainty as to the immediate future of federal legislation to remove cannabis from the schedule of controlled substances.
The cannabis industry will continue to experience the convergence between state and federal government regulations until a uniform regulatory and compliance framework can be established. Fundamental services such as banking, financing, and insurance, along with IRS 280E tax regulations, will continue to burden state-regulated cannabis businesses. And, with the industry still in its relative infancy, emerging and shifting regulatory backdrops create risks to these businesses.
Cannabis businesses can manage these risks in a variety of ways. Perhaps the foremost among them are the procurement of appropriate insurance coverage. While just a few years ago, insurance coverage options for cannabis operators were incredibly limited, today there are dozens of insurance carriers serving the industry .
Cannabis operators have to be proactive in developing a risk management program that conforms to local and state compliance and security requirements. As the industry continues to evolve, we will need to be more diligent in controlling and managing risk.
To assist with this process, NCIA’s Risk Management & Insurance Committee (RMIC) is pleased to provide the first in a series of Insurance Manuals that will help guide you through the various coverages and definitions used in the cannabis insurance industry. This first edition of the RMIC Insurance Manual will outline the basic and entry level knowledge base for the cannabis insurance industry, and explore the various insurable risks attributed to the cannabis supply chain. Future additions will dive deeper into more specific insurance topics.
NCIA’s Risk Management & Insurance Committee is a multidisciplinary group of risk management professionals convened to draw on expertise and experiences of professionals dedicated to the cannabis community. Primary contributors for the first installment of the Insurance Manual include:
Eric Rahn, S2s Insurance Specialist
Shay Gilmore, Shay Gilmore Law
Adam Patt, iCann Insure, LLC
Mathew Grimes, Grimes Law Group LLC
Sandra Sheils, Safety Equation
Jason Horst, Horst Legal Counsel
Summer Jenkins, Cannasure Insurance
Doug Esposito, Owen Dunn
Christopher Payne, CLIC Risk Retention Group, Inc
Cimone Casson, Cimone Casson, LLC
Jim Gerencser, Nationwide Auto Services
Merril Gilbert, TraceTrust
by Jesse Parenti, Programs Director of Nine Points Strategies, Stephanie Bozzuto of Cannabis Connect Insurance Services, Matthew Johnson, Vice President of QuadScore Risk Services, and Helkin Berg, CEO of Strimo
Members of NCIA’s Risk Management and Insurance Committee
If your company has an “auto exposure” such as delivery, distribution, or employees simply running company errands, your company needs a robust risk management program.
Managing a fleet is essential to ensure drivers are given the necessary tools to be safe and responsible while on the open road. Implementing a vehicle maintenance program is also a necessary component of fleet management.
Proper automotive risk management starts with driver guidelines on how you hire your drivers and what is required to qualify to be employed by your organization. Best practices on age, driving experience, motor vehicle reports, and training make for a great start. Even though your employees may think they are only delivering or transporting cannabis, they are commercial drivers, and they need to take that duty very seriously. Morbid as it may sound, death is not the worst thing that can happen…
You and your employees can do everything right, but accidents can and will still happen. That is why culture, safety, and accountability are essential when working in the transportation and delivery space. If you don’t take this seriously, your company will pay the price. To avoid these costly mistakes, work with your legal team, insurance providers, and software vendors to ensure ideal policies, training requirements, and data storage.
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Nine Point Strategies is a national risk management firm specializing in all forms of commercial auto for the cannabis industry. We can help you with anything you need concerning hiring, training and maintaining all your required driver compliance you need to be a safe and profitable organization. Contact us to discuss how we can better protect your cannabis auto exposures.
QuadScore Insurance Services is the nation’s leading insurance provider for marijuana businesses. QuadScore offers comprehensive property & casualty solutions as well as a full suite of risk management services for large cannabis companies around the United States.
The Strimo™ team is comprised of industry veterans. We are both practitioners in cannabis and long-time experts in software. We have supported companies in rapid growth and deeply understand that your software needs to grow with you. Strimo is the leading enterprise cannabis SaaS platform.
Cannabis Connect Insurance is a specialty division of Bozzuto Insurance, an insurance firm serving businesses since 1978 and part of Acrisure, LLC the 4th largest insurance brokerage in the United States. We specialize in connecting cannabis business owners with custom built insurance programs.Cannabis Connect was founded on basic principles of honesty, integrity, and trust. We are actively involved in the cannabis industry on both a local and state level. We are involved in multiple cannabis associations and continue to remain informed on policy forms and legislative changes to ensure our clients best interests come first.
This month, NCIA’s editorial department is reviving the monthly Member Spotlight series by highlighting our Social Equity Scholarship Recipients as part of our Diversity, Equity, and Inclusion Program. Participants are gaining first-hand access to regulators in key markets to get insight on the industry, tips for raising capital, and advice on how to access and utilize data to ensure success in their businesses, along with all the other benefits available to NCIA members.
I have been using cannabis for 20 years, and got into the industry in 2011, before METRC was implemented, and before adult-use legalization. I was working in cultivation, budtending, purchasing, and managing. At the time, I was seeing firsthand the products dispensaries were providing, and began developing a vision of what the San Jose community needed versus what was out there. Stepping back from my position at a successful dispensary, I made a choice to go all in on my visions and build a delivery service and lifestyle brand in San Jose. I created iFlyWellness for the people.
iFlyWellness delivery service will connect the legendary Humboldt County to the Bay Area. Offering a unique flower menu from Humboldt County to Indoor exotic flower, iFlyWellness will cater to the everyday smoker/user, specifically the people of San Jose. There are over 1.1 million people in San Jose, with a high percentage of cannabis users. Connecting the “farm to blunt” is the method behind iFlyWellness. Patients are currently buying jars at ninety dollars an eighth. The everyday consumer has struggles affording such medicine. The logic is to figure out a way for patients to consume top-tier flower at an affordable price.
I know quite a few cannabis growers and will go straight to the source. This is the “farm to blunt” experience. The indoor cultivation side and the Humboldt side both make a supply chain connection from the Emerald triangle all the way to the Bay Area. This is really good medicine for the people.
It’s about getting on the ground. Talking directly to the people in the community that you want to make a social impact with. I am working with Daniel Montero and Javier Armas of BALCA (Bay Area Latino Cannabis Alliance), and I am connected directly with Humboldt farmers and legacy growers.
Our vision is for the patient to feel a direct connection with the flower they are smoking. Big corporations in this industry fail to recognize that this industry has been here for over 100 years. They are looking at the industry as a money grab. You can make it as a small business owner, but it comes with many more challenges. Forming alliances among us and going directly to the people helps us face these challenges.
Capital is big and can dominate the industry. I am working right now with Javier Armas of BALCA to acquire a building and license in Oakland, CA. With the minimal amount of licenses the city of San Jose has to offer, if you don’t have deep pockets, it can be challenging applying for the same license that a multi-million dollar corporation is applying for.
I joined NCIA through the DEI Scholarship Program to learn and network, as the cannabis industry is constantly changing and I need to stay up to date. When I was working for dispensaries in San Jose, I was networking a lot but representing someone else’s company, not representing my vision and dreams of connecting and catering to the everyday cannabis consumers. It’s time now to build my vision and with the strength of great associations like NCIA and BALCA, I’m confident it will happen.
by Kimley Svendsen, Drive Talent on behalf of the Human Resources Committee
My dream as a child was to become a fashion designer. But there were many voices telling me this was not realistic, if I wanted to drive a nice car and live in a nice house. Step in line! While some people are able to ignore these messages and walk to the beat of their own drum come what may, I wanted to please those around me and continue the family tradition of academic achievement. The eventual result was being admitted to one of my dream schools as a graduate student.
Enter the Impostor Syndrome. According to the Oxford Dictionary, this is “the persistent inability to believe that one’s success is deserved or has been legitimately achieved as a result of one’s own efforts or skills.” I believe Impostor Syndrome can result from following someone else’s path versus your own, and/or achieving a position in life you believe you don’t deserve. By my mid-20’s, I had achieved an Olympic level of comparing myself to others, and feeling as if I were “playing the part” of a graduate student. I had the sneaking suspicion that an administrator in tweed would show up in class and say a mistake had been made (this didn’t happen by the way).
Re-enter Impostor Syndrome after 20+ years of twists and turns which bring me to today as the Founder of Drive Talent, a cannabis recruitment services business, for the past 5+ years. The tweed-clad administrator has been replaced with my peers and those I admire within cannabis. I don’t want to let them down, let my team down, or let myself down. Most days I can fight off the doubts that pop up, but the whisper is still there – “you don’t deserve this, someone else is faster/smarter/better than you, and you should hang it up my friend.”
Running a business is hard. Running a business within cannabis is REALLY hard! I imagine many of you out there entered the cannabis ecosystem for a variety of reasons – you worked within the space pre-state legalization, personally witnessed the plant’s benefits, desired an influence on unjust laws, wanted to be a part of a trailblazing industry, and/or saw the opportunity to profit. Most of these are true for me, albeit not quite the dream of designing for the runway. Still worth it!
Whether you are a founder, member of senior leadership or at the beginning of your career within cannabis, my best piece of advice to combat the Impostor Syndrome is to GET A MENTOR! Mentor #1 for me was my Grandfather who advocated for women to have access to the highest degree of education. Mentor #2 was a fellow graduate student who gave me rides to and from school in her beat-up Saab, and challenged me to have a creative vision for myself. Mentor #3 is my mentor today who encourages me to dream big. I have learned from him that I am not having a unique experience with Impostor Syndrome, I am not alone as a business owner, and my work can align with my dream of positively influencing the cannabis ecosystem. This is like medicine and reinforces my confidence and belief in myself on a daily basis.
There are formal and informal mentors, and those whose words of encouragement have stuck. Who are these people for you, and in what way have you served this role for someone else? Make this a priority and don’t be afraid to ask. The Mentor/Mentee relationship is beneficial for both parties, and can serve as a conduit to identify/reinforce your passion, capability, and confident following of your dreams.
Kimley Svendsen is the founder and CEO of Drive Talent, a leading recruiting company that connects their clients with diverse talent within cannabis and other industries, and is a member of NCIA’s Human Resources Committee.
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 August 15, we are accepting applications for the 2021-2022 term!
All NCIA annual members in good standing are invited to apply for an NCIA committee seat for the 2021-2022 committee term.
NCIA Committees enable current NCIA members to engage their vast and varied areas of expertise and passion to:
by Trevor Morones, Darwin Mallard, Liz Geisleman
NCIA’s Cannabis Manufacturing Committee
Read on for insight and guidance for the vitally important topic of preventing, eliminating, or reducing microbial growth in cannabis edibles and packaging.
It all starts with the HACCP (Hazard Analysis Critical Control Point) Principles. Gather your team to share the five preliminary steps of HACCP and develop a plan (figure 1). This management system was launched by Pillsbury along with NASA and the U.S. Army for food safety in space exploration in the 1960’s. Quality, safety and efficacy is obtainable and sustainable with the HACCP discipline.
The objective is to PREVENT packaging from being a failure point and inhibit microbial growth in edible products. We know moisture (water activity), temperature, pH, and oxygen levels are primary microbial growth drivers.
HACCP is an asset, not an expense. Food is medicine for some, and cannabis products are medicine for many. Resin cannabis products (RCP) must be safe, consistent, and reliable products continuously. To generate those results, learn the HACCP mindset. Practice being an advocate with HACCP discipline displaying the actions written in the programs. It’s a system for cannabis safety that encourages operations to have Emergency and Business Continuity plans before disruptive events occur, e.g., natural disasters, pandemics, etc.
Creating such a plan is important because exposure to microbes may result in allergic symptoms such as sneezing, coughing, wheezing, nasal congestion, and watery or itchy eyes. Consumers using cannabis products as medicine, such as cancer patients on chemotherapy, are even more susceptible to harm caused by microbes. Thus, it is critical to ensure your products do not have microbial growth.
This is not only a health concern, but the financial impacts can be detrimental. How much did the February 2021 Canadian infused gummy recall cost? More than 330,000 packages of THC infused gummies, worth approximately 8.2 million Canadian dollars, were lost. Overhead costs go above and beyond. The global cannabis industry must learn from industry events such as this.
Effective HACCP management system ensures control. Empower your team through education and training on discipline of HACCP. Take the infused gummy recall from February 2021 as an example where cross-contamination, improper employee hygiene, and package permeability were failure points that led to loss of control. Lack of control during transport of the initially sterile packaging also contributes to contamination. Personal clothing worn by team members or visitors are also known sources of pathogenic fungus.
Best practice is to address preventive controls and reducing/mitigating risks. For example, consider installing two-way humidistatic control devices in packaging, such as desiccant packs, to maintain water activity (Aw) in acceptable ranges to mitigate microbial growth. Reducing moisture prevents powdery mildew caused by Golovinomyces Cichoracearum (figure 2).
A great resource to mitigate risks can be found in the ASTM D37; Standard Guide for Cleaning and Disinfection at a Cannabis Cultivation Center; Aw ASTM Standards for Cannabis Flower: D8196 – Standard Practice for Determining Water Activity in Cannabis Flower; and D8197 – Standard Specification for Maintaining Acceptable Water Activity Range for Dry Cannabis Flower.
Sanitary environments are critical from seed to sale.
Use the principles of HACCP to guide and maintain the integrity of your work. Each principle builds on the next to create a solid foundation to build and operate a safe and consistent management system. Establish storage conditions in your control and transport; determine the temperature and humidity for each product type (gummies do not tolerate heat, and certain ingredients are sensitive to humidity which could change the potency). This includes evaluating the stability of each of the ingredients when in final product form (how long do they remain potent).
Depending on the ingredients used, i.e., the formulation, gummies can take on or reject water. Most typically let out the water, then that water has nowhere to go (trapped in the packaging), and the product molds. This is why commercially produced gummies are coated in wax, literally to trap the water inside the product. Inadequate gummy formulations lead to water permeability; change in cannabinoid content is the least of the concerns.
General chapter 659 on Packaging and Storage requirements published by the USP (United States Pharmacopeia and the National Formulary, USP–NF) is a great resource. Though not all cannabis products may be for the medical market, using the standards of excellence from the USP is the best way to minimize product failure and help ensure consumer safety. Packaging 659 states that packaging materials must not interact physically or chemically with a packaged article in a manner that causes its safety, identity, strength, quality, or purity to fail to conform to established requirements.
Empower your cross-functional team to apply and implement HACCP through your organization. In doing so, you will have the discipline and tools to mitigate risks and prevent costly downtime. Your consumers benefit by having safer, consistent, and quality products. Finally, collect the data and share the story. We all need to drive improvement and produce safe consistent products for our consumers. HACCP systems are a tried-and-true tool to achieve this.
Please note that prerequisite programs such as current Good Manufacturing Practices (cGMPs) are an essential foundation for the development and implementation of successful HACCP plans. This article is intended to level up your current manufacturing processes and mitigate your exposure to potential recall or unsafe products in the marketplace.
For resources on how to establish an effective HACCP system and other quality management related tools, consider adopting the best practices defined in ASTM D8250 – Standard Practice for Applying a Hazard Analysis Critical Control Points (HACCP) System for Cannabis Consumable Products and/or following the guidelines provided in ASTM D8222 – Standard Guide for Establishing a Quality Management System (QMS) for Consumer Use Cannabis/Hemp Products and ASTM D8229 Standard Guide for Corrective Action and Preventive Action (CAPA) for the Cannabis Industry.
by NCIA’s State Regulations Committee
Contributing authors Jennifer Gallerani, Tim Gunther, Elise Serbaroli, and Erin Fay
The COVID-19 pandemic and subsequent recession powerfully demonstrated that the cannabis industry is providing essential medicine and products to countless Americans, as well as creating jobs and tax revenue. Retail sales of medical and adult-use cannabis in the United States were on pace to eclipse $15 billion by the end of 2020, and if you include ancillary products and services, the industry is estimated to reach $68.4 billion in 2021. The U.S. cannabis industry is experiencing rapid job growth, boasting an estimated 300,000 full-time jobs in 2020. Those numbers are expected to almost double by 2024. Over the next four years, the industry is expected to add nearly 250,000 full-time equivalent positions. By comparison, roughly 271,000 people currently hold beverage manufacturing jobs. These numbers demonstrate with sureness that the U.S. cannabis industry is on a high-growth trajectory, which makes it imperative that the market operate under a practical regulatory framework that benefits both regulators and operators.
Most states that have approved some form of legal cannabis sales (medical and/or adult-use) have also selected a single, mandated technology platform that all operators must use to track and trace their cannabis seeds, plants, and end products. Some iterations of the current track and trace model — which is primarily centralized approach — sets businesses, employees, and regulators up to fail. Of course, it also further limits the competitiveness of the regulated market with the unregulated market, and the ability for policymakers to be confident that cannabis consumers in their states are obtaining taxed, tested, and regulated products.
Local governments are missing out on tax revenue, and businesses (both large and small) are forced to spend unnecessary resources on a system that is fundamentally flawed. The centralized model, contracting with one specific software provider, and mandating operators to use that software provider in order to stay compliant, is wreaking havoc on the entire U.S. cannabis industry and is not sustainable for a federally-legal and global supply chain.
As a team, the National Cannabis Industry Association’s State Regulations Committee’s Technology and Compliance Subcommittee has spoken to regulators, operators, and international technology providers in the interest of presenting a practical track and trace solution to benefit the industry as a whole. This is the first blog in a series that will highlight the issues that cannabis operators and regulators are facing because of the current centralized state-mandated track and trace model. We propose that the U.S. cannabis industry operate under a more practical framework that has a higher probability of success for regulators and cannabis businesses through slight changes and improvements based on proven best practices.
Track and trace systems serialize assets to identify where assets are (track) and to identify where assets have been (trace). Track and trace is not something new. It is the globally acknowledged standard for product movement and reconciliation in both the Pharmaceuticals and Consumer Packaged Goods (CPG) industries. A secure track and trace system combines material security and information security elements to confirm assets are legitimately produced and sourced, following a pre-defined and auditable path.
As the regulated cannabis markets started to take shape and mature in 2012, one of the driving factors that shaped the need for a track and trace system was the 2013 U.S. Department of Justice Cole Memorandum (Cole Memo). The Cole Memo indicated for the first time that the federal government would only intervene in states that failed to prevent criminal involvement in the market, sales to youths, and illegal diversion to other states.
The first four states to legalize adult-use cannabis were Colorado, Oregon, Washington, and Alaska. All four of these states instituted a market-based licensing system to regulate the commercial activity of cannabis sales. The intentions of the newly instituted policies were two-fold: protect consumer health and minimize diversion, both of which align with the core principles of the Cole Memo. To meet these intentions, the states instituted procedures for inventory control and tracking documentation using a state-mandated centralized model, in an effort to create a transparent and controlled system of oversight within the cannabis industry.
As the industry has developed over the years, most states that have approved some form of legal cannabis sales have selected a single mandated technology platform that all operators must use to track and trace their cannabis seeds, plants, and cannabis products. As shown in Figure 1, the majority of legalized states have chosen METRC as their exclusive contractor of track and trace services.
Figure 1: https://mjbizdaily.com/metrc-sees-sale-tracking-opportunities-in-new-cannabis-markets/
The legal cannabis market has changed significantly since 1996 and it is important for the industry to re-evaluate the intention and implementation of track and trace. Regulatory bodies contracting with one track and trace technology provider and mandating operators to use that specific provider in order to stay compliant is problematic for many reasons. Time has shown that the current centralized model is fiscally irresponsible and ultimately counterproductive, with significant negative externalities, including ethical concerns such as anti-trust issues. Most recently, an Oklahoma cannabis operator (seeking class-action status) initiated litigation against the state’s Medical Marijuana Authority (OMMA), alleging that the state exceeded its authority by requiring licensees to pay for a state-mandated track and trace program, and that the state’s contract with METRC creates an unlawful monopoly, among other claims.
To provide an analogy, let’s think about how businesses are required to report taxes. The IRS sets out certain rules and every business must report their income and assets according to that framework. Technology providers (such as TurboTax, Tax Slayer, H&R Block, etc.) have built scalable products to support businesses in reporting their taxes. The IRS does not mandate that businesses use one single specified software in order to report their taxes. Doing so would kill competition, introduce a monopoly, and eliminate any incentive for the technology providers to improve their product. By the IRS allowing free competition over the realm of tax preparation and processing software, the public benefits from the technology companies being incentivized to update and improve their software features and benefits.
The centralized model is crippling the entire industry as system failures are occurring on a more frequent basis, and its after-effects are causing a more detrimental and wide-ranging impact as the industry grows at an exponential rate. Most recently, METRC’s integration functionality (how third-party business operations software communicates to the state’s system) was down for more than fourteen days in California, causing significant problems in the nation’s largest cannabis market. One software provider and its tag-producing partners are benefitting, while setting industry regulators and operators up to fail. One software provider cannot meet the current or future needs of regulators and operators, especially not on a national level. Meanwhile, there are many excellent software providers that specialize in track and trace. The free market should determine the most efficient and user-friendly approach to allow businesses to stay compliant and accurately report to the appropriate regulatory authorities.
By leveraging the knowledge and experience the industry has gained over the last 20 years, we can incorporate best practices from other industries’ and other markets’ track and trace systems, and set regulators and operators up for success.
Join us as we dive deeper into the issues surrounding compliance and track and trace in the cannabis industry. Our multi-part blog series provides an in-depth look into the technical shortcomings of the current centralized approach and provides a roadmap for implementing a distributed model approach. Some of the disadvantages we will cover in the subsequent posts include:
Impact of System Failure: The current centralized model provides a single point of failure: if the system goes down, all licensee operations must stop operating entirely. In some cases, operators may manually record activity during a system failure, and then manually enter the activity when the system resumes. This introduces a high risk of human error. No backup system or alternative means of recording through the use of technology exists since the state relies on only one system.
Challenges with Scalability: The history of performance with centralized track and trace systems demonstrates that there are significant challenges in scalability because of multiple system failures and shutdowns. The system would benefit from a more advanced track and trace capability, specifically with its API (Application Programming Interface). Many times it is not the technology of the licensee system, but the technology design of the state-mandated systems.
Fiscal and Environmental Impacts: Licensees are required to purchase plant and product tags from the single state-mandated vendor, which creates a fixed price system that is typically not in favor of a licensee. It is also creating a sustainability issue in the industry, as the plant and product tags are single-use. More operators are speaking up about the waste it is generating in our cannabis industry.
Interested in joining us in establishing an effective and scalable track and trace framework for regulators and operators in the legal cannabis space? Click here to stay updated on the State Regulations Committee, and the efforts that it’s Technology and Compliance Subcommittee are taking to improve and advance track and trace nationally. Let’s close the informational gap between operators and regulators, and help the entire industry move forward together.
Stay tuned for the next two blog posts in our multi-part series!
#cannabisindustry #legalcannabis #trackandtrace #wearethecannabisindustry #cannabiscompliance
by NCIA’s Cannabis Manufacturing CommitteeDespite prohibition, the cannabis industry is not behind the curve of sustainability progress. While other industries were inventing modern Cloud-based quality control/distribution systems and making stuff out of plastic, cannabis producers were maximizing yields per watt and creating stronger concentrates in attempts to get the most out of their value streams while staying under the radar. Now all industries are racing towards a more sustainable future and the cannabis industry has the opportunity to show that it can be a good example, even a leader in sustainability. Regardless if it is in preparation for competition or regulation, now is the time to start building more sustainable, energy-efficient, and overall lower footprint businesses.
As the manufacturing branch of the cannabis industry paves its way into the future, the processes involved need to be made environmentally sustainable and best practices need to be shared and standardized to ensure product safety and industry longevity. Collecting and sharing data from manufacturing facilities is the ideal way to achieve these sector goals.
Environmental sustainability is a multi-discipline effort. Experts in engineering, emissions, air quality, worker health and legal matters should be relied on for educating and guiding businesses into a more sustainable future.
While cultivation is one of the main focuses of the cannabis sustainability effort, manufacturing procedures are also prime targets for sustainable advancements. Due to the nature of the organic chemical processes used to produce consumables, some of the materials and practices could have a negative impact on both worker and environmental health if not addressed and handled properly. As a best management practice, regulated cannabis manufacturers typically operate closed-loop systems, which greatly reduce certain dangers, but this can require other more energy-intensive systems. As these relatively new processing techniques are being pioneered, we need more data to understand how they can be made more efficient and sustainable. For various reasons — such as intellectual property concerns — advancements in sustainable practices are often not shared and therefore not visible to potentially become a standard process that ensures product and consumer safety.
The scientific improvements for manufacturing cannabis into consumer products in high demand have outpaced regulations. From process design and equipment to processing material sourcing, the manufacturing branch of the cannabis industry has much to offer the future of sustainable cannabis products. In many jurisdictions today, regulators have hastily opted for vertical, prescriptive regulations which have left many manufacturing operations without the leeway required to innovate more sustainable process strategies. Even more businesses with the legal leeway simply do not want to push the envelope in today’s regulatory climate. More forward-thinking, regulation-savvy equipment manufacturers have begun focusing on lower energy-use in their newer products as a selling point. The industry as a whole could be making progress much faster if regulators focused on performance standards for manufacturing facilities.
Strategies inspired by building and process heat recovery offer dozens of basic possibilities when it comes to implementation in a cannabis manufacturing facility. Using the energy released during solvent condensation for solvent evaporation is a prime example. Connecting liquid-cooled equipment with the building’s central plant system is another. These are big ideas that could be implemented in different ways with different efficiencies. Intelligent use of insulation, exhaust recirculation, odor mitigation, ventilation minimization, demand-control ventilation for providing makeup air, etc. could also make significant differences. Data collected from actual operating facilities experimenting with different strategies will be the best guide going forward in determining what the best energy saving strategies are.
In an effort to prevent unnecessary Volatile Organic Compounds (VOC) emissions it is important to maintain proper solvent transfer and storage, perform extraction equipment inspections, and ensure a maintained inventory and handling of solvents on site are a part of a facility’s standard operating procedures. Best practice for extraction and post-processing dictates the use of butane, propane, CO2, ethanol, isopropanol, acetone, heptane, and pentane as solvents to encourage safe consumer products.
Carbon filtration is also the best management practice for controlling cannabis terpenes (VOCs) and odor emissions. It is important to install properly engineered molecular filtration systems (aka carbon scrubbers) that are sized appropriately for a facility’s ‘emission load’ and don’t exceed the maximum cfm rating for air circulation through the filter. To prevent VOC and odor breakthrough, it is imperative to inspect and conduct regular maintenance of HVAC systems and carbon filters. A standardized method for measuring the lifespan of carbon is by using a Butane Life Test, which equips manufacturers with the data to know how to manage their carbon replacement schedule effectively, minimizing unnecessary carbon waste. Additionally, processors can conduct air sampling to detect and measure VOC and odor levels in their facilities and the data can be used to validate the impact of control technologies further protecting worker and environmental health.
Proper VOC and cannabis odor control from manufacturing processes helps reduce community odor complaints and improve neighborhood relations. It also improves public and environmental health by reducing local ozone concentrations. Proper emissions control when running cannabis manufacturing processes and handling chemicals helps to shift the industry at large toward sustainable and environmentally conscious business practices.
Cannabis manufacturers are seeing big changes on the horizon. Increased legalization brings increased competition and inevitable M&A activity. Whether a business aspires to compete on the world stage or to be acquired in one of the coming green waves, there are actions that can be taken today to help cannabis manufacturers maximize their value to both customers and potential acquirers.
One of the most important assets a company can have — both to compete effectively and to attract purchasers — is intellectual property. Intellectual property, or IP for short, is the term for an intangible asset that has been afforded certain legal protections to solidify the asset into a commodity that can be bought, sold, and licensed. IP can have a negative connotation in some circles, mostly resulting from misconceptions in the law but also rooted in IP abuses by unscrupulous “trolls.” In reality, IP is an important tool to help companies protect their hard work and, when properly deployed, intellectual property can increase transparency into cannabis manufacturing processes and open new avenues of scientific advancement.
Intellectual property broadly covers a number of different types of rights. Patents protect new inventions like processes, machines, compositions of matter, ornamental designs, and plant genetics. Patents can grant relatively broad rights to these ideas, but with substantial additional costs and scrutiny.
Similarly, copyright can protect creative works, like writings, drawings, and sculptures. But many do not recognize that copyright can also protect compilations of data that have been creatively selected or arranged. Data and algorithm copyrights are relatively nascent, but they promise to play a large role in the intellectual property landscape of the future cannabis industry.
Another sect of intellectual property, trademarks, is all about protecting a brand: the names, logos, slogans, and overall look that tells customers that a good or service is from a particular company. Federal trademark registration is unavailable for federally illegal goods and services, but that does not mean that federal trademark protection is unavailable to cannabis brands. Many companies are using the zone-of-expansion doctrine baked into federal trademark law to set up registrations on related legal products (smoking/vaping devices, clothing, and even CBD edibles) that can be expanded to cover THC products when federally legal.
The nuances and requirements of these property rights — along with other IP rights like trade secrets and trade dress — are highly fact-specific, so involve a good IP attorney to guide your strategy from the start.
Now is the time to start building more sustainable, energy-efficient, and overall lower carbon footprint businesses and the emerging legal cannabis industry is well-positioned to be the leader. If manufacturers are incentivized to safely share processing data directly or through emerging data collection and tracking platforms, the industry will make major advancements towards more environmentally sustainable practices. Environmental impact areas, such as air quality, energy, water, soil waste, and community all need to be considered by the manufacturing arm of the cannabis industry. Regulators can help push the industry forward by reducing negative impacts in these areas though focusing on performance standards for manufacturing facilities and their processes. Lastly, understanding that IP, including trademarks, can in fact increase transparency into cannabis manufacturing processes and open new avenues of scientific advancement will help position operators for M&A activity coupled with proper legal representation. These factors work together to protect the environment and communities, as well as future-proof manufacturing operations setting up the rest of the cannabis industry for longevity and federal legalization.
By Deborah Johnson, MCA Accounting Solutions & James Whatmore, MAB Investments
NCIA’s Banking & Financial Services Committee
Part 3 of a 3-part series
In our first two blogs we took you from early concept, legal formation and early efforts through the early angel rounds. You have production in place with some equipment financing, getting you to early-stage revenues. Hopefully a smart angel investor is available to you for questions or direction. In the final part of this blog on funding your business, we will present some formal round structures, how you can best prepare for those finance rounds, and some ways to bring your friends along for the ride.
Everything you have done to date is going to be considered in a Series A round. What you have done and who you have surrounded yourself with will be looked at by potential investors. You have put in the work and built strong social capital. You have a diverse and strong team with expertise in your sector. The next level of investor will want to see how you tie it all together. These factors will be considered in light of your Total Addressable Market (TAM), valuation, use of funds, jurisdiction, and many other metrics. At this level a solid accounting team can produce Canna-GAAP (Generally Accepted Accounting Principles) financials to build a credible financial model. Having this current as you move through funding will give investors some level of comfort. As we have discussed, preparation is particularly important.
Alain Bankier, an active Angel investor, points out, “If you have brought on the right group of Angel investors, they are a prime source of excellent feedback, as you prepare your deck, your financials, and your pitch for the next round. Angel investors have seen 100’s if not 1000’s of company pitches and they can help you craft the most compelling presentation and they are your natural allies, as they have already invested and are motivated for you and the company to succeed!”
Long-term planning will help you define the total amount of funding you will need for certain milestones of development. A series of capital raises has some advantages over a single funding event. Each milestone you pass signals a value add to the company, and each subsequent round will be less dilutive. And the investor may see the project as de-risked, increasing their commitment through the follow-on rounds.
For each round there are several types of funding instruments: SAFE agreements, convertible debt, and preferred equity to name a few. Simple Agreement for Future Equity (SAFE) may be an option early in the funding plan. A SAFE note is a convertible security that allows the investor to buy shares at a future priced round. It has no maturity date and no interest rate. As such they are not debt and therefore do not accrue interest. But it also requires C-Corp status as the note goes on the cap table just like stock options. A convertible note is a common way to kick off a formal funding cycle and is dependent on future rounds as a trigger event. As a note it has a term of maturity and an interest rate; often there will be a cap on conversion value and a discount on valuation below that threshold. Once triggered, both of these may convert into shares of the company (or units of an LLC); what those shares are is described in the offering documents, usually summarized in a term sheet outline. These shares can have any number of rights or preferences attached to them. The fact that these are triggered by further rounds makes them a good part of an overall funding strategy.
The alphabet soup of rounds starts after the convertible note. The first equity A round will essentially sell some of the company to your investor; there will be a price, your valuation, and terms. As long as you are executing on the vision you have communicated to investors, each additional round will reflect your progress with a higher valuation and less attractive rights. The business put forth by you and your PowerPoint pals from the first blog in the series was worth a couple thousand dollars. Now you can apply many metrics on your sales, balance sheet, or milestone for a multimillion-dollar value.
Convertible debt and equity rounds are part of your long-term funding plan; so are new target investors. As you hit milestones and rise in valuation, the company becomes attractive to new investor classes. Certain funds have a minimum milestone they need to see before considering an investment. Pre-revenue, post-revenue, cash flow positive, market share, and total sales all have relevant hurdles for certain groups. Seed and angel investors may participate in a convertible note getting you to revenues, while an investment fund will only lead the A round with those revenues in place. If all is right, they will participate in B and C rounds as well; with larger and more sophisticated investors looking at the milestones you are currently achieving. The investors who value your milestone wins will take notice and start to circle.
As the investment in your company grows, the pool of investors shrinks. Although this may change in the near future, the traditional investment landscape is limited in cannabis; fortunately, there are several new and non-traditional sources of funding. Crowdfunding is a trend that has not escaped cannabis; however, the stigma has limited the platforms those in the industry have access to. Crowdfunding via Reg CF is the use of small amounts of capital from a large number of individuals. It is legal to be part of a cannabis business by investing up to $2,000 in exchange for ownership of a portion of the company. Through this method, a company can raise up to $5 million. Sites such as Fundanna, CannaFundr, Start Engine, Kickstarter, Crunchbase, Mazakali, Useed, Indiegogo, and SeedInvest provide platforms to market opportunities. There are various hurdles encountered here as well. Platforms can have banking issues as well. For example, 420fundme was shut down after their bank decided not to work with them. Also, some require the business to be in a U.S. state where cannabis is legal, or they only promote those businesses that impress them. So be sure to understand the sites’ rules and stay on top of regulations.
The REG A(+) is crowdfunding’s big sibling. This is an investment vehicle that is exempt from registration with the SEC that allows the general public and not just accredited investors to join the round up to $50 million in a 12-month period. GAGE, a Michigan vertical, successfully funded their recent expansion with a Reg-A. If you are talking to investment banking firms, this could be a good late-stage option to secure a large round of capital.
As you prepare to fundraise and have a clear understanding of where your business is in its lifecycle, you can put together the best capital raise for your project. Cannabis is a relatively new industry, and its murky legality means that roadblocks are likely. Be prepared to exercise all of your financing options. When raising funds for equity, all of the investors are looking for a liquidity event. So, whether your company eventually goes public or there is a merger or acquisition, they are not looking to invest in a so-called “lifestyle” company. As legality is resolved, many companies that are now on the sidelines looking in will be looking for opportunities to acquire and appear “established”. This is your window of opportunity to build a great brand, gain traction and be ready for when that happens.
In a year that has tested everyone’s resilience, our industry found new legitimacy as cannabis was deemed “essential” by lawmakers and regulators during the pandemic. As we slowly emerge from a shut down, the members of the Marketing & Advertising Committee (MAC) all agreed that 4/20 celebrations have brought a new meaning in 2021.
We celebrate that we have survived, and grieve for those who have lost so much.
We celebrate that cannabis legalization has moved forward – and rapidly – in several more states.
We celebrate that our industry continues to adapt so well, as it has throughout the last few decades.
Part of that celebration was reflected in clever and innovative 4/20 promotions. Of course, they were executed under CDC and county health guidelines because we know compliance, don’t we? Several NCIA member retailers, brands, and companies rose to the occasion, and we as marketers wanted to recognize that creativity and ingenuity. So, this year NCIA’s MAC committee asked for nominations for the best 420 Marketing Campaigns…and our members did not fail to deliver!
On Tuesday, May 5th, 2021 at 3:00PM EDT, NCIA’S MAC committee will recognize and showcase several of those marketing successes in our #IndustryEssentials Best Of 4/20 Marketing Campaigns celebration webinar. And, in a twist, we’re letting YOU decide who is the best of the best!
We’ve collected dozens of incredible entries and have boiled it down to EIGHT finalists to showcase during the broadcast. Congratulations to our finalists!
NCIA members will vote live to determine the top three. You won’t want to miss this interactive program featuring the best and brightest minds in the marketing space sharing each other’s most successful strategies surrounding the biggest retail day (and year) for our industry.
Here is a quick overview of the finalists (in no particular order):
Rebelle’s 4/20 Series began with a campaign to petition Governor Cuomo in New York to legalize cannabis. CGP ran a series of billboards around New York in high traffic areas and another at the entrance of the Lincoln tunnel. Finally, CGP conspicuously placed a billboard in Albany with the hopes of gaining attention from the Governor. This campaign was done with the help of Verdes, a design agency who has worked with the likes of Nike and Target. The messaging was loud and clear: “Legalize Loud, Legalize New York, Legalize Now”, “New York Wants All The Smoke”, “I (Pot Leaf) NY”. Their team banded together with the creation of personal Instagram accounts that coordinated messages daily, highlighting the inequities and harm done by the prior war on drugs. Billboards were highlighted on news channels in Brooklyn and Albany.
The loud billboards must have worked. Once legalization passed in New York, messaging shifted gears. The next round of ads debuted April 20th on the NASDAQ Billboard in Times Square. This time, it’s a message of celebration: “Happy 420”, “Let’s Get Loud”, “Let’s Rebelle”. After their 420 moment, Rebelle celebrated NY legalization 4/20 it’s first ever Rebelle 420 party at an outdoor restaurant patio location, Ten Hope in Brooklyn.
“4/20 Social” | Golden State Greens
Golden State Greens was back at it again with it’s first in-person event since Covid labeled “4/20 Social.” Just like an ice cream social, attendees were able to mingle and munch safely distanced outside while listening to their favorite local and international artists. A list of top vendors displayed and gave away products to the lucky guests meeting friends in various hospitality areas. A series of social media posts leading up to the event encouraged followers to share with their friends by rewarding customers with in-store incentives. A group of media teams documented, captured, streamed and produced a recap of the event. A series of well known influencers hosted on stage and in front of the camera to guide guests/digital viewers through the experience. Massive discounts were given storewide and a percentage of all the proceeds for the day were donated to the charity our social following determined through their voice in voting.
“The Dabvent Calendar” | Higher Celebrations/Birthjays
In 2020, the year when 4/20 was an entire month, Higher Celebrations, an ancillary cannabis gifting company introduced the Dabvent Calendar, an epic month-long countdown to the most recognized cannabis holiday of the year. The Dabvent Calendar gathered 20 brands and 20 Instagram cannabis influencers to partake in a collaborative giveaway that honors every day in April as we do in December while counting down the days until Christmas. A nod to the classic Advent Calendar, the Dabvent Calendar contained daily elements of surprise and delight revealed by popular cannabis influencers such as @Chronicalewinsky (46K Followers) and @Bettykrockerbakes (21K Followers) leading up to the 20th. The physical calendars were gifted to influencers, including small products or swag items representing each major 420 Daily Giveaway that was announced by Higher Celebrations every day at 4:20 MST.
“#4ward20 Celebrating” | WANA Brands
Edibles manufacturer WANA planned a series of activities that incorporate fun, pandemic-safe celebrations as well as opportunities to support the social justice causes brought to the forefront during last summer’s consciousness-raising demonstrations. #4ward20 reflects on the challenges of the past year while embracing the optimism on the horizon. In addition to consumer activities, #4ward20 honored dispensary partners by sharing special gifts with the essential workers who have kept the industry going throughout the pandemic.
Leading up to April 20, Wana Brands released a daily #4ward20 Challenge, providing ideas on ways individuals can celebrate each and every day. Ideas ranged from the silly (“get dressed up, even if it is just to feel good at home”) to the socially minded (“go on a distanced walk with a friend”) to the philanthropic (“donate money or time to a social equity organization”). Consumers were encouraged to share their activities by posting photos and videos to social media sites with the hashtag #4ward20 and tagging Wana Brands for a chance to win limited-edition #4ward20 swag.
“Glass House Fest” | Glass House Farms
This year on 4/20, the brand hosted Glass House Fest, a socially distanced hybrid digital-and-in-person music festival held at a secret location in LA featuring critically acclaimed rapper and producer, Flying Lotus along with supporting performers including Duckwrth and comedian Mike E Winfield.
The event included a fully immersive, virtual cannabis greenhouse experience, featuring interactive elements and a discount easter egg redeemable in the store’s merch shop. Glass House Fest was hosted live and in accordance with CDC guidelines, as well as virtually through the event livestream. Live music and cannabis experiences have historically gone hand in hand. Glass House Fest was developed to bring back a sense of normalcy to their customers’ everyday lives, and the hybrid event could serve as a blueprint for future industry activations.
“Year of Essential” | Green Thumb Industries
Green Thumb Industries and its Rise dispensaries celebrated with their “Year of Essential” 4/20 campaign full of in-store activations, promotions, giveaways and paid media.
Each location was highly decorated with posters, 180 feet of pennant strings, flags, welcome mats, floor decals to help maintain social distancing and large wrapped bongs. There were price promotions in every market the entire month of April.
Traditionally, paper is the first wedding anniversary gift. To celebrate the first “year of essential”, Rise locations in Illinois, Maryland, Nevada and Florida gifted customers with rolling paper and copies of Lizzie Post’s “Higher Etiquette” and Lizzie hosted a GTI/Rise livestream event on April 19 at 4:20pm. Lizzie Post is the great-great granddaughter of etiquette legend Emily Post who 100 years ago wrote the book “Modern Manners”. The discussion centered on respect for cannabis culture to help usher in a new 4/20, and Lizzie shared tips on “canna-courtesy.” There were prizes and incentives for staff as well. The “Year of Essential” is a positive reminder that self-care and well-being are of utmost importance.
“Waking + Baking: Cannabis Cooking Class and Dance Party” | PLUS Products
To kick off the week of 4/20, PLUS hosted “Waking + Baking: Cannabis Cooking Class and Dance Party,” a free virtual cannabis cooking class and dance party featuring a one-on-one interview with PLUS Chief Science Officer, Ari Mackler. The live cannabis brunch party was hosted and produced by Michelle Lhooq (@MichelleLhooq), a popular and respected LA-based cannabis journalist and author.
Viewers started off their lazy Sunday morning with a cooking class led by PLUS’ Research and Design team learning how to bake hash-infused scones and marmalades using PLUS’ Hash Gummies as the main ingredient. Registration for the event came with a discount code on PLUS gummies to entice viewers to purchase Hash Gummies for use in the cooking class.
Considering 4/20 landed on a Tuesday, PLUS chose a Sunday to offer those who may not be able to celebrate cannabis mid-week the chance to honor its history on the quietest day of the week. It brought together the community for some lighthearted fun after a year of pandemic-related stress.
“Nugg Club’s Virtual Curated Experience with 4/20 Home Edition Box” | Nugg Club
As a fun way to celebrate 4/20 at home, Nugg Club engaged cannabis enthusiasts through a virtual and immersive experience that was accessed via nuggclub.com/420 (which started live on 4/15). Along with their 4/20 Home Edition Nugg Club box, members were invited to the site to enjoy curated selections of cannabis inspired by music, art, and deals from local restaurants to curb the munchies.
Nugg Club is a subscription cannabis club and helps anyone explore the world of cannabis at a discount. The company surprises consumers each month with a box of full-sized, premium cannabis products that are carefully curated and personalized for each customer and delivered at a wholesale price. The 4/20 box was a specialized tailored edition of that box.
All of the entries were terrific, and it was challenging to narrow the field to only eight (8). Your input and votes will determine the “People’s Choice” winners of the best of 4/20.
We are a resilient industry, and about to emerge into a new post-pandemic environment.
Please join us to celebrate epic marketing in a year of uncertainty and change. Register now and join us on May 5th!
We would also like to extend a big THANK YOU to everyone who submitted entries, and offer Honorable Mentions to all of these companies for their efforts!
by NCIA Staff and members of NCIA’s Diversity, Equity, and Inclusion Committee
As the nation continues to struggle with the ongoing deaths of people of color at the hands of law enforcement, including recently those of 20-year-old Daunte Wright and 13-year-old Adam Toledo, we are relieved to see that George Floyd – whose killing by police officer Derek Chauvin last year sparked a global reckoning on institutional racism and the urgent need for criminal justice reform – will receive some form of justice with his murderer being held accountable in a court of law.
The fact that the Chauvin defense largely hinged on the presence of drugs in George Floyd’s system at the time of his murder should come as no surprise. Since its inception, prohibition and the accompanying dehumanization of people who use drugs have been used to justify unfairly robbing people of color of life, liberty, and property, with devastating generational effects. This bloody cycle must end.
While many of these deaths are not directly related to cannabis, they take place in the house of horrors that prohibition helped build, and it is our duty to dismantle the walls nearest us through substantive policy reform. Despite yesterday’s guilty verdict in the Chauvin trial, examples of justice like this are still far too rare and do little to ease the pain of those most affected. We acknowledge that there is still much work to do to right the wrongs of the past and ensure they do not continue into the future.
NCIA reaffirms its commitment to helping repair the racially and economically disparate harms caused by prohibition by removing criminal penalties for cannabis-related behavior and promoting a diverse and inclusive cannabis industry. We stand in solidarity with all those fighting against police violence and systemic racism.
by Fred Whittlesey, Founder and President, Cannabis Compensation Consultants
Member, NCIA Human Resources Committee
with assistance from
Kara Bradford, Co-Founder & CEO, Viridian Staffing
Chair Emeritus, NCIA Human Resources Committee
All high growth companies face the same challenge: Hiring high-quality people at a feverish pace, while dealing with all of the issues that come with that including recruiting, onboarding, training, and of course, compensation.
The cannabis sector (more than just an “industry”) has another layer of challenges rarely seen when finding and hiring the employees needed for the explosive growth underway:
The cannabis product lifecycle, like any consumable product, spans agriculture, processing, packaging, branding, distribution, and direct sales. A fully vertically-integrated company might employ, within a single corporate entity, agricultural workers, lab workers and extraction specialists, manufacturing workers, distribution teams, and dispensary employees. That is a challenging environment for compensation plan design.
For example, agricultural workers, including agricultural managers, virtually never receive equity compensation as an element of their pay package. Biochemists, particularly when coming from a biopharma company, expect significant equity compensation. Retail dispensary managers, no equity. VP of sales, equity.
Now, imagine those jobs and people are spread across multiple entities. Maybe the overall corporate structure is a C Corp over some LLCs. Or, like in Arizona, a nonprofit corporation with a Management Services Agreement with a C Corp which directs money through an LLC.
Or in British Columbia which, like the U.S., prohibits alcohol and cannabis sales in the same stores or from the same company, but has owners that operate in both businesses. And the stores are next door to each other. Budtender vs. sommelier? Employees talk.
But perhaps the most compelling reason to consider a broad spectrum of compensation alternatives is unique to cannabis: The non-deductibility of compensation expenses that cannot be characterized as cost of goods sold — Tax Code Section 280E. More than in any other industry, using forms of compensation that avoid incurring a nondeductible compensation expense can have a direct and immediate impact on business financial performance.
Complex cannabis companies have to mold their pay programs to fit this broad array of entities, lines of business, and types of jobs, under an unfavorable tax environment.
There are four, and really only four, types of compensation for employees (and independent contractors, and members of the Board of Directors, and consultants). Each of the four has many forms, but there are four types of things a company can do to pay — and hopefully continue to pay — an employee. This is a useful framework for thinking about compensation.
Wage, salary, performance incentives or bonuses, commission, 401(k) contribution (yes, a cannabis company can have a 401(k)), profit sharing, retention bonuses. Every employee will receive one or more of these forms cash payments. All require cash changing hands from the company to or on behalf of the employee.
The most common cash compensation arrangement is a base salary plus bonus as a percentage of salary that is typically dependent upon the performance of the individual, team, and/or company. Many companies have a 10% of base salary target. In the cases of budtenders and delivery drivers, tips (essentially a customer-paid commission) are common as compensation as well. Companies in some locations, such as California, continue to pay trimmers at piece rates (pay by unit production).
I casually call this category “stuff” — a company gives people stuff as part of their compensation. Healthcare coverage, life insurance, job training, a laptop and a phone in the traditional model. But this category includes much more than traditional “employee benefits” — from free food to use of the company vacation home to sabbaticals, these meet employees’ needs while keeping them focused on, and sometimes physically at, work. Sometimes this free stuff is not taxable income to the employee (healthcare coverage, free food at work) and sometimes it is taxable (free gym membership). Be informed in your creativity here. Local regulations in many jurisdictions are dictating benefits coverage above the federally-mandated level.
This is by far the most complex form of compensation, and more so for cannabis companies. Whether it’s stock options, restricted stock, restricted stock units, or member interests (in an LLC) — the question is which entity is granting the compensation, and whether they are allowed to grant it to an employee in a different entity. We are beginning to see companies that compensate employees with cryptocurrency which is viewed as a “security” by both the IRS and SEC. Given the increasing social justice emphasis in the cannabis sector, equity compensation is the form of pay that truly levels the playing field across all income levels.
The choice of equity compensation will be driven by the form of organization and ownership philosophy.
Before COVID-19, companies in all industries were increasingly emphasizing this form of compensation. In the 1980’s, there was no “casual dress” and “working from home” was unheard of. An employee reported to the workplace at the assigned time, and there was no “flextime.” Over the past few years, companies were already experimenting with paid parental leave, unlimited vacation time, and employee-choice work location. Now, for many companies and many jobs, WFH is the model. Not for growers and not for budtenders (yet). But time and place can be highly valuable cash-free (sort of) equity-free forms of compensation.
Hiring is only half the battle. Retention of employees in the cannabis sector is as challenging as hiring. Companies need to be creative with the same four tools to retain employees. But you can’t wait until they give notice of resignation, because then it’s too late.
Your employee retention compensation program starts at the employee’s date of hire, because it is the same program.
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Cannabis Compensation Consultants (TM) , owned by Compensation Venture Group SPC (CVG) helps companies design and implement compensation programs that balance diverse stakeholder needs, under its Conscious Compensation© model. CVG specializes in working with startups and early stage companies in this complex regulatory environment.
by Deborah Johnson, MCA Accounting Solutions & James Whatmore, MAB Investments
NCIA’s Banking & Financial Services Committee
Part 2 of a 3-part series
In our first part of this blog, we discussed the very beginnings of a company; an idea, gathering a team around you, self-funding, opening a bank account and forming an LLC or incorporating. Now you are ready to take a big step, bring on some more people, purchase more equipment and explore partnerships. You have a path with real milestones. This is the time to plan a funding strategy.
If you are not plant-touching, or you are directly ancillary, you might be able to secure a bank loan or an SBA loan. As the SAFE Banking Act is being considered in Congress (at time of writing) the reality of greater access to cannabis banking services may be getting brighter. However, traditional banking sources may still be an issue. These challenges have blended into some ancillary activities. There are a few other debt instruments including venture debt, an accounts receivable (AR) line, or an asset loan. Some of these instruments can be originated with specialty firms or other investment sources.
“While debt has traditionally been scarce in our industry, the relatively recent arrival of lenders has fortunately changed the construct of cannabis company balance sheets. Industry normalization, low rates, relatively high equity capital costs and supply-demand imbalances have attracted capital pools into credit and provided companies with the ability to further normalize their blended cost of capital,” said Sumit Mehta, founder and CEO of Mazakali and chairperson of NCIA’s Banking & Financial Services Committee.
Recently Harborside Inc. (CSE:HBOR) (OTCQX:HBORF) in California landed a historic $12 million revolving line of credit with a bank, marking the first time a cannabis touching company has secured this kind of access. Granted it is secured, but it is a commercial loan from a traditional lender. If you have real estate involved many investors will do a sale leaseback on the property to provide some liquidity. Equipment may also secure a loan; this is often a choice to outfit a capital-intensive production. When evaluating your debt options consider what is happening at this point in your life cycle. For an early-stage company, a revolver may not be the right fit; however, having the right equipment getting you to revenues might be worth investigating.
There are also grants available. Especially with COVID-19, many local jurisdictions are providing small business grants, or you might find one aligned with your demographic or target market niche. Many startups find an accelerator or incubator to help both fund and scale the company. In cannabis, the accelerators have historically been targeted to the ancillary market. Several exist, including Canopy Boulder, Momentum, Gateway, Hood Incubator, The Initiative, Cannabiziac, and even traditional market accelerators such as Y Combinator are addressing the needs of the cannabis market. Accelerators will invest in the companies they are providing guidance to and are generally hosted over a short period of time like 3-4 months, whereas an incubator provides resources, networks, and services over an 18+ month time and might charge a fee to participate. This early mentoring is a great resource for social and personal capital as well. If you have participated in an accelerator or incubator environment you should be exposed to early-stage investors; if you haven’t been exposed to them, this is the time for a solid PowerPoint deck and to polish your presentation.
Next on the list are angel investors. Angels are those individual investors that provide early-stage funding for a startup usually in exchange for convertible debt or ownership equity but are not locked into a funding structure. Banks make loans, angels can do as they please. They can be sophisticated or unsophisticated as they technically just need to qualify as an accredited investor. Most are drawn to investing in something familiar, so either they have a direct professional background in your industry or have felt the pain point you are addressing personally. Some want to roll up their sleeves and be engaged in helping your company grow, others just want to diversify their investment portfolio and take a more passive role. They can invest in the idea and direction of the company and a good angel will understand the timing of the investment. This means that early-stage investors like angels and funds should understand that this is a long-term investment that might take 5-8 years to see liquidity.
The greatest challenge to an entrepreneur is where to find them. Sometimes it’s as easy as looking around your network. With some work you can attract attention to your business idea by either presenting/speaking or pitching at a conference. Over the years, many opportunities to do so have developed. NCIA hosts CannaVest and Cannabis Business Summit, one of the longest running is The Arcview Group, Benzinga, IC3 by IMN, CWCBExpo and many cut their teeth at MJ Biz. Angels are individuals, but often belong to a group of angels to assist with deal sourcing and due diligence. With the normalization of cannabis, you can find many groups via the Angel Capital Association. We’d suggest reviewing market transactions and see who is announcing that they secured funds and with whom. You can find this information through keywords and press releases, consolidating sites such as New Cannabis Ventures or Viridian Capital Advisors, or even Pitchbook. This is the hard part of fundraising: connecting with the right investors.
You can also gain exposure to investors by sharing your expertise. Whether it’s articles on LinkedIn or podcasts and panels, exposing your knowledge of your niche is critical to gaining their confidence in your ability to execute. The conferences above may host your presentation as well furthering your investor engagement. One word of caution, there is a new platform being used by millions – even though it’s still in beta – called Clubhouse. There have been many people that are running pitch rooms on that platform and they are running up against the SEC and rules for fundraising. We encourage an extra dose of caution when pitching where you don’t understand who your audience is and if they adhere to qualifying factors. Many times, the later investors (Series B or C rounds) have to do a lot of work to clean up the cap table from earlier investment rounds. That can be a hurdle that an investor might walk away from. So, the more you can do to assure you are running a clean and efficient fundraising round, the better.
Given that we are in the cannabis industry, it is of particular importance to be an advocate. Access to this plant is still restricted for many, people are still going to jail or are still in jail, and businesses have a disadvantage to all other industries given the repercussions of federal illegality. So being an advocate, aligning and engaging with advocates like the National Cannabis Industry Association (NCIA), Marijuana Policy Project (MPP), Students for Sensible Drug Policy (SSDP) and others, can also expose you to investors who recognize your understanding that there is much work to be done to assure fair access. Expertise, Advocacy, and Engagement will build your social capital. The early rounds can hinge on these factors. While you will need a proforma, other financials and a solid plan, an angel is investing in you as much as in your current project. With enough social capital, your relationship with the early angel investor will survive major setbacks.
Once past these early rounds, your focus will turn to more formal investment groups and businesses in private equity, venture capital and then the public market. Currently those companies touching the plant are able to be hosted on the OTC (over-the-counter) market or the CSE (Canadian Stock Exchange) with a growing number of ancillary companies listing on the traditional exchanges. Here there will be a deep dive into the numbers and execution, pre/post revenues with a clear runway to real revenue. This requires an adaptive corporate culture with some loss of control expected.
In our final piece of the series, we will review crowdfunding, tips on angel and fund investors, and types of funding.
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