Committee Blog: Fundraising Basics in the Cannabis Industry – Part 2
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.
Committee Blog: Why Insurance Companies Should Cover Medical Cannabis Now
by Carol Welch & Jim Gerencser NCIA’s Risk Management & Insurance Committee
Cannabis was legalized for medical use in California in 1996. Since then, 47 states, the District of Columbia, and three territories (Puerto Rico, Guam, and CNMI) have legalized some form of cannabis, leaving only three states with no legal use. Thirty-six states have an effective medical use law in place. The main reason insurance companies haven’t had to consider providing coverage for patients is because federally cannabis is still listed as a Schedule 1 drug. Even though the likelihood of cannabis being legalized nationally seems bound to happen within the next few years, insurance companies should start planning to incorporate new cannabis policies into their plans now.
Here are five great reasons to cover medical cannabis:
SAVES MONEY
Science has proven that cannabis helps over 60% of epilepsy patients decrease the frequency and severity of seizures. Cannabis products should cost less than traditional epilepsy medications, especially when taking into account the added prescriptions often needed to combat the side effects of currently available prescription drugs.
Compared to the traditional cost of cancer treatment, patients opting to skip conventional treatments for cannabis could save their insurance companies thousands in initial cancer treatment, and potentially will have less recurrence and costly maintenance prescriptions.
Insurance companies are paying billions in healthcare costs to include doctor visits, lab tests, hospital admissions and prescriptions for conditions that cannabis has shown to improve dramatically. Chronic pain, depression and PTSD are all treatable with cannabis, and cannabis is much less dangerous than the opioids that are commonly prescribed in chronic pain cases.
SAVES LIVES
There are no known deaths reported from cannabis consumption alone. According to the CDC, there were 70,630 deaths due to drug overdose in 2019. In addition, there are estimates of over 1.5 million hospitalizations per year from adverse drug reactions that don’t cause death but are still costly to many people. Insurance companies can avoid some of the negative PR, potential litigation and upset related to deaths caused by pharmaceuticals, while providing patients with a solution that works for many conditions.
Research is increasingly showing that certain strains and compounds within the cannabis plant can have a significant positive effect on several conditions. For instance, breast cancer responds very well to FECO (full extract cannabis oil), with lab tests showing how cannabis causes cancer cell death. More study is still needed, and that is currently being conducted in Israel where there are fewer legal barriers to research.
REDUCES MEDICARE SPENDING
Data from all prescriptions filled by Medicare Part D enrollees from 2010-2013 showed a significant decrease in prescriptions being filled for symptoms for which cannabis could serve as an alternative treatment. Overall reduction in Medicare spending in states that implemented medical marijuana laws were estimated to be $165.2 million per year (2013). This one difference alone could mean billions in savings for insurance companies in the coming years.
IMPROVES SATISFACTION RATINGS
Let’s face it, insurance is a competitive business. Several large health insurers cover most of the country and will likely be the last to jump on board to cover medical cannabis. But for the smaller, regional or state-specific insurers out there, adding cannabis to the coverage lineup in legal states can provide a competitive advantage with employers and group plans.
Medical cannabis is listed as an eligible expense in many Canadian companies’ HSAs and islisted as an eligible medical expense by the Canada Revenue Agency. Since our northern neighbors are starting to cover it, hopefully that will encourage U.S. insurers to do the same.
IT’S THE RIGHT THING TO DO
Cancer is the #2 leading cause of death in the United States and can cost several thousand dollars for treatment. Using cannabis as a complementary treatment to traditional cancer therapies could decrease the cost of treating cancer to the patient, to the insurance companies and in the end to all of the people across the United States that contribute to Medicare and Medicaid.
If you would like to take action, contact your legislators to push for the federal legalization of cannabis or sign this petition calling on all U.S. insurers to step up and cover medical marijuana for their patients. Here’s a link to the Care2 petition: Health Insurance Companies Should Cover Medical Marijuana Now.
Committee Blog: Fundraising Basics in the Cannabis Industry
So, you discovered a pain point in the cannabis industry while brushing your teeth. You go on to craft a business plan and begin to execute on a minimal viable product to prove your hypothesis and test the market interest in your product. To date, you have funded this by volunteering your time and convincing some other contacts to contribute their time as well. You still have your full-time job, but it’s time to create a formal entity and grow this thing. How are you going to fund this? Well, there are some options and some of them have greater odds depending on your demographic. Are you considered ‘touching the plant” or not? Are you male or female? Are you a person of color or not? Do you have a track record of building businesses and raising funds?
Unfortunately, the data shows that it’s much more difficult to raise funds from angel and VC investors if you are a female or person of color. The following statistic is actually based on the traditional market, so level up the challenge if you are in cannabis:
“Venture dollars invested in sole female founders in 2020 represented 2.4 percent of overall venture funding… the percentage of U.S. venture dollars that went to sole female founders in 2020 dropped dramatically by stage. At the seed stage, 7 percent of VC dollars went to startups with only female founders. At the early stage, that figure was 4 percent, and at the late stage, a mere 1 percent.” – Crunchbase News.
Fortunately, the cannabis investment industry has approached this issue with several new funds and structures. We will touch on that later in this series.
Does your idea involve ‘touching the plant’? Currently, cannabis is illegal at the federal level. This comes with a whole host of challenges and opportunities. With federal illegality comes the opportunity for a startup to solve a problem before the more established, traditional market entities are willing to enter the industry. If you build it well enough, you are likely to be acquired once the market opens up. But you will have to deal with lack of access or restricted access to banking and processing, the IRS and 280E, the certainty of audits, and working within the boundaries of your state’s regulatory structure.
Now you have an idea, so, how to fund? Well, the first thing anyone considering investing in you wants to know is, what is your investment in yourself? Do you have savings, credit cards, personal real estate? For the earliest stages, this is often the first step. This is the “three peeps and a PowerPoint stage” — ideas and iteration come fast. There is no real cost for you to walk away. It is on your dime. You are living off of your day job and everyresource you can apply for This shows commitment and the effort will be a key to demonstrating value in the future. Be scrappy.
You will also need to establish a banking relationship. If you are touching the plant this can be quite the struggle. Federal banks have to comply with the KYC – or Know Your Customer – rules and most are unwilling to take on the extra tasks and time it takes to manage a cannabis account and file Suspicious Activity Reports (SARS). Be ready to navigate the business world in cash – which includes security and safety and paying your taxes. Many local-based credit unions are rising up to the challenge, but that often involves extra, costly fees. And even if you are ancillary, if you choose a “green” enough name you are exposing yourself to having your account closed. This goes for processing too. It really behooves you to be as honest and clear about what you are doing and establish a relationship with your banker. NCIA has successfully advocated for the SAFE (Secure and Fair Enforcement) Banking Act (S. 1200, H.R. 2215) which provides a safe harbor to financial institutions doing business with state-legal cannabis providers. It sits in the Senate after having passed the House twice now, although now a new House version will still need to be approved.
As your concept solidifies, its demands of capital increase, with personal, social, business, and financial needs starting to grow past what you can provide alone. You need help. If you have a buddy willing to put an LLC together for you, that’s bootstrapping. If she wants something in return, you are at friends and family time. This is a good stage to build your early financial network and can really help with those next steps. This is a small round of insiders and is as much about personal capital as financial capital. A friend and family round is a direct contact on your part, and those relationships you made in the boot-strapping are good places to start. These early champions will build your social capital as they talk positively about you. Being a small group also creates scarcity. These subtle behaviors will help your valuation when it comes time for that. A good friend and family round will get you off to a right start with the resources for securing an accountant and other professional services to determine the right way to structure your company.
For these early funding stages, bootstrapping and friends and family funding demonstrate your validity as an investable partner for later rounds. No matter your hurdles, starting your fund journey on the right path will pay off down the road.
In our next blog, we will discuss funding options such as debt, angels, and venture capitalists, and where to find them.
Committee Blog: National and International Standards & Regulatory Bodies Relevant to the Cannabis Industry
by NCIA’s Facilities Design Committee
The cannabis industry benefits from the accumulated knowledge and established standards developed by many of the organizations listed here. Understanding the regulatory ecosystem is essential for cannabis operators as well as for those who strive to shape the regulatory future of the cannabis industry.
Listed below are some of the major regulatory bodies and standards agencies that have some relevance to the cannabis industry.
The American Herbal Products Association (AHPA) was founded in 1982 to promote the responsible commerce of herbal products to ensure that consumers continue to enjoy informed access to a wide variety of herbal goods. Their seminal Herbs of Commerce (HoC) (first published in 1992) was officially incorporated by the US Federal Government into the Code of Regulations (21 CFR 101.4) establishing consistent naming of botanical ingredients for dietary supplements. With precedent for federal recognition, their active Cannabis Committee is actively paving the path for safe and consistent use of cannabis products.
The American Society of Agricultural and Biological Engineers (ASABE) is an educational and scientific organization dedicated to the advancement of engineering applicable to agricultural, food, and biological systems. ASABE develops standards through its standards committees. Relevant cannabis committees include:
ES-300 Energy Utilization & Application: Leads and coordinates the activities of ASABE in matters related to electro-technology as related to agriculture energy efficiency, electrical wiring systems, and electrical utility programs.
ES-310 Ag Lighting Group: Leads and coordinates the activities of ASABE in matters related to agricultural lighting systems (combined with ES-311 Electromagnetic Radiation Application for Plants)
The ASABE Standards Committee ES-311 X644 Working Group is developing Draft Standard ASABE X644 Performance Measures of Electromagnetic Radiation Systems for Plants.
ASABE Plants, Animals, and Facilities Systems (PAFS) Technical Community is working with ASHRAE (through its Plant and Animal Environment technical committee) to develop x653 related to HVAC and lighting for indoor plant growth without sunlight.
American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE) is a professional organization seeking to advance HVACR systems and design.
The ASHRAE Multidisciplinary Task Group coordinates technical activities related to the design of indoor plant production facilities and their HVAC&R systems and considers deliverables created by Technical Committees like:
Technical Committee 2.2 on Plant and Animal Environment (concerned with the relationships of environmental conditions and the growth, health, and reproduction of plants and animals).
Link to standards relevant to cannabis production:
Established in 1898, ASTM International formerly known as the American Society for Testing and Materials is a globally recognized leader in the development and delivery of voluntary consensus standards. Working in an open and transparent process and using ASTM’s advanced IT infrastructure, our members create the test methods, specifications, classifications, guides, and practices that support industries and governments worldwide. ASTM Committee D37 on Cannabis has 1,000 stakeholders from 30 countries working together to advance the industry by addressing quality and safety through consensus standards.
Examples of standards that have already been approved for the cannabis industry use include:
D8250 Standard Practice for Applying a Hazard Analysis Critical Control Points (HACCP) System for Cannabis Consumable Products
D8222 Standard Guide for Establishing a Quality Management System (QMS) for Consumer Use of Cannabis/Hemp Products
D8197 Standard Specification for Maintaining Acceptable Water Activity (aw) Range (0.55 to 0.65) for Dry Cannabis Flower Intended for Human/Animal Use
The Design Lights Consortium (DLC) is a non-profit organization that promotes high-quality lighting solutions in collaboration with utilities and others and establishes standards for different lighting types.
The European Hygienic Engineering & Design Group (EHEDG) was founded in 1989 as a non-profit consortium of equipment manufacturers, food producers, suppliers to the food industry, research institutes and universities, public health authorities, and governmental organizations.
The EHEDG mission is defined as:
“Raise awareness of hygienic engineering, develop guidance and solutions, and provide a platform to promote EHEDG expertise that facilitates networking between hygienic engineering experts from around the world.”
EHEDG actively supports European legislation, which requires that handling, preparation processing, and packaging of food is done hygienically using hygienic machinery and in hygienic premises according to the food hygiene directive, the machinery directive, and the food contact materials directive (see EC Directive 2006/42/EC for Machinery, EN 1672-2 and EN ISO 14159 on Hygiene requirements for the design of machinery). While EHEDG is European Initiative, the EHEDG Certification Logo is becoming more widely seen on food processing equipment sold in the US as a product differentiator, offering assurances of sanitary design, cleanability, sterilizability, and bacterial tightness. It is considered more stringent than other stamps or marks. Auditors or Regulators who might be inspecting a cannabis facility, if they understood this Certification Logo, should have an impression that the operator has invested in more hygienic equipment.
ENERGY STAR® is the government-backed symbol for energy efficiency. With oversight from the Environmental Protection Agency, this program certifies the energy usage and energy efficiency of products, homes, buildings, and industrial plants. By using a common set of metrics objectively applied across categories, companies and end-users can make comparative decisions based on energy efficiency.
In many localities, the use of ENERGY STAR® certified products or achieving certification for a building or industrial plant may qualify for rebates from local utility companies. Cannabis company eligibility to participate in these programs will vary depending on local laws, products in use, and rebates offered by local utility companies.
Founded by Thomas Edison in 1896 as the Lamp Testing Bureau and renamed to the Electrical Testing Laboratories (ETL) in 1904, ETL certifications demonstrate compliance to the requirements of widely accepted product safety standards, as determined through independent testing and periodic follow-up inspections by a Nationally Recognized Testing Laboratory (NRTL). The company is now known as Intertek.
The ETL Listed Mark indicates to distributors, retailers, and customers that a product has been tested by Intertek and found in compliance with accepted national standards. Acceptance of ETL certification varies by locality though it is widely recognized across the United States and Canada.
The U.S. Food and Drug Administration (FDA) oversees the safety of all food, drugs, medical devices, and cosmetics in the United States through the Federal Food, Drug, and Cosmetic Act of 1938. Despite the current status of cannabis as a Schedule I controlled substance, the guidance provided for analogous products, particularly current Good Manufacturing Practices (cGMPs) align with global best practices that industry can follow to ensure product quality and integrity as well as prepare for potential federal legalization. Resources on the current approval process and research pathways have been published by the FDA on their page: What you need to know about cannabis compounds, CBD, cannabidiol, products containing cannabis, scientific data, development & approval process, and much more!
Some states require compliance with The FDA Food Code in their cannabis regulations, but some reference 2013, some 2017. The next issue is expected in 2021. Be aware that The Food Code is for retail and foodservice segments of the industry. Many in the cannabis sector anticipate that when Cannabis is legalized at the federal level, FDA will apply the regulatory approach suitable to manufacturing, such as:
21 CFR 111 Current Good Manufacturing Practice in Manufacturing, Packaging, Labeling, or Holding Operations for Dietary Supplements
21 CFR 117 Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventive Controls for Human Food
This is a very complex topic, and depending on how the sector for THC and CBD products evolve and how the products are sold and labeled. Other regulations may become relevant, such as:
21 CFR 211 Current Good Manufacturing Practice for Finished Pharmaceuticals.
The Global Food Safety Initiative (GFSI) is a private organization that oversees and approves different auditing platforms as meeting their criteria for safe food processing. This criterion provides a universal gold-standard of recognition to specific food safety audits. There are currently 10 global GFSI schemes that can award certifications. Cannabis eligibility for certification varies based on scheme and jurisdiction. Some states are requiring a GMP audit, “such as GFSI” in their cannabis regulations.
GLOBALG.A.P is a globally-recognized certification program that began as EUREGAP in 1997 to help the supermarkets in Europe address consumer concerns about the safety of agricultural practices and products. GLOBALG.A.P. is the world’s leading farm assurance program, with over 100 countries following the requirements of Good Agricultural Practices (G.A.P.). It focuses on globally accepted criteria for food safety, sustainable production methods, worker and animal welfare, and the responsible use of resources such as water, compound feed, and plant propagation materials. As of 2020, they have begun a feasibility assessment of bringing their G.A.P certification program to the cannabis industry. Cannabis and hemp businesses that are focused on cultivation of the plant would greatly benefit from incorporating these global best practices into their operation.
The Illuminating Engineering Society (IES) is a community of lighting experts seeking to improve the lighted environment by bringing together those with lighting knowledge and by translating that knowledge into actions that benefit the public.
The IES Horticultural Lighting Technical Committee researches and develops best practices for horticultural lighting using climate-based annual daylighting and electric lighting with lighting and shading controls, with a focus on greenhouses, vertical farms (plant factories), and building atria.
The committee produces Recommended Practices documents, including one for professional lighting designers who are tasked with horticultural lighting.
The International Organization for Standards (ISO) is an independent, non-governmental international organization with a membership of 165 national standards bodies that was established in 1946. Today, it has nearly 800 technical committees and subcommittees that manage the standards development process.
ISO standards focus on the business management of an organization and how information and data are reported and responded to. Some of the most common ISO standards relevant to the cannabis space are:
ISO/IEC 17025 – General Requirements for the competence of testing and calibration laboratories
The National Sanitation Foundation (NSF) originally brought together key stakeholders back in the 1940s to develop the first consensus standards for restaurant equipment sanitation. Public health inspectors liked what they saw, and began requiring product certification to NSF/ANSI standards. Currently, many states approach cannabis regulation from a foodservice perspective and the NSF Mark is desirable for equipment in the Cannabis processing room, such as sinks, rolling stock, dishwashers, and if available for cooking and packaging equipment. Even when cannabis is legalized at the federal level and the FDA regulates following Food Safety Modernization Act regulations from 21 CFR, the NSF Mark will continue to provide assurances of the sanitary design of much of the equipment used to produce Marijuana Infused Products (MIPS) However, after federal legalization, Certifications from the manufacturing perspective, such as 3-A or EHEDG, will become, most likely, more relevant.
With the Occupational Safety and Health Act of 1970, Congress created OSHA, the Occupational Safety and Health Administration, to assure safe and healthful working conditions for all workers by setting and enforcing standards. Additionally, OSHA provides training, outreach, education, and assistance. With steep fines that can exceed $50,000 for repeat violations, this commonly overlooked agency actively inspects cannabis facilities in all states. A free Guide to Worker Safety and Health in the Marijuana Industry was developed by a State of Colorado workgroup that cannabis businesses, regardless of state, can utilize.
Resource Innovation Institute is a non-profit research and advocacy organization providing guidance and data for cultivators and their project partners to use to optimize facilities for efficiency and productivity.
Cannabis PowerScore, RII’s resource benchmarking tool, is both a voluntary performance ranking system and in some jurisdictions where benchmarking is required PowerScore is also specified as a way to report energy and water information to regulators.
UL LLC (formerly known as Underwriters Laboratories) is a global safety certification company approved by the Office of Occupational Safety and Health Administration (OSHA) as a Nationally Recognized Testing Laboratory (NRTL).
The UL Listed seal means that the product has been tested by UL to nationally recognized safety and sustainability standards. Additionally, it has been found to be free from a reasonably foreseeable risk of fire, electric shock in a Division 2 environment.
U.S. Department of Agriculture (USDA) has had a significant impact on the cannabis sector through the 2018 Farm Bill, which provided authorization for the USDA to oversee the cultivation of cannabis containing no more than 0.3% THC (i.e. hemp / CBD biomass).
Additionally, the USDA would most likely be involved after legalization if Cannabis producers decided to launch Cannabis-infused meat products. So far this has not happened and the regulatory impact would be difficult to anticipate.
The U.S. Green Building Council (USGBC) is a non-profit organization that promotes high-performance buildings through the creation of voluntary certification systems for projects and credentialing programs for professionals.
The third-party green building certification Leadership in Energy and Environmental Design (LEED), is the most widely used green building rating system for commercial buildings.
The Green Business Certification Inc (GBCI), implements the LEED Accredited Professional (LEED-AP) program to support the construction of LEED-certified buildings.
The US Pharmacopeia, formed in 1820, is an independent, scientific, nonprofit public health organization devoted to improving health through the development of public standards for medicines, food ingredients, and dietary supplements, and related programs. Over 150 countries recognize the standards set by the USP, with more than 40 integrating USP standards into law. The USP formed a Cannabis Expert Panel in 2016 to support the industry with data-driven recommendations on cannabis quality attributes for human use. The 2020 paper on Cannabis Inflorescence for Medical Purposes: USP Considerations for Quality Attributes (Sarma et al., 2020) is available for download.
The International WELL Building Institute™ (IWBI™) has created the WELL Building Standard is a standardized metric for buildings, interior spaces, and communities seeking to implement, validate, and measure features that support and advance human health and wellness.
WELL was developed by integrating scientific and medical research and literature on environmental health, behavioral factors, health outcomes, and demographic risk factors that affect health with leading practices in building design, construction, and management.
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.
Enter to Win: The Best of 4/20 Marketing Campaigns
Does your company have a uniquely effective 4/20 marketing campaign that deserves to be showcased?
Submit a campaign for review on our upcoming webinar “The Best of 4/20 Marketing Campaigns” being hosted by NCIA’s Marketing & Advertising Committee and taking place on Wednesday, May 5 at 3:00 PM ET.
Entries will be collected over the following two weeks, with a deadline to submit by Wednesday, April 7.
Members of NCIA’s Marketing & Advertising Committee will vote on entries and the finalists will be selected by Wednesday, April 14. Please provide basic information about your company, location, and entry category along with some basic information surrounding your campaign as well as interest & ability to participate in the live broadcast.
If selected, your campaign will be showcased by a member of NCIA’s Marketing & Advertising Committee during the live broadcast. Additionally, you’ll have the opportunity to participate as a panelist during the award ceremony segment of the program after our live audience selection of the winners.
All entries will receive recognition in a video highlight reel featured during the live broadcast and post-event credit sequence along with inclusion in a blog post hosted on NCIA’s website.
Product safety isn’t an endpoint, it’s a journey. That’s what we told you in the 2021 series premiere, and it continues to hold true. In the last post, we revisited the Vaporizer Liquid Formulations portion of the NCIA’s policy council white paper to provide guidance to the industry. This time, we’re republishing the Vaporizer Delivery Devices section below. We’ve learned more about EVALI since its original publication, and while some of the specifics may be a little dated, the principles remain relevant to helping you understand vapor product safety.
Over the course of the next several months, we’ll bring you new content with the following working titles.
The Importance of Testing Vapor Products as a System
Edibles Stability – Microbial Growth Due to Insufficient Packaging
Terpene Limits Across Multiple Product Formats
So, while we wait with bated breath for this exciting new content, enjoy the excerpt below!
Excerpted from The Key To Consumer Safety: Displacing The Illicit Cannabis Market Recommendations For Safe Vaping. Access the full report and citations.
Background
While the technology used to vaporize cannabis extracts have been around for many years, advancements in vaporization technology and supply chains over the past decade have led to widespread adoption and growth of vaporization as a preferred method of cannabis consumption. Vaporizer devices offer the benefits of being discreet, allowing for metered consumption, and eliminating carbon associated with combusting cannabis flower. However, not all vaporizer devices are created equal and manufacturers should develop an understanding of the nuances of different vaporizer devices to ensure the delivery of a safe and high-quality experience. Aside from considering experiential qualities such as taste and the amount of vapor produced, manufacturers should consider at least the following three categories of issues that can present safety risks.
Physical Design Considerations
Vaporizer devices should be mechanically and electrically safe. This starts with relatively basic considerations that include ensuring the device is mechanically sound, does not leak alkaline or heavy metals, and is not configured in a manner that presents a safety hazard. In the early 2010s, there were many reported instances of vaporizer devices exploding. This was primarily due to improper electrical design and battery cell protection. Battery cells that are not protected from drawing current beyond their rated capacity or are allowed to drain too deeply present a safety risk. In fact, this risk led to the development of the UL 8139 standard for e-cigarette battery safety and the FDA recently relaxed its prohibition on e-cigarette battery changes in order to allow manufacturers to comply with this standard. UL 8139 is applicable to vaporizer devices and anyone who sources or develops a vaporizer device for the cannabis market should voluntarily comply.
Contamination by Hardware
Vaporizer device hardware should be tested for the presence of heavy metals. Currently, some manufacturers use Restriction of Hazardous Substances (RoHS) testing or rely on vendor representations that the components and materials being used are certified as FDA food-grade. The California Bureau of Cannabis Control mandated heavy metals testing standards for the three categories of cannabis products, including inhalable cannabis products, starting on December 31, 2018.
Vaporizer device hardware that comes into contact with cannabis formulation should also be free of other contaminants. It is important to consider both contaminants that could be immediately detectable in vaporizer devices as well as those that can be released or created over time. Vaporizer devices are designed using a variety of industrial manufacturing processes, some of which can leave residual oils, biological agents, or other substances in the device. It is important that device manufacturers clean incoming components, assemble them in a clean environment, then store and ship them in a manner that prevents re-contamination. Depending on the nature of the component, one or more of a cleaning bath or ozone treatment may be used for cleaning. After cleaning, assembly of vaporizer components should be performed in a cleanroom environment under appropriate current Good Manufacturing Practices (cGMP). Unfortunately, simply asking a device manufacturer whether it operates in such a manner is not sufficient to be certain that it does. There is no substitute for first-hand inspection of manufacturing processes. While it may not be practical for U.S.-based cannabis manufacturers to maintain a constant presence in the country of manufacture, it is possible to hire local agents who are skilled in audit practices and can perform unannounced inspections to verify that desired practices are implemented within the supply chain.
As noted above, hardware may also introduce contamination into the formulation over time, either through the process of leaching heavy metals or through chemical reaction. Leaching is a process whereby soluble constituents that may be present in materials dissolve into a formulation. A well-known example was the discovery that plasticizers present in certain plastic food and beverage containers were leaching and then being consumed. As a result, new types of plastics were developedfor improved food safety. Vaporizer components that contact cannabis formulations may present a similar issue and leaching may be tied to metals, ceramics, plastics, or other materials. In addition to leaching, certain materials may react with cannabis formulations, especially those with high terpene content which tends to be more volatile. Moreover, metal components in contact with formulations may be especially susceptible to leaching and lead to contaminants such as heavy metals in the formulation.
The good news is that it is possible to address this risk of leaching through the use of appropriate base materials and or plating. Base materials such as stainless steel are good candidates because of their low tendency to react with formulations. Plating other materials with corrosion-resistant metals is also possible; however, care must be taken to specify the right material and plating thickness while also ensuring the plating is not damaged during assembly.
With proper material selection and design, it is possible to reduce the risk of such contamination, including through conducting stability tests. In a stability test, a formulation is placed into the vaporizer device for a period of time, then removed and tested for contaminants. A good guide is to design the stability test to align with the desired shelf life of the product. That doesn’t necessarily mean the test needs to be as long as the rated shelf life. Typically, elevated temperature tests are used to determine stability and can cut the duration of the test to 50% or less of the desired shelf life. In addition, by taking measurements at intermediate intervals, stability can be better characterized and the point at which contaminants would exceed their respective limits can be projected.
Device Impact on Formulation: Control the Heat
The most fundamental, yet perhaps the most underappreciated aspect of vaporizer devices is how they vaporize cannabis formulations. Setting aside dry herb vaporizers, all liquid cannabis vaporizers basically work by bringing the formulation into contact with a hot surface in order to heat it and thus create vapor. While this may seem straightforward, there are a number of subtleties that affect the outcome. First, the temperature of the hot surface must be hot enough to heat the liquid, yet not so hot as to cause components of the formulation to degrade into byproducts that could be harmful. In fact, one study demonstrated how changing the voltage, and thus the temperature of an unregulated vaporizer device can affect the production of such degradants. While more advanced vaporizer devices attempt to control vaporization temperature by using heating elements made of specific materials that indirectly measure temperature and regulate the power delivered to the heating element, the majority do not.
Different formulations have different compositions and contain constituents that vaporize and degrade at various temperatures. This means that to fully control vaporization, the vaporizer device must be configured precisely to the requirements of the formulation in use. Second, many vaporizer devices do not heat uniformly. Rather, the heated surfaces heat unevenly, creating hot spots that can locally trigger thermal degradation. Temperature control circuits typically measure an average temperature and do not prevent such hot spots. Finally, the majority of vaporizer devices, whether they contain fiber wicks or ceramic, rely on capillary action to bring the formulation into contact with the heated area or surface. During a puff, capillary action is also what replenishes the formulation at the heated surface, and such capillary replenishment takes time. Depending on the viscosity of the formulation and the duration of the puff, a heated surface that was initially saturated with the formulation can become dry and hot during the course of a puff. Experienced users sometimes refer to this as a “dry hit,” which can be perceived when a cartridge runs dry or during a long puff. Dry hits can result in increased thermal degradation.
Armed with this understanding of the nuances of vaporizer devices, one can appreciate how the common business model of selling cartridges with a universal 510 threaded connection that can be used in conjunction with any number of batteries, any number of power settings, and filled with a variety of formulations makes it difficult to guarantee what is produced during vaporization. In order to understand and control the output of a vaporizer device, the system should be designed, configured, and tested as a whole; cartridge and battery, plus formulation. Closed systems with proprietary connectors and one-piece designs do not face the cartridge-battery mismatch challenge, but should still be tested in conjunction with the target formulation using a reasonable worst-case puff duration. And while new systems under development that employ non-contact heating methods may not present the same temperature control challenges, they too should be validated as a whole.
The Cannabis Manufacturing Committee (CMC) focuses on reviewing existing business practices and state regulations of concentrates, topicals, vaporizers, and edibles, ensuring the manufacturing sector is helping shape its destiny.
Video: NCIA Today – March 19, 2021
NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday here on Facebook for NCIA Today Live.
Committee Blog: Crafting a COVID-19 Vaccination Policy for Your Cannabis Company
By NCIA’s Human Resources Committee
COVID-19 vaccine policies are just the latest challenge for employers as the world continues to adapt to life after coronavirus. COVID-19 has forced employers to be much more actively engaged in monitoring our employees’ health and your company’s approach to a vaccine policy may continue to reflect the unusually intimate partnership between employers and employees in protecting the health of our communities.
Business owners may be eager for operations to return to normal after nearly a year of intense focus on disruptive business practices made necessary while we responded to the COVID-19 pandemic and its implications for the workplace. While a widely vaccinated public has been promoted as the light at the end of this tunnel, over a third of Americans are reluctant to get the vaccine. This is where employers can make a difference in the trajectory of our national vaccine project by encouraging, and even requiring, employees to be vaccinated. Cannabis industry operators should be especially concerned about crafting a careful approach to vaccine policy as many of our workers have been declared essential throughout the pandemic and we provide services to some of the most vulnerable in our communities including those with chronic illness, the elderly, or those with compromised immune systems. Yet, in many states, cannabis business owners and human resources departments continue to struggle with unclear guidance about when our employees will be able to get the vaccine.
What role do cannabis employers play in vaccination against COVID-19?
Employers will have to navigate a number of competing interests and obligations to craft a sound and responsible vaccine policy. On the one hand, employers are obligated to provide a workplace that is “free from recognized hazards” (OSHA General Duty Clause), i.e. persons infected with the coronavirus. On the other hand, employers are generally more hands-off when it comes to personal health decisions like whether or not to get vaccinated against certain illnesses, and indeed we have an obligation to protect our employee’s privacy and right to refuse vaccination due to a religious objection or medical condition. There is no shortage of advice available to cannabis companies but much of this advice fails to explore the real-world challenges that HR practitioners and business owners will face as they navigate vaccine issues with employees on the ground over the coming months, partly because we are wading into uncharted waters. Below is a brief summary of what information is available to guide employers right now.
Employers must be prepared to take a position on vaccines
The Equal Employment Opportunity Commission has provided guidance for employers navigating their approach to vaccination at the workplace. In general, the EEOC supports employers’ right to encourage or require employees to get vaccinated against COVID-19, as well as take other precautionary measures recommended by the Centers for Disease Control. There is a persuasive business necessity to, at a minimum, encourage employees to get vaccinated against COVID-19, and cannabis companies may find that their employees are relatively prioritized in many state vaccine distribution plans due to the prevalence of designating cannabis workers as essential, though guidance specifically pertaining to cannabis workers is slow-coming and vaccine availability has gotten off to a rocky start with an uncertain supply of vaccines. At least for the time being, multi-state employers will have to continue to adapt to a patchwork of various approaches to state vaccine distribution plans just as they have for managing the workplace throughout the pandemic.
Be ready to accommodate legitimate objections
Employers must also proceed cautiously when responding to employees who refuse vaccination. Some employees who resist vaccination will have a legitimate right to be accommodated due to a sincerely held religious belief or a medical condition that prevents them from taking the vaccine. Employers must be ready with a flexible policy that allows qualified personnel to engage in an interactive process with these employees to discover and document the nature of their objection and then to negotiate a reasonable accommodation. For those positions that have already been eligible for temporary work from home arrangements, for example, an extension of this arrangement might be a reasonable alternative to vaccination. Other accommodations can be made for employees who must interact with the public or their coworkers to perform their essential job functions, such as leave of absence, but how soon such an employee would be excluded from the workplace given the scarcity of vaccine availability and under what conditions this employee would be allowed to return to the workplace are still open questions.
Vaccines remain one of many tools employers have to reduce risk
The Society for Human Resources Management (SHRM) published research earlier this month revealing that the majority of employers plan to encourage but not require their workforce to be vaccinated against COVID-19. This approach seems to dodge some of the more troubling aspects of rolling out a mandatory vaccine program and reflects the reality that many employers can use a combination of other means to reduce the risk of transmitting the virus such as the continuation of work from home policies, virtual services, contactless product delivery, etc. A mandatory program would force a confrontation between those employees who are unwilling to get vaccinated and the company’s managers tasked with tracking vaccination, avoids potential workers compensation claims that might arise from adverse reactions to the vaccine, and provides relief for the potential administrative burden of tracking employees’ proof of vaccination. A voluntary vaccine policy also restores some of the onus for making an informed decision about vaccines on the employee rather than the employer assuming all the responsibility, and potential liability, for forcing a decision to become vaccinated on the workforce. Keep in mind that even under mandatory vaccination policies, some employees will inevitably not get vaccinated and the company will need to work with those individuals on a case by case basis to determine what reasonable accommodations, if any, can be made for those workers. Employers who mandate vaccines as a condition of employment will also likely need to pay for vaccination if there is a cost in the future as well as provide paid time off for employees to go to vaccine appointments. A voluntary policy may make it easier for the employer to be flexible and compassionate toward the varying needs and attitudes of our employees while navigating the continually evolving state of vaccine availability and public health advice.
Expect to adapt to new information
Throughout the pandemic, employers have operated with ambiguity and uncertainty. This (hopefully) final stage of the pandemic will be no different. As we craft our vaccine policies, we should be prepared to deal with the unexpected and adapt to change as new information is available or revised. This is where I believe that cannabis companies have a real advantage. In this industry, flexibility and innovation are essential skills and we as professionals in this industry are well-practiced at pivoting with little notice. I am confident that cannabis operators will rise to the challenge of navigating vaccine distribution while protecting our workers and our customers with the same aplomb that has helped our industry thrive during the challenging last 12 months.
Melissa Hafey is the Director of Human Resources for Blackbird. Blackbird is a software and services company that provides marketing tools and transportation solutions for cannabis operators. Melissa is a passionate advocate for creating meaningful work in rewarding work environments. Her experience includes change management, benefits administration, HRIS implementation, recruiting, workplace diversity initiatives, and human resources management across multiple states including California.
Committee Blog: Property Insurance – The Good, the Bad, and the Ugly.
How a Hardening Market is Limiting Coverage and How to Be Prepared.
2020 was one heck of a year. The insurance industry has experienced more claims this year than in the history of insurance with over a billion dollars in intentional property destruction alone. With the catastrophic claims from COVID-19, record-setting wildfires, civil unrest, and theft, expect property insurance rates to spike this year — and even more so if you’ve experienced a property claim.
Should an insured party that does not have a loss on their record expect an increase in their premium upon renewal? Simple answer, YES.
What is “commercial property”?
In the insurance world, commercial property is a lot more than just physical property — like cultivation equipment or a brick building. Commercial property coverage also includes (but is not limited to): loss of income, equipment breakdown, business property or equipment, inventory of others and finished stock that has been processed, packaged and ready for sale.
Commercial property insurance is not required but is highly recommended — your business could close due to a fire, theft, natural disaster, or other catastrophic loss. If your brand-new cultivation facility burns to the ground, you don’t want to be the one paying to build a new one out of your own pocket.
Property insurance is still an essential component of your insurance portfolio. There are many forms of property insurance that need to be considered. Property coverages include but are not limited to:
loss of income (sometimes known as business interruption),
tenant improvements,
real property such as the building,
business personal property,
manufacturing equipment,
cannabis inventory,
signage,
and property of others (in this case, any cannabis stock or equipment you may hold for another licensed operator).
Also, it’s important to understand the different forms of coverage available in property insurance. You can learn and understand the forms by looking at the property declaration page. There is basic, broad and special. Here is a breakdown of what each form generally covers:
Broad: Covers basic perils and more – fire, lightning, explosion, smoke, windstorm, hail, riot, civil commotion, aircraft, vehicles, vandalism, sprinkler leakage, sinkhole collapse, volcanic action), plus the following additional perils: falling objects; weight of snow, ice, or sleet; water damage (in the form of leakage from appliances); and collapse from specified causes.
Special: This is considered all risks coverage: coverage for loss from any cause except those that are specifically excluded. This is the BEST form of property insurance.
What people often don’t realize is that when you buy property coverages, these differences between Basic, Broad, and Special determine if you have coverage or not for your loss based on the peril that caused the loss.
Example: In a brush or fire area, getting Special coverage is almost impossible which is exactly what an operator in that environment needs. But when an insured asks for coverage, they usually are required by a lender or lease to have property coverage. They are usually not requiring a special form, just property coverage per the specific limits per the contract. At this time, the insureds are not concerned about Basic coverage, but that is all that they can get due to brush zones caused by recent fire areas throughout the U.S. Fire is covered, but not much else.
Any defense you can provide your property when located in these high brush areas is essential to surviving in these harsh environments. Clearance of 100 feet minimum from all structures is always recommended where possible. Water storage and proper access throughout the property is also recommended. This will help with personal defense and help support the efforts of your fire department in case a fire comes your way.
Wind and Hail coverage is another example that you need to address concerning property in the Midwest and East coast. Make sure this is addressed in your property policy if you live in these areas. These policies will have either a flat deductible or a % deductible based on the policy that is written. A flat deductible could be $5K-100K and the deductible will range from 1-5% of property coverage based on the geographics and coverage written for the policy.
Knowing it’s a hard market with higher pricing shouldn’t steer you away from purchasing this coverage — but that knowledge should make you more aware of the initial costs to properly safeguard your property.
The reason why property insurance is getting pricier isn’t that the insurance companies are out to get you… it’s that they’re busy paying for your neighbor down the road whose dispensary was targeted by criminals or whose building burnt up in a wildfire. With that in mind, savvy insurance customers are taking steps to reduce their risk profile (and their corresponding insurance premiums). If you haven’t already, take some time to check out your property and do what you can to protect yourself from fire, theft, hail, or other local worries.
Content provided by Jesse Parenti of PCF Insurance Services- Nine Point Strategies, Stephanie Bozzuto of Cannabis Connect Insurance Services, Helkin Berg of Strimo, Michael DeNault of Charles River Insurance, Summer Jenkins of Cannasure Insurance Services, and Matthew Johnson of QuadScore Insurance Services on behalf of NCIA’s Risk Management & Insurance Committee.
Committee Blog: Everything You Need to Know About ADA Compliance for Your Cannabis Website
When the legal cannabis industry began making waves in the late ’90s, there was still a major stigma against cannabis users. Although the federal status of the plant has yet to change, a Pew Research survey shows that around nine-in-ten Americans favor legalization for adult-use or medical purposes.
As more consumers enter regulated cannabis markets, the industry continues to evolve and be held to higher standards. Given its diverse history, the cannabis industry does not only aim to be an inclusive space – it is expected.
From social equity programs to ADA compliance, cannabis businesses and markets are increasingly standing out from the crowd with their efforts to be more broadly accessible.
What is ADA Compliance?
The ADA, or Americans with Disabilities Act, is a law that prohibits discrimination against people with disabilities in all public spaces. ADA website compliance expands upon this and refers to meeting the standards set by the Americans with Disabilities Act Standards for Accessible Design. This act describes the accessibility of information technology, such as the Internet and its websites (as opposed to physical locations).
In other words, your cannabis website’s ADA compliance characterizes whether or not the site is deemed accessible to people with disabilities as outlined in the ADA’s guidelines.
Why does my cannabis website need to be ADA compliant?
Nearly every registered and operating business needs to follow ADA. It is required that any business, regardless of size, make all reasonable efforts to accommodate customers with disabilities.
More importantly, as a business owner, you want to provide everyone, online or offline, with the same positive experience and level of accessibility. As we continue to become a more technology-based society, website accessibility will become more important to your business as well as consumers.
Now that you understand why your cannabis website needs to be ADA compliant, it’s important to learn how.
Before you touch your website, we recommend reviewing the Website Content Accessibility Guidelines. These guidelines explain how to make web content more accessible to people with disabilities, from the text, images, and sounds on your website to the code or markup that defines structure, presentation, etc.
Once you have a complete overview of what makes website content accessible to all users, you can begin to go through your site and evaluate it for needed changes. Here is a checklist of features you should have to make sure your website is following best practices:
Keyboard navigation is supported.
Your website can be easily navigated without a mouse.
Fonts are easy to read.
Screen readers can accurately interpret and read your site content.
Text can be scaled without distorting the page.
The contrast between the text and the background is sufficient for easy legibility.
Website design is consistent and intuitive.
Calls to Action are clear and concise.
Alt tags, closed captions, and descriptions are provided for all image and video assets.
With all the existing rules and regulations surrounding the cannabis industry, especially when it comes to cannabis marketing, it can be overwhelming to think about more to add to the pile. However, ADA compliance will not only show your customers that you are committed to creating inclusive spaces both in-store and online, but it will also protect your business.
Is ADA compliance mandatory?
In short, yes.
Although there are no clear ADA regulations that define what makes a website compliant, courts have overwhelmingly ruled that websites are considered places of public accommodation. Therefore, under Title III of the ADA, accessibility is mandatory for websites that affect interstate commerce and fit under 12 listed categories.
These 12 categories include sales establishments, like retailers and dispensaries, as well as service establishments, such as any cannabis ancillary business.
Additionally, if your website fails to meet ADA standards, you risk lawsuits and large fines. First-time violations typically receive a $55,000 – $75,000 fine, while repeat violations come with a $150,000 fine. In fact, federally funded organizations that are not compliant can lose funding.
Can I be sued if my cannabis website is not ADA compliant?
Absolutely. The more commercial in nature your website is, the more you become vulnerable to lawsuits. This is especially true if your website is connected to a physical location. However, even if your website is only web-based, you can absolutely still be sued.
In fact, online-only businesses with no physical presence are increasingly being swept up in ADA compliance litigation. So whether you’re a dispensary, a CBD brand, or a B2B cannabis business, you should be testing and mediating your cannabis website for ADA compliance.
How do I test ADA compliance?
There are a number of ways to test whether or not your cannabis website meets the Web Content Accessibility Guidelines (WCAG) standards.
Another way to test your cannabis site’s ADA compliance is by conducting a manual audit. Completing a website audit by yourself means evaluating every page of your site for accessibility using the WCAG standards and checklists like the one above. It can also include testing your website using assistive technology, such as a screen reader, to be sure all barriers have been remedied.
The bottom line is that your cannabis website should be ADA compliant – and not just because of the legal requirements. To take meaningful steps towards a more equitable and inclusive industry, we must all be proactive in making all touchpoints of our businesses more accessible.
Committee Blog: Manufactured Product Safety – 2021 Series Premier
by NCIA’s Cannabis Manufacturing Committee
Product safety isn’t an endpoint, it’s a journey. And let’s face it, there is years-worth of research left to do on the safety of cannabis products. That’s why it’s important to stay up to speed on the latest thinking from leaders in the industry. In 2021, the National Cannabis Industry Association’s Cannabis Manufacturing Committee intends to help you do just that by providing information and approaches aimed to help you continue to improve the safety of your manufactured cannabis (marijuana and hemp) products while providing your customers with increasingly trusted experiences. This Manufactured Product Safety Series will consist of blogs, podcasts, and expert panel discussions focused on providing insight into topics relevant to a wide range of manufacturers.
Over the course of the next several months, we’ll bring you content with the following working titles.
Vapor Liquid Formulations
The Importance of Testing Vapor Products as a System
Edibles Stability – Microbial Growth Due to Insufficient Packaging
Terpene Limits Across Multiple Product Formats
But while we’re busy crafting these new pieces, we want to take advantage of our past publications to keep important safety topics front and center. Back in January of 2020, in response to the then-emergent EVALI outbreak, NCIA’s Policy Council created a whitepaper to provide guidance to the industry and regulators. We’re republishing portions of this whitepaper starting with the Vaporizer Liquid Formulations section below. We’ve learned more about EVALI since its original publication, and while some of the specifics may be a little dated, the principles remain relevant to helping you understand product safety.
Disseminating our knowledge of this topic also helps promote better regulation. Examples of what can go wrong are the Oregon Liquor Control Commission’s (OLCC) recently adopted regulations that effectively ban the use of propylene glycol (PG). Granted, they were addressing a difficult issue and made some good decisions, but had they read this piece, they might have better understood that PG “degradation has been shown only with temperatures in excess of what is typically produced by well-controlled hardware.” Even in studies where the temperature was not well controlled, thermal degradants were detected in amounts that are lower in the vapor stream when compared to combustion and inhalation of plant products, such as cannabis flower. And given that PG has been “used at up to 90% concentration in e-cigarette products for the past decade without reports to date of significant health issues,” it is unwise to ban an ingredient option that may turn out to have a better safety profile than even certain native terpenes, some of which may have to be added at abnormally high concentrations in order to achieve the desired viscosity, without further research.
So with that in mind, stay tuned for the next piece in the series and enjoy the excerpt below!
Excerpted from THE KEY TO CONSUMER SAFETY: DISPLACING THE ILLICIT CANNABIS MARKET RECOMMENDATIONS FOR SAFE VAPING
The cannabis-derived ingredient in cannabis oil vaporizers is a concentrate that is produced by extracting the cannabinoids and other compounds from the plant. With the exception of supercritical CO2 extraction, most other common extraction methods use butane, alcohol, or hexane as solvents for the extraction of cannabis oils used in vape pens. Extraction processes using these solvents may result in a small presence of the solvent in the extracted oil. Any residual solvent must ultimately be removed prior to any product being sold to consumers. States that have legalized and regulated cannabis typically have specific requirements regarding allowable concentration levels of these solvents. These states also require full analytical testing by licensed independent labs, including reporting of residual solvents, to ensure that only safe levels of any solvents are present in the final formulation of cannabis vape products.
The type of cannabis concentrate used in a vaporizer is important to consider. Some require diluents or other additives to be effectively vaporized while other types of concentrates (eg: live resin) have the appropriate viscosity to be used in vaporizers without adding any diluting non-cannabis ingredients.
Similar to what we are seeing in the commercial e-cigarette industry, some manufacturers of cannabis extract-containing vape pens choose to add ingredients that help adjust the viscosity of the cannabis oil. This allows the oil to flow evenly through the atomizer when heated. Some of these additives may also contribute to a vapor “cloud” when exhaled. PG, VG, and PEG are the most commonly used cosolvents or diluents. PG and VG are on the FDA’s Inactive Ingredient List for inhalable drug products and are allowable only at fairly low concentrations in drug products, but have been used at up to 90% concentration in e-cigarette products for the past decade without reports to date of significant health issues. PEG is not on the FDA’s list and less is known about its inhalation toxicity. Therefore, PEG should be viewed with more caution, even at lower concentrations.
The state of Colorado has paved the way for the industry on forward-thinking cannabis regulations and remains an industry leader. Governor Polis, his cannabis advisor, and the Marijuana Enforcement Division should be commended for creating an environment in the state that fosters business development while simultaneously protecting consumers. After discussions between Colorado regulators and stakeholders about additives, and given the lack of sufficient safety reviews of these ingredients, the state of Colorado prohibited Polyethylene glycol (PEG); Vitamin E Acetate; and Medium Chain Triglycerides (MCT Oil) in inhalable concentrates and products effective January 1, 2020. Colorado further banned non-botanical terpenes, any additive that is toxic, and any additive that makes the product more addictive, appealing to children, or misleading to patients or consumers. Other states should consider following Colorado’s lead.
The creation of degradants through overheating is also an important consideration. For example, overheating PG and VG may result in their degradation into molecules with established toxicity profiles such as glyceraldehyde, lactaldehyde, dihydroxyacetone, hydroxyacetone, glycidol, acrolein, propanal, acetone, allyl alcohol, acetic acid, acetaldehyde, formic acid, or formaldehyde. However, this degradation has been shown only with temperatures in excess of what is typically produced by well-controlled hardware. Because PEG is a polymer of glycerin, its degradation upon heating is similar to that of VG and it forms the same unwanted toxic molecules.
Vitamin E Acetate and Tocopherols Inhalable Safety Profile Has Not Been Evaluated
Investigators at the FDA and CDC recently found that some cannabis-containing vape products from the illicit market contain a molecule called vitamin E acetate (VEA), also known as Tocopheryl acetate. Vitamin E is a common name for several similar types of chemicals called “tocopherols.” Vitamin E occurs naturally in certain foods, such as canola oil, olive oil and almonds, but also can be made synthetically. Tocopherols are used as nutritional supplements, and manufacturers put tocopherols in food and cosmetics. VEA is the acetic acid ester derived from vitamin E and is also not known to cause harm when ingested as a supplement or applied to the skin.
VEA’s safety when inhaled has not been evaluated. Numerous published studies indicate that the inhalation of vaporized oils, including certain tocopherols, are harmful to the lungs and numerous cases of lung injury after their inhalation have been documented since 2000. Tocopherols such as VEA adhere to an important fluid in the lungs called lung surfactant. Lung surfactant enables oxygen to transfer from air into your body. Studies have shown that tocopherols impair gas transfer in the lungs. Currently, it is believed that inhalation of significant amounts of certain tocopherols can lead to the death of lung cells and initiate a massive inflammatory reaction that can further contribute to lung damage and functional impairment. Accordingly, VEA should not be used as an additive in any inhaled product. Following the FDA and CDC’s investigation, Colorado added VEA to their list of prohibited ingredients in inhalables to their regulations effective January 1, 2020.
Artificial Flavorings Have Not Been Fully and Scientifically Evaluated.
Some manufactures of cannabis extract-containing vape pens choose to add flavoring agents to the cannabis oil to give them a distinctive flavor, similar to products in the electronic cigarette industry. These additives tend to produce flavorings that are appealing to some consumers. While a number of flavorings have been used for many years without incident, the safety of the majority of flavorings when added to vaporized products – alone or in combination with cannabis extracts – have not been fully and scientifically evaluated.
In one study, certain chemicals that are used in flavorings for vanilla, cherry, citrus, and cinnamon can create compounds called acetals when they are mixed with solvents such as PG and VG. Acetals are known to cause irritation when inhaled and can lead to chronic inflammation in the lung. The long-term
effects of these flavoring agents on lung function are unknown. A separate study showed that some popular flavorings may increase the risk of cardiovascular disease when inhaled, although several other studies show no negative effects.
As approximately 17 million Americans use vape products, many of which contain flavors, and only around 2,000 cases of e-cigarette, or vaping, product-use associated lung injury (EVALI) are currently being reported, it appears unlikely that all flavoring agents in all hardware devices are linked to EVALI. However, until more detailed safety studies have been completed on these product lines, manufacturers should proceed with caution.
Some Terpenes are Safe (GRAS); Some Can be Harmful When Heated
Terpenes are a class of molecules found in many plants, including cannabis, that are responsible for the aroma of the plant. Plants evolved to make terpenes to attract pollinators and to deter herbivores and unwanted pests. Terpenes are biologically active and help contribute to many of the physiological effects of inhaled cannabis. Isolated terpenes have been widely used as fragrances in perfumes in the cosmetic industry and in medicine, such as aromatherapy. Although many terpenes are considered “Generally Regarded As Safe” (GRAS) by the FDA, some terpenes are toxic when inhaled/ingested at high concentrations. While most cannabis goods on the market contain levels of terpenes similar to those that occur naturally in the cannabis plant (~1-5%), some products contain terpenes at much higher concentrations (upwards of 25%). High levels of terpenes and other molecules can also occur if chemical procedures such as distillation are used to concentrate cannabis or hemp oil.
In general, terpenes are benign at low concentrations; however, overexposure to concentrated terpenes has the potential to lead to negative effects, including hypersensitive (allergic) reactions in chemically sensitive people. Additionally, some vape pens do not have the means to adequately control the temperature and can heat the cannabis oil to a very high temperature. In certain instances, this has been shown to lead to thermal decomposition of some molecules in cannabis extracts, such as terpenes, resulting in the formation of new molecules with established toxicities. It is also worth noting that even when these new molecules have been shown to form, they have beendetected in amounts that are lower in the vapor stream when compared to combustion and inhalation of plant products, such as cannabis flower, or tobacco leaf.
Cannabis-derived Terpenes
Cannabis contains terpenes, such that cannabis oil extracts used in vape products typically also contain these molecules, depending on the extraction method. Typically, the distillation process causes a loss of terpenes. Some vape manufacturers now recover cannabis-derived terpenes during the distillation process and then re-introduce them back into the final formulated product. Because of poor process control, one potential safety concern from this procedure is that these cannabis-derived terpenes have an undefined molecular composition and the specific concentration of any terpene in the crude mixture likely varies from batch-to-batch due to numerous experimental variables. For example, many manufacturers that are producing large volumes of vape products by necessity must make the oil extracts from a mixture of cannabis strains. Since every cannabis strain contains different terpene profiles, this means that formulated products made from these strains will also vary in their terpene profiles from batch-to-batch.
The potential for terpene profiles changing during the manufacturing process could pose a potential safety concern. Additionally, new isomers, oxidative by-products, or degradative terpenes may be present in these captured terpenes, which could possibly present hazards never presented by merely combusting and smoking the cannabis plant. Some states that have regulations on cannabis require analytical testing of formulated products, including the reporting of terpene concentrations, but this is not yet the universal standard. Vape manufacturers must exercise caution and be required to analyze terpene profiles of products they make in order to begin to develop a better understanding of this subject. Adhering closely to terpene concentrations known to be present in cannabis flower is a good practice.
Non-Cannabis Derived Terpenes Can Contain Residual Solvents and Pose Dangers
One widespread misconception in the cannabis vape industry is that cannabis-derived terpenes are somehow safer or better for you than non-cannabis-derived terpenes. There are few cannabis-specific terpenes because most terpenes are also present in other plants. Most cannabis vape manufacturersthat operate at a large scale, therefore, prefer to use terpenes isolated from non-cannabis sources to introduce into their formulated products. There are several reasons why this is popular in the industry. High purity terpenes (e.g. >99% pure) are sold by numerous retailers, which allows these terpenes to be re-introduced into cannabis vape products at defined and safe concentrations. Also, the cost of using non-cannabis-derived terpenes is far lower than the cost of isolating and using cannabis-derived terpenes.
For example, the terpene D-Limonene is present at extremely high levels in citrus fruits, and therefore can be isolated to high purity easily and inexpensively from them. In contrast, in most cannabis strains D-Limonene is only found at relatively low concentrations, and therefore one would have to use massive amounts of cannabis material to isolate significant quantities of this terpene required for companies that are operating at scale.
The origin and concentration of non-cannabis-derived terpenes that manufacturers use in their formulations is nevertheless important. Non-cannabis-derived terpenes from overseas often have several residual solvents in them, including ethanol, hexane, xylenes, benzene, butane, and toluene. Moreover, some retailers of non-cannabis-derived terpenes do not list the actual concentration or purity of terpenes in their products. It is imperative that cannabis vape manufacturers purchase and use non-cannabis derived terpenes that are accompanied by a COA that reports the purity of the terpene, any solvent(s) that may carry the terpene, and be required to adhere to the same purity standards and mandatory analytical testing requirements as cannabinoids. Reputable companies will also supply a safety data sheet (SDS) that describes the known toxicities of that terpene by different routes of ingestion, including inhalation.
Cannabis manufacturers that make formulated vape products should be aware of any toxic liabilities of non-cannabis-derived molecules introduced into these products. Vape products should also undergo analytical testing for cannabinoids, terpenes, and contaminants. Finally, analytical tests for aerosolized cannabis, similar to those used in the e-cigarette industry, should be developed, implemented, and mandated to address safety concerns. The industry needs to build the volume of inhalation safety data required for all of these ingredients, hardware, and end product combinations.
Video: NCIA Today – 117th Congress, New Scorecard, DEIC Update, and more!
Host Bethany Moore, NCIA’s Deputy Director of Communications and host of NCIA’s weekly Podcast ‘NCIA’s Cannabis Industry Voice‘ brings you an in-depth look at what is happening across the country in federal cannabis policy reform and with NCIA.
From the top, Bethany discusses the “cautious optimism” bouncing around the D.C. Government Relations office, as the 117th Congress begins to get to work with GR Director, Mike Correia.
We check in with Mike Lumoto, Committee Organizer for NCIA’s Diversity, Equity, Inclusion Committee on the incredible growth they saw in 2020 and the plans taking off in the new year.
Don’t forget to download the new NCIA Mobile App and never miss the latest cannabis news.
Committee Blog: Trust In Cannabis – Why It Matters More Now Than Ever
As a country, the U.S. is experiencing what can best be described as the “age of distrust.” While public distrust in institutions has been escalating for at least a decade, according to the annual Edelman Trust Barometer which has tracked trust in media, governments, businesses, and nonprofits since 2000. Social unrest and a global pandemic have escalated this distrust. Never has the public eyed institutions or businesses with such suspicion.
Meanwhile, in our industry, the vaping crisis of summer 2019 hit our industry below the belt, aided by some bad actors knowingly flooding the illicit market with products that couldn’t meet stringent state testing. That crisis created a crisis of confidence in the overall cannabis industry-leading it into a bleak period which was only partially buoyed by the declaration that dispensaries were considered “essential businesses” during the COVID-19 pandemic, pro-cannabis outcomes in both voting booths and Congress, many thanks to NCIA’s national and local efforts. By supporting NCIA, you’re signaling industry commitment and that you value growing trust within the industry.
Now, against the national backdrop of distrust and a COVID-19 vaccine that offers a glimmer of hope, it’s time to evaluate ourselves and our industry’s actions. Never has it been more crucial for all brands, but particularly our industry, to lean into actions and communications which consistently and powerfully earn the trust of investors and consumers. As an industry, we’re on an important precipice, what we do next will either ensure our credibility or tarnish it for years to come.
Consumers (and therefore investors) are looking at brands in a more holistic manner. Trust will be the single most valuable brand attribute.
Trust is defined on two spectrums: competence and ethics.
For CEOs, CMO’s, and experts in our industry, the time is now to act and communicate from a place of authentically aligned communications. This alignment will require hyper levels of empathy and a constant pulse on the state of affairs affecting your customers. Consumer behavior is in flux now.
The COVID-19 pandemic has changed consumers and now is the time for brands to align. According to the Edelman Barometer special report, Brands Amidst Crisis:
The role of brands in reflecting the consumer’s desire to be viewed as a tastemaker or trendsetter has decreased 9%
Up 38% is spending time with family
86% of consumers expect brands to solve both societal and personal problems, including proper treatment of employees and making product in a domestic market
The only values more important than trust to consumers are price and quality
Because consumer behavior is in flux, it’s never been more important to ensure internal and external values and communications align. Ironically, ensuring alignment supports the flexibility needed to respond quickly to changing behaviors or unexpected upheaval.
Aligned communications means we act internally and externally in a consistent and emotionally intelligent manner that earns trust. It’s not just good for our industry, trust in brands has very real bottom-line implications including increased sales, increased investor opportunities, and reduced customer acquisition costs. In fact, according to Edelman Trust Barometer, high trust consumers have 75% more brand loyalty.
Outstanding packaging and even quality products are the minimum expectations for today’s brands. But even those choices come under scrutiny from consumers if they don’t mirror consumer expectations and lifestyle. Therefore, earning trust starts at the very beginning. The earliest choices are powerful signals to consumers about brand values.
It isn’t enough to simply sponsor a campaign or align with a social movement. While those choices can be powerful quivers in your trust arsenal, it feels and sounds hollow when the brand is suddenly thrusting itself into a conversation without looking at itself first. Consumers are increasingly aware of “trust washing.”
92% of employees expect their employer’s CEO to speak up for issues ranging from income inequality to diversity and training for future jobs. An aligned trust-based strategy starts on the inside. Take a solid look at the ethos and ethics within your own company.
What are your company’s values?
What do you stand for?
How do you signal trust internally and how do you reward it?
Does your internal communication stand for your values?
The reason this internal step is critical is no matter what, your brand ethos is distilled into consumer interactions and communication, whether those communications are with dispensary workers or directly to the consumer, the experience will always stay with the brand. Imagine a dispensary worker making recommendations to a new-to-cannabis buyer, naturally, the dispensary worker has a huge amount of influence on the consumer’s impression of a new brand. And new-to-cannabis buyers are most likely to be loyal to their first brand, assuming the product meets expectations.
Personal experience is the number one way to build trust with consumers. 59% of customers say personal experience matters the most.
What consumer interactions signal trust?
How do you manage poor reviews?
How do you handle customer inquiries?
How does your owned media reflect not only your brand values but those of your customers?
Personal experience is absolutely about product experience and brand interactions. Brand interactions at events will take on more importance in cannabis. Consumers will want to engage in an experiential way with cannabis brands and it won’t be at cannabis events exclusively, consumers will expect to see cannabis brands in all the same places they see alcohol brands, even if sales and sampling aren’t available, which means experiences will need to be multi-sensory and strongly personal. Choose your experiences carefully based on your brand audience and ethos.
Earned media is second only to personal experience incredible trust-building. During the COVID-19 pandemic, trust in publications increased by 7%. Brands should look for opportunities in earned media that reflect their values. Branded content is another area where brands can use the credibility of publications.
Experts are still considered credible sources (52%) and they far surpass celebrities (35%) and influencers (36%). As you consider brand strategies in 2021, take a careful look at who you’re leveraging and what role they play. Choose your experts carefully and ensure they are fully vetted. NCIA’s Marketing and Advertising Committee is developing an “experts directory” of carefully vetted industry professionals, this will be a key resource not only to event organizers, but CEOs and CMOs looking for credible, authentic experts.
Our industry has so much to offer consumers, we provide very real opportunities for consumers to enhance their lives. We have been active on numerous social justice fronts from the very beginning. We may come from a historical place of rebellion, but often, even that rebellion came from a place of empathy and not just income. Consumers today are responding to companies who double down on trust and an aligned brand value system. There’s every reason to think the cannabis industry can do this better than anyone. Together, let’s lean into our values and seed trust not just in our companies, but in our industry.
*All statistics come from Edelman Trust Barometer 2020, unless otherwise noted.
Tara Coomans is the CEO of Avaans Media (formerly known as Primo PR), which has been working with hemp and THC brands and services since 2015 from startup through IPO. Founded in 2008, Avaans Media brings a digitally forward and purpose-driven perspective to public relations. Avaans Media is based in Los Angeles with clients and team members distributed around the country including Washington D.C., New York and Denver.
Coomans is on NCIA’s Marketing & Advertising (MAC) committee and leads the MAC Experts Directory subcommittee for 2021. Coomans is a frequent writer and speaker on public relations, marketing, and social media topics.
Committee Blog: The Language Of the Cannabis Industry – Developing A Commercial Manufacturing Glossary
The language of the cannabis industry is crude. It’s not that the cannabis industry relies on vulgar or offensive words, but rather that modern cannabis vernacular remains raw, unrefined, incomplete, and sometimes contradictory, even in mature markets. Perhaps most generously described as “imprecise” or “fluid,” the current lexicon is changing as quickly as the industry, but not always for the better. Consistent and universal terminology are hallmarks of strong industries. As the cannabis industry (including both high-THC “marijuana” and low-THC “hemp”) continues to grow and prove its legitimacy, it is critical that everyone is speaking the same vocabulary.
Defining the issue
Out of necessity, the language of the cannabis industry took root in the dark. Decades of prohibition followed by state-led regulation has resulted in a fractured vocabulary where terms-of-commerce have fuzzy boundaries. The current landscape of murky terminology can inject ambiguity into everyday transactions and, in the worst of circumstances, mislead consumers. As some industry terms coalesce in particular regions, for example, other terms take on different meanings around the country. It is not a problem unique to the cannabis industry, but with its regulatory history, rapid product advancements, and diverse consumer base, the NCIA’s Cannabis Manufacturing Committee (“CMC”) felt it time to start a conversation about the words that define the industry.
With legalization comes a mass-consumer base and new forums to joust for consumer attention. Retail shelves, product packaging, and commercial advertising are the new arenas where cannabis companies try to describe their product to consumers and differentiate their brands from others. Out of this scrum comes a new marketing jargon that can be difficult to decipher. Shatter, crumble, butter, wax, sauce, diamonds, distillate, isolate, broad-spectrum, full-spectrum, partial-spectrum… and that is just in one section of the dispensary. Indeed, a huge swath of cannabis consumers fall into the infrequent or casual consumer demographics for which these terms mean next to nothing.
What’s the problem?
This linguistic haze is felt acutely in the manufacturing link of the supply chain. Manufacturing is the relatively nascent segment of the industry that converts raw cannabis plants into various medical, adult-use, and industrial products. In just the past two decades, new technologies have produced a glut of new products, each of which needs to be called something. But those new terms have ambiguous definitions that are easy vehicles for confusion. And where confusion is prevalent, both consumers and companies suffer.
For many cannabis customers, trying to decode a dispensary menu is like reading in an alien language. They frequently must rely on budtenders and marketing materials to understand some products’ basic characteristics. And even if they manage to become fluent in one dispensary’s menu, they may still find it difficult to predict how that menu will translate to other retailers across the country. The lack of vocabulary standardization would be untenable in the food or beverage industries. In the cannabis industry, where patients may rely on specific products for medical treatment, consumers should have a uniform vocabulary to describe products.
That challenge is not limited to retail consumers. Language is critical to the smooth functioning of intra-industry business relationships. As in any other industry, cannabis business relationships are far more successful when the parties’ expectations are aligned. When a dispensary orders tens of thousands of dollars in shatter, crumble, distillate, and tincture, they have certain expectations about the products they will receive. Even experienced extractors, operators, and executives have different understandings of where some products end and others begin.
Ambiguity in the commercial arena can lead to big problems. Among the best-case scenarios, a miscommunication results in a dissatisfied customer. More serious disagreements may require costly replacement shipments or refused deliveries. Of course, if the stakes are high enough and both parties are adamant in their positions, a linguistic quarrel may become a courtroom duel. Some advertising litigation, such as for “Refined Live Resin” vape cartridges, is already working its way through the court system. When it comes to cannabis terminology, fuzzy boundaries are not a standard the industry should embrace. But leaving cannabis industry terminology to the mercy of courts and regulators also holds little appeal.
And so…
…the CMC set out to create a working glossary. The goal of this document is to get the industry on the same page with published terminology standards as best understood by the NCIA’s Cannabis Manufacturing Committee. These standards are intended to facilitate commerce within the cannabis industry by increasing consistency and decreasing confusion.
The CMC developed a list of the most common terms that are currently utilized in the manufacturing segment. While the committee included some broad terms applicable to the industry at large, the focus was on those terms that most directly relate to cannabis extraction and refinement. From that list of industry terms, the committee drafted definitions that attempt to capture how those terms are currently being used throughout the legal cannabis industries. The CMC then shared those draft definitions with as many practitioners as it could to get a broad selection of perspectives. Wherever possible, the CMC sought to be inclusive of regional variations and note instances where terms are exceptions to a generally understood meaning. But the CMC understands that neither this process nor any other is guaranteed to represent all corners of an increasingly complex industry.
The document is not meant to be the ultimate word on cannabis terminology, but rather a snapshot in time and the starting page for a discussion about what the words of the cannabis industry should mean. Importantly, these definitions are the CMC’s attempt to capture how the terms are currently used, not how they should be used. Indeed, there are several well-qualified bodies debating the future of cannabis nomenclature, including ASTM’s D37 committee and the Emerald Conference.
Along with publication of this glossary, the NCIA’s Cannabis Manufacturing Committee is inviting comments from the entire cannabis community. Your constructive comments are a crucial part of forming the vocabulary of an industry. The CMC’s intent is to revisit these definitions approximately every calendar quarter, adding, revising, and annotating as new terms are invented and meanings inevitably shift.
Paul Coble is the founder and CEO of Thalo Technologies, a veteran intellectual property attorney, Vice-chair of the NCIA’s Cannabis Manufacturing Committee, and Chair of the Nomenclature Subcommittee.
The CMC focuses on reviewing existing business practices and state regulations of concentrates, topicals, vaporizers, and edibles, ensuring the manufacturing sector is helping shape its destiny.
Committee Blog: Future-Proofing Your Business – 2021 Series Premier
The future is coming and the cannabis (marijuana and hemp) industry is uniquely positioned to offer innovative approaches to best management practices in its manufacturing sector. In 2021, the National Cannabis Industry Association’s Cannabis Manufacturing Committee formed a new group focused on addressing sustainable practices, legal protections, and policy considerations to future-proof your cannabis manufacturing business. The series, Future-Proofing Your Business, will consist of blogs, podcasts, and expert panel discussions focused on providing insight into the coming regulations, processes, facilities, and consumable products.
Extracts
With the coming vaping emissions and vape product potency regulations, the Future Proofing subcommittee will offer their expertise on what to expect and what manufacturers can do to support compliance and help protect the environment and public health. The outbreak of vaping-related respiratory illness in late 2019 demonstrated the damage a few bad actors can do in a marketplace where regulated and unregulated producers compete for consumer dollars. The committee will discuss these issues and more as manufacturers and regulators work together proactively to protect consumer health.
Processes
Manufacturing processes are evolving as the scientific understanding of cannabis consumables and their various effects and treatments deepens. In their efforts to protect environmental and worker health both inside and outside of the processing area, manufacturing best practices are changing. Regulators are also beginning to determine the standardization of these various processes in an effort to retain product quality without jeopardizing human and environmental health and safety. And new forms of competition will demand an increased focus on protecting intellectual assets. This second part of the Future-Proofing Your Business series will unpack sustainable manufacturing process design including software, equipment, and materials offering recommendations for regulatory approaches.
Facilities
Building on the processes deployed in the future of manufacturing cannabis (marijuana and hemp) products, facilities will also need to consider more efficient design strategies to reduce the use of energy & waste, increase product safety, and safeguard worker and community health. The rapid pace of energy efficiency technologies development for all utilities means most industries, not just cannabis, are playing catch up. Automation is redefining the best practices surrounding product and employee safety. Increasingly stringent testing standards are demanding greater care for waste and community health. The committee will offer their insights into the technologies and practices that are becoming popular in this multi-industry-wide push for sustainability.
Biosynthetic Manufacturing
The final topic to be addressed by the new Future-Proofing subcommittee in their 2021 series, will take a detailed look into the future of manufacturing techniques, specifically the use of biosynthetic manufacturing and how this will impact the industry. Tune in to learn more about bioreactors and their application for the concentrate market and genetic modification to cannabis (marijuana and hemp) consumable products.
Prepare to check out the first part of this integral Future-Proofing Your Business series brought to you by the Cannabis Manufacturing Committee.
Coming, February 2021.
Committee Blog: Future-Proofing Your Business – How Adopting Industry Standards Improves Your Bottom Line and Reduces Your Risks
By developing and adopting standards now, operators in the cannabis space can avoid unnecessary future expenses they might incur when needing to rework established facilities to meet upcoming federal standards or third-party compliance
Upton Sinclair’s The Jungle in 1905led to the Pure Food and Drug Act in 1906. The food sector has matured through additional governmental regulations, industry-led initiatives, consumer and trade guidelines and standards, and more recently, the Food Safety Modernization Act. Over one hundred years of progress helped to ensure what is arguably the safest food supply in the world. By comparison California, in 1996, 24 years ago, legalized Medical Cannabis. Since then, 36 states have legalized cannabis for medical or adult use. Confusingly, that is 36 different sets of regulations, none harmonized. And no consensus on how FDA will regulate cannabis when it is descheduled.
But investors and producers in the cannabis sector are seeking direction on how to future proof their businesses so they can manage the transition from fragmented state-level regulations to rigorous federal oversight. Developing and adopting cannabis industry best practices may be the greatest insurance available.
NCIA’s Facility Design Committee is one of the few groups beginning this effort. The group has representatives from operations, regulatory compliance, quality, equipment vendors, design and construction, and allied industries.
Standards can focus on several areas. Because the cannabis industry deals with substances that are ingested into the human body, standards that support consumer health and safety are paramount. Much of the current practice in the food sector, organized under the topic of current Good Manufacturing Practices (GMPs), can port over to Cannabis with some adjustments. These practices protect consumers and your brand. GMPs have, as a foundation, many aspects of facility and process design, but standards for these don’t yet exist. However, by developing and adopting standards now, operators in the cannabis space can avoid unnecessary future expenses they might incur when needing to rework established facilities to meet upcoming federal standards or third-party compliance. They also can control their own destiny, in effect, by establishing approaches that later can be considered as regulators write the rules in the future.
As operators themselves, a number of our committee members have felt the direct impact of product recalls due to a lack of clear delineation at the intersection of cannabis and food safety regulations. Depending on the scope of the recall, a company can be crippled by not properly understanding and adhering to a common set of standards across the industry, especially when concerning safe food handling practices and similar regulations that control consumable product manufacturing. For example, one of our committee members had to recall a batch of infused gummies because public health regulators used safe food handling regulations to determine that the gummies were exposed for too long in a potentially contaminated environment during the setting process. Had the operator adhered to standards commonly used in food production, they would have avoided the costly impact of the product recall. With nearly 15% of flower failing tests for yeast and mold in Colorado, the cannabis industry has become no stranger to costly recalls.
Standards not only minimize risk to the consumer and the business, but also improve quality and consistency. Improve employee NPS (Net Promoter Scores). Reduce cost and production downtime. Increase the inherent value of the business. And offer a brand message that increases sales.
Nearly all related industries follow best practices, known as cGMPS (current Good Manufacturing Practices), which can be adopted for our industry. If we look to examples from the food sector, you find mature and professional regulations at the federal level and experienced inspectors from USDA, FDA and state departments of Health or Agriculture, as well as global standards from the International Organization for Standardization (ISO) and the World Health Organization (WHO), initiatives from trade customers such as Global Food Safety Initiative (GFSI), equipment certifications from European Hygienic Equipment Design Group (EHEDG), NSF International, and 3-A Sanitary Standards. This constellation of resources is not yet published for the cannabis sector.
Join us in this exciting journey. Become involved, and stay aware of and ahead of the pending regulations. We don’t have 114 years to get this right!
The Facilities Design Committee (FDC) focuses on providing NCIA members and regulators a framework and information about facilities design options through which legal producers can plan for GMP level production as the market transitions from a state to a federally regulated industry.
Committee Blog: An Introduction to HVACD for Indoor Plant Environments – Why We Should Include a “D” for Dehumidification
Transpiration and VPD are two fundamental components of plant vitality, and heating, ventilation, and air conditioning (HVAC) systems are one of the most critical considerations for an indoor cannabis cultivator. HVAC alone doesn’t tell the full story of environmental control for cultivation facilities. The term HVAC is typically used to refer to the cooling, heating, or ventilation systems in a building, and while it technically includes dehumidification in most forms, it does not directly highlight the significant dehumidification requirements necessary to maintain optimum plant health inside indoor cultivation spaces. In order to emphasize the importance of dehumidification in the mechanical equipment sizing and selection process, the controlled environment horticulture industry would benefit from moving toward the concept of heating, ventilation, air conditioning, and dehumidification (HVACD) as the common term for these systems.
“HVAC” Challenges
The term HVAC is typically used to reference conventional air conditioning and heating systems designed for temperature control to provide a comfortable environment for people. This is clearly demonstrated in the very design of these systems – for example, sensible heat ratios of commercial HVAC equipment are pretty high in order to meet the loads generated by people, lighting, and miscellaneous equipment found in offices. Plants grown in enclosed spaces have different needs than people do. Of particular interest is the large amount of dehumidification that needs to be performed on a daily basis to maintain an optimum vapor pressure deficit (VPD).
When you apply a standard HVAC system to indoor horticulture, the instant the sensible load is removed from the space (i.e. the lights turn off), the air conditioning unit reaches the lower deadband of the specified temperature set point and shuts off. In the process of bringing the temperature down, we have raised the relative humidity to the detriment of the plants. Further, despite being mostly sensible cooling machines, conventional HVAC systems provide most of the dehumidification capacity in an indoor cultivation space, and that capacity is now inactive during the dark period.
Traditionally, growers would install stand-alone, pocket dehumidifiers to handle the moisture removal requirements that the air conditioning units cannot meet. There are a handful of challenges with this approach that can negatively impact plant health when scaling into industrial-scale operations. Most standalone dehumidifiers dry the air with mechanical refrigeration and in the process add hot air into the room, which then needs to be cooled by additional cooling equipment to maintain temperature. Another challenge is the numerous condensate drains throughout the growing space that are high risk for clogging and quickly leading to pest and pathogen proliferation which are potential GMP and GFSI compliance risks. The separate cooling and dehumidification systems typically do not have communication and control amongst them and ultimately “fight” against each other for temperature and relative humidity setpoints. Additional pest vectors can come into play when the HVAC contractor enters the cultivation or curing space to make repairs on mechanical equipment that is mounted above plants. Above all, maintaining cleanliness in the space can be challenging with many mechanical units perched above a dynamic plant canopy.
Dehumidification, or removing humidity from a room that is filled with water vapor as a result of plant transpiration, is arguably the biggest environmental challenge in controlled environment horticulture. When you size an HVAC system for human comfort or server rooms, the primary focus is temperature control (or sensible load). When selecting and sizing an HVACD system for plants to thrive, it’s all about the latent load, plant transpiration and VPD. Excess humidity is roughly twice as difficult to remove as excess heat from lights, so an effective system needs to be designed as a dehumidifier first and an air conditioner second. Integrated dehumidification needs to be at the beginning of every HVAC conversation, and a primary focus of every system.
The benefits of including dehumidification as a critical component
To maximize plant vitality, two fundamental components to understand are transpiration and VPD. Put simply, VPD is the humidity difference (or deficit) between the inside of a leaf and the environmental conditions surrounding that leaf. It is this humidity difference that draws water from the roots of a plant, through the stem and out of the leaf tissue, otherwise known as transpiration. This process is critical to photosynthesis and optimizing plant production, and it’s all directly related to the levels of humidity in a given room. As humidity is drawn out of the leaf, dehumidification must be used to remove the humidity from the environment and maintain appropriate VPD levels. Without dehumidification, humidity builds inside the room, plant growth and plant health are negatively impacted, and conditions become ideal for pests and pathogens.
Properly-designed dehumidification creates consistent and precise environmental conditions across the plant canopy, mitigating risk against issues like powdery mildew and botrytis. Well-executed dehumidification allows growers to control their VPD and drive plant health. At the end of the day, a stable climate sets a strong foundation of cultural control for a facility to maximize quality biomass while limiting crop loss associated with pest and pathogen issues.
Why does this all matter? Because properly sized and commissioned HVACD systems empower the cultivator to maximize production efficiency, reduce the risk of production downtime, and promote growth.
HVACD will change industry standards and best practices
Collectively updating the industry’s knowledge and understanding surrounding dehumidification highlights the true challenges of growing plants indoors, and the need for purpose-built equipment and controls that optimize the environment based on every stage of the plant life cycle. Plants are living organisms that have different needs at different times, and mechanical equipment should be designed and manufactured around this concept.
We can draw a comparison to this concept by looking at indoor horticulture lighting systems. When the industry began to develop new terms like Photosynthetic Photon Flux Density (PPFD), the phrase “PPFD for plants because lumens are for humans” came to be. Meaning that if we are measuring lumens, we are prioritizing people in the space as opposed to the plants. This same mindset should apply to all mechanical equipment involved in a cultivation facility.
Now that more scientific studies and data are becoming available on topics like plant transpiration, dehumidification, and VPD as a driving force in plant vitality, it is clear that there is a better way to think about climate control when applied to controlled environment horticulture. HVAC focuses on the sensible (or temperature) cooling that keeps people happy indoors, while HVACD focuses on the latent cooling (or moisture removal) that keeps plants happy indoors. Both are critical concepts that must be considered during the design of an indoor cannabis cultivation facility to ensure both people and plants are happy indoors.
Critical Dehumidification Requirements for other Rooms in an Integrated Cannabis Grow/Manufacturing Facility
Extending the discussion downstream of horticulture to other areas of the facility, humidity control plays a critical role in profitability, food safety, asset utilization, and operating efficiency.
Humidity control in the Curing Room and the awareness of any air exchange with building areas adjacent to Cure is important. More broadly, any room-to-room pressure differentials can transfer air with different humidity levels.
Food safety is enhanced by considering humidity control, usually dehumidification. Any cold surfaces below the dew point of the room can cause condensation, which can lead to microbiological growth. Room environments controlled so that the water activity (aW) of the cannabis is maintained between 0.55 and 0.65, will also help limit mold growth and the associated mycotoxins.
In many cases, there are special dehumidification requirements, such as in an equipment drying room after warewashing, or to dry out a room and return it to operation after washing and sanitizing. HVACD designers need to coordinate closely with process or manufacturing specialists to be aware of any process exhausts, combustion air requirements, or high outside air exchanges. That additional outside air and the humidity carried in with it, must be considered.
And for Marijuana Infused Products (MIPs), specifically gummies and chocolates, the primary food safety control is low water activity, rather than a robust kill step, so precise humidity control is again a critical issue.
Even further, packaging machinery operates more efficiently if the flow characteristics of the cannabis are a key operating parameter. Moist cannabis will adhere to machinery and create other problems that slow run rates and cause downtime. This problem can occur with any weight fillers or the pre-roll machines.
All told, moisture can be both your friend and foe in a wide variety of cannabis endeavors. The ability to maintain the appropriate relative humidity, in addition to temperature, in each different type of room in a cannabis production facility is a key factor in a successful operation.
The Facilities Design Committee (FDC) focuses on providing NCIA members and regulators a framework and information about facilities design options through which legal producers can plan for GMP level production as the market transitions from a state to a federally regulated industry.
Committee Blog: Recruiting Best Practices for Hiring Leaders to Your Cannabis Business
Most cannabis businesses are still figuring out how best to recruit key leaders to their organizations who can survive the tests of the cannabis industry.
The ability to effectively hire key leaders who will “stick” with your cannabis business and add incremental value on your leadership team is nothing short of paramount.
Of course, the first steps should be to define the role internally and agree on the desired functional skills and experiences possessed by the ideal candidate, how their success will be measured, and what your selection process will be that will deliver the right candidate experience to land that talent.
But… What X-factors are you screening for when evaluating senior executive candidates in today’s cannabis economy? Here’s a (not so) abbreviated version of our checklist:
A record of accomplishments and a demonstrated ability to get results in a variety of situations under different conditions.
While we are looking for “we” people, as in “here’s what we did,” we are also trying to tease out and understand what they accomplished individually. You (as a leader) led a team to deliver your strategy, but we are looking for what you did personally to create intense focus and drive results, i.e. what levers you pulled to improve revenue and EBITDA, or Earnings Before Interest, Taxes, Depreciation, and Amortization.
Ask probing questions to get beyond the obvious answers.
Ask what they envision your cannabis business should look like in 1-2 years if they were hired and what they are prepared to accept as a consequence of trying to make needed changes. Asking those kinds of detailed questions can help test how committed they are to doing what is required to deliver on their goals. It’s also about asking what they expect the obstacles to success will be and proving their acceptability of being uncomfortable in order to help the organization level up.
Adaptability when there is a pivot point.
While we all want to get it right the first time, there are almost always fine-tuning adjustments that need to be made along the way. We want to know how fast and nimble the leader is at doing that.
Ability to roll-up their sleeves and/or delegate to the right people and then back off while supporting them as-needed.
You owe it to your people (and plants) to give them an opportunity to grow. Permit them to work on stretch projects.
Desire to understand the business holistically, across all departments and levels of the organization.
One of the biggest challenges that leaders face is maintaining a fingertip feel for what people at all levels of the company are thinking. This is especially difficult to maintain with the frenetic pace in the cannabis industry.
Desire being part of the solution, not the problem.
An avoidance of pious judgments. We all need to hold the mirror up more often to ourselves, because people do not listen to us when we start criticizing them. You must take more control and ownership of outcomes within your sphere of influence as a leader in cannabis, and know it’s nearly impossible to hide out successfully behind a computer screen. No guts. No dirty fingernails. No glory.
An ability to say “no” to distractions so there’s time to get the job done.
So many distractions to manage through in the cannabis industry; i.e. There’s always a shiny object to distract in the way of a new vendor solicitation, a new tech to consider, another (virtual) trade show to participate in, the long line of candidates asking for some of your time, etc.
We look for curiosity.
We generally try to get people talking about something that is not directly related to their prior jobs, like how deeply they know their industry or their hobby. We want to know how curious they are to learn more than just what they need to know. Wanting to figure out how things work is so critically important, especially in the nascent cannabis industry.
An appreciation for the importance of being able to question authority and have debates.
Healthy friction and debates almost always get you to a better answer. You are in trouble if part of your culture suppresses disagreement. You want leaders who really want to make sure there is an environment of having open transparent debates rather than surrounding themselves with like-minded friends and family as many first-time founders/leaders have historically done in the cannabis industry.
How they themselves assess talent.
Much of our focus is to get the right leaders in place with strong team-building skills, so we prefer a track record of having people follow them to new companies because that’s always a good sign. A wide range of networks of relationships, well beyond their job, is a good measure of whether they know how to build relationships and collaborate.
Storytelling skills.
We like to learn about the mechanisms they use to mobilize their organizations and their ability to create a direct link between the boardroom strategy and what the average employee’s doing because good things happen when that link is tight.
Those moments in their career where they were forced to reexamine how they develop strategy and how they lead.
We ask about when they have failed. Good candidates will often have a lot of examples to share while others will tell you about one failure and externalize to somebody/something else to carry the blame. This conversation is also a key indicator of innovative thinking and risk-taking ability because those who do take risks are going to fail at times in their careers, and then have a better chance at succeeding in the cannabis industry.
Ability to manage ambiguity because they are not going to have all the answers to the real challenges that are playing out every day.
We are looking for people who have proven that they can deal with ambiguity and can operate outside their comfort zone in increasing areas of grayness. Somebody may be super in their current role, but it may be because it is the work they have always done and they’re in control of that world. If everything is not buttoned-down, they start getting out of their comfort zone and it really shows. What is important is being able to make the transition from controlling everything to building out and operating a completely different model. There are people who can adapt to that and there are people who just freeze and start complaining. “Your attitude defines your altitude.” The cannabis industry will test your attitude.
Comfort with showing vulnerability.
The emergence of vulnerable leadership has been a great pandemic gift.When you are focusing on growth and innovation, as we do on a regularly occurring basis in the cannabis industry, you must take risks. If you are taking risks, you are going to fail some of the time. When we are looking to put someone into a new role or to build out a leadership team, we want to know when that person has taken a risk and failed.What we are trying to understand is someone’s appetite for risk, but we are also interested in whether and how they ask for help. People are generally uncomfortable being vulnerable about the fact that they are making mistakes.We’ve shaped our view around team-building/leaders to focus on wanting people who take risks, because we don’t believe it’s possible to innovate and grow without taking risks; who have failed, because we don’t know how to truly take risks without failing some of the time; and who are really comfortable asking for help. It’s unrealistic to think that with all the talent available to us, that people still feel they have to solve everything themselves when they get stuck.
An ability to ensure their teams are acting like teams.
It is not so much about who gets credit for doing the most or who gets credit for any given task. Ultimately the real credit belongs to the person who is the biggest giver, the most generous, and the one who is most likely to help their teammate get off the mat when they’re down or help them do their job. It is important to remind ourselves and our teams that none of us are as smart as all of us, and we have got to stick together.
How they have led through a crisis.
Because let’s face it… pandemic or not, there’s always an existing or lurking crisis in the cannabis industry and no playbook to lead through it. You must rely on your team, because everyone has something to contribute. Right now, simple acts of kindness from present leaders will be remembered for a very long time. We’re also looking for examples of making decisions to protect the business, which requires making very tough choices to ensure the business has the necessary flexibility to weather the storm. Examples of how they opened the lines of communication with employees; disclosing to them what is known and what is not. Seizing opportunities to build and strengthen relationships with their workforce such as being very understanding of the stress that everyone’s under; staying in touch with those people and being attentive to their needs. Time isn’t on your side during a crisis, so we’re looking for people who have acted and pivoted quickly when something’s not working. Leaders must show up like a duck — calm on the surface but paddling like crazy under the surface to keep it all together. Not everyone has the same tolerance for stress and anxiety. True leaders in a time of crisis rise to the top, just like cream, whereas other people just cannot take it. We seek out people who are calm and focused; people we would want in our lifeboat in a crisis.
Authenticity and the ability to generally work based on unconditional trust with people.
If you must speak truth to power, being authentic helps. Taking everything people say as true on its face will backfire sometimes, but the ability to put up with those occasional moments in order to have most relationships built on trust is paramount. Also, do not gossip. Gossiping is often born of insecurity.
An understanding that leadership is a journey that does not end the moment they hit the C-suite.
For many, that is when the journey begins. We like leaders who know they must continually develop themselves, who don’t rest within their comfort zone, and who push themselves into new and different situations and expand their portfolio. They seek to be expansive. This is especially true for many cannabis c-suite professionals who have little to no previous leadership experience.
The stomach, experience, and awareness to deal with your startup environment.
We seek Builders > Maintainers, and those who are ready to bring a ‘No Limits’ mindset to the challenges ahead. Nearly every cannabis business is an extremely fast-paced environment with little processes and procedures in place. The ability to work under those conditions while beginning to put structure in place is paramount. Leading through enormous amounts of change means having the ability for self-management and helping the team cope with change at warp speed.
WHY interested?
We want talent that’s going to run hard at the opportunity vs. those who are simply running into your opportunity because they are running away from something else and your opportunity is in their path. Ask early and often about their “WHY?” and their DBM’s “Dominant Buying Motives”; i.e. uncovering what is on their Personal, Professional and Financial scorecards and why those things are important.
Finally, we ask ourselves the following questions:
“Would we want to work with/for this person? Would we have confidence in them if we staked our family’s livelihood on them? Do we have confidence in their ability to deliver? Do they have the ability to build a company that we would be proud to be associated with?”
Personally, I like to look at people through the “MIA Test” lens — would I want to be stuck in the Miami International Airport with this person for numerous hours? So much of work is who you work with. Who are the people that you want to be around? I think you are more willing to open up to, question and debate with people who you feel good about and like. However, you must ensure you are not doing this in exchange for harming your diversity and inclusion efforts. It’s not just people who are likeable, but who also think differently and bring different perspectives and experience to the table.
Those are some of our final gut checks while measuring essential skills such as honesty, candor, confidence and courage balanced with hunger and humility, strong verbal and written communication style, emotional maturity/intelligence, self-awareness, responsiveness, listening skills, ability to ask and answer tough questions, ability to receive and apply constructive feedback, and attention to developing other people.
Bryan Passman is a father, a husband, a trailblazer, and Co-founder and CEO of Hunter + Esquire. My professional background before launching H+E was entirely in retained executive search for 18 years in MedTech/Pharma (15 yrs) and Food and Adult Beverage CPG (3 yrs). My deep knowledge of those highly regulated and nuanced industries has helped H+E significantly understand the needs and wants of our cannabis clients. My deep and genuine networks within those industries have helped us deliver that rare talent “unicorn” our clients desire to fit their particular needs. My client-first approach helps us provide a very customized, white-glove, headhunter treatment to client and candidate.
NCIA’s Human Resources Committee is comprised of Human Resource practitioners devoted to bringing best practices to the cannabis industry. Their focus is educating and bringing awareness to misclassification of employees, promoting guidelines for employee safety, clarification on wage and hour issues in the industry and creating checklists to being a legitimate employer.
Commmittee Blog: NCIA’s Diversity, Equity, and Inclusion Committee Offers Critiques and Recommendations for Illinois Social Equity Dispensary Licensing Process
by NCIA’s Diversity, Equity, and Inclusion Committee
We are NCIA’s Diversity, Equity, and Inclusion Committee (DEIC), comprising experienced professionals representing a diverse range of backgrounds. In response to the early results of the Illinois Adult Use Dispensary application process, and with the interest of supporting Illinois’ Social Equity efforts, we felt compelled to reach out and offer our analysis and recommendations.
While the creation of the Social Equity Program in the Cannabis Regulation and Tax Act and Illinois Department of Financial and Professional Regulations (“IDFPR”) implementation of the licensing scheme was well-meaning and intentioned, the recent litany of lawsuits and outcry from advocacy groups following Illinois’ inaugural issuance of cannabis licenses indicates heavy criticism. As demonstrated thus far, the Social Equity Program appears limited in its ability to capture a sufficient representation of persons most harmed by the War on Drugs in Illinois in business licensure and ownership, or to generate the opportunities for restorative justice and building generational wealth for such persons as hoped.
Our intention with this letter is to state our express desire to lend the expertise and resources of NCIA’s DEIC to support Illinois legislators in crafting Illinois’ licensing and regulatory systems in a manner that reflects the Social Equity Program’s laudable mission of reducing barriers to cannabis business ownership, and establishing a legal cannabis industry that is equitable and accessible to those most harmed by the disparate enforcement of drug-related laws in Illinois. Furthermore, we hope to lend support to local organizations building toward that same goal, and to form a coalition as we all strive to rectify the harmful effects of prohibition and the War on Drugs.
At this time, and pending further collaboration with local officials, NCIA’s DEIC makes the following recommendations for your consideration. For further understanding of the analysis supporting these recommendations, please see the attached report.
For IDFPR to move forward with license scoring and issuance as soon as possible, we suggest the following:
Removing the required possession of premises and overhead to hold on to property (not required of dispensary applications and may bankrupt existing applicants awaiting results)
Ensuring oversight of KPMG (the 3rd-party firm hired by the State of Illinois to score the applications) by persons of color and social equity representatives
Allowing for a documented appeals process internally with KPMG results before issuing them to all applicants
Scrutinizing Operating Agreements in the rubric and gradient to ascertain and avoid predatory or straw-man agreements
Moving forward, reasonable transparency would include knowing what the makeup and process was for KPMG in making their first evaluations, and what the process will look like for the re-scoring to avoid conflicts of interest. Specifically, IDFPR can ensure transparency by making the following information public:
Evaluation Rubric
Composition of the Reviewers
Scoring Process and Determination of Grading
Frequency of KPMG Meetings
KPMG Public Relations Contact
Timeline of Events During the Scoring Process
Lessons Learned and Plan for Improvement on Future Scoring Rounds
For future rounds of applications, we offer these recommendations:
Pre-qualifying social equity applicants for state funding to ensure economic empowerment in the application process
Providing a path forward for those who are not (yet) qualified to operate a cannabis business, but are qualified as social equity applicants
Allowing for 100% Social Equity Applicant owned businesses to qualify for cannabis experience points without partnering with a multi-state operator (“MSO”)
Issuing delivery licenses for social equity operators
We also express our support for the recommendations made by the Cannabis Business Association of Illinois’ Minority Access Committee, in their October 5, 2020, letter to Governor Pritzker. (see here)
Finally, we appreciate the efforts taken by Governor Pritzker, the Illinois legislature, and IDFPR thus far to address disparities in the application process and commend Governor Pritzker for taking leadership on this important issue. Allowing this first generation of applicants to address deficiencies in their applications, as it was originally intended to allow them to do, offers another opportunity to enter the lottery system, which we recognize and appreciate.
Additionally, the commission of a disparity study is commendable and should prove helpful in understanding what went wrong and how to improve. If anything, we hope our expertise and professional experience will assist in this process and in the effort to improve upon the mistakes of the past to achieve a more diverse, inclusive, and socially equitable future.
Thank you for your time and attention to this matter. Please let us know if we can assist in any way.
Sincerely,
The National Cannabis Industry Association Diversity, Equity, and Inclusion Committee
Company executives and human resources professionals often talk about company culture as if it were a faraway planet, dreamy to think about and look at, but impossible to grasp. Now more than ever with a global pandemic and civil unrest, company culture is crucial to the success of a business.
So what is it?
Well simply put, company culture is defined as a set of behavioral and procedural norms observed by an organization. Typically, we use policies, procedures, codes of conduct, values, goals and initiatives to mold and shape our company culture. From the employee relations perspective, company culture is a company’s personality.
What are the different types of company culture?
There are many different types of company culture and some industries tend to gravitate towards certain cultures more often than others. The three main types of company culture are leadership, traditional, and innovative.
Leadership company culture focuses on developing employees and helping them grow in their careers through mentorship and coaching. The main idea is to create an organization of leaders, because as many say, a team is only as strong as their weakest link.
Traditional company culture is the most conventional style of company culture and it tends to get a bad reputation for being “stuffy.” Most folks wear suits and ties, there are a lot of rules and policies in place and there tends to be a clear organizational hierarchy.
The last company culture type, and probably most effective for the cannabis industry, is an innovative company culture. An innovative company culture is focused on the development and innovation in the business. This culture tends to break down the barrier to allow for open communication and transparency. Innovative company culture tends to be inclusive and accepting of individuality. Many innovative and creative employees tend to thrive in this setting and thus do amazing work for innovative companies.
What affects company culture?
Outside of the policies and procedures, there are other factors that shape our company culture including company goals, backgrounds and experiences of the aggregate employee workforce, leadership styles, rewards, and disciplinary systems in place as well as local and national government policies. I’d also add cultural norms with the local and national government, as that heavily affects our company culture. For instance, we often look to Europe with mastering work-life balance due to shorter workweeks and longer maternity leaves.
The backgrounds and experiences of the aggregate workforce is also a huge factor we often overlook. If we have an unconscious bias on our recruitment team, chances are, the entire organization will mirror that make-up, backgrounds, and experiences of the in-house recruiters, which leads to a lack of diversity across the board.
Why is company culture important?
Company culture within an organization separates the successful businesses from the failing businesses. In fact, poor company culture will almost always result in high turnover, poor customer experience, disengaged employees, lower morale and eventually lower profitability.
What is Human Resources’ role in company culture?
What can you do as a human resources professional within an organization to support company culture?
Carry out organizational values day-to-day
Effectively communicate company culture through recruiting and new hire processes
Clearly define roles and responsibilities of each employee within the organization
Provide continuous learning and development
Sustain reward and recognition systems
Administer and maintain performance management
What can Human Resources Assess and Develop Company Culture?
Many organizations harness the power of employee experience survey instruments to determine the success (or failure) of their company culture. After developing an appropriate assessment tool, the next step is to administer the assessment properly. Be sure there’s a goal for participation and a plan of action to attack following up with employees who haven’t completed the assessment.
This is where a lot of organizations fall off. After obtaining responses, you must analyze and actually communicate the results of the survey in a town hall. From there, you work on your areas of opportunity in focus groups within the organization. Most focus groups consist of volunteers from all departments and different levels of seniority and experience.
The next step is to actually take action and begin implementing changes that can improve your areas of opportunity addressed in the survey. This assessment process is iterative, so after following through with suggested changes, you follow up routinely with the same assessment. While this process seems daunting, it shows your employees that you actually care about their experience and want to improve as an employer.
As we continue to develop and evolve as an emerging industry, keep company culture at the forefront of your efforts. Remember, if you take care of your employees, they will take care of your customers, and that growth and profits will absolutely come naturally.
Rashaunah “Shawnee” Williams is the co-founder at Illinois Equity Staffing, an MBE and WBE firm based in Chicago, that supports the cannabis industry in education, job placement, human resources, payroll and social equity & diversity compliance. Shawnee and her business partner Lynette Johnson founded Illinois Equity Staffing because they understood the barriers to entry for lower and middle-class people, minorities and women in the cannabis industry. Both having the “Corporate America” background, Shawnee and Lynette, understand the pain points of this population, as they both grew up in disproportionately impacted areas and are minority women. It’s this perspective that has allowed Illinois Equity Staffing to bridge the gap and create a more equitable cannabis industry in Illinois. She is a member of IWC, Chicago NORML, MCBA, the Cannabis Equity Coalition, Cannabiziac, and BIPOCANN. She also serves on the Human Resources Committee with the National Cannabis Industry Association and the advisory board of Cannabiziac.
Committee Blog: Leading With Heart
by Nichole McIntyre, SPHR, SHRM-SCP, Director of Human Resources at urban-gro Member of NCIA’s Human Resources Committee
Want to inspire? Lead from the heart.
I recently attended the Empower 2020 virtual conference where Claude Silver of VaynerMedia held a fireside chat. She is the first person in a professional capacity to have the title “Chief Heart Officer.” What I heard from Claude over the next hour was energizing, though she claims she doesn’t see herself as an inspirational leader. Her modesty came through tenfold as she spoke about her journey toward her role at VaynerMedia, and the lessons she learned along the way. Claude never aspired to have a career in Human Resources, in fact, she doesn’t even consider herself an HR professional. Her message came through loud and clear – it is about the people. Plant the right seeds, and watch them grow. The success of VaynerMedia is undeniable, and it starts at the top by leading with heart. I was definitely inspired.
How many times have we heard it? Business is business, it is not personal. This type of thinking has largely contributed to the state of affairs in which we now find ourselves, which is a heightened state of anxiety in the workforce. The time to start making things personal, and lead with the heart, is at a tipping point. Seize this moment to let employees know you care about the whole person and not just the worker.
All of our working norms have been turned upside down, and it is no wonder there’s a secondary plague of anxiety with a new focus on mental health and employee well-being. With the seismic shift to remote work, many employees have assumed multiple additional responsibilities, in and outside of the office. For working parents, the additional stress of remote learning has caused concern about their abilities to maintain performance levels at work. For some, there is a daily anxiety when it comes to choosing between job responsibilities and engaging as a parent toward the educational development of their children – a choice no one wants to be required to make. Talking with employees to understand both professional goals and personal circumstances is critical.
Increase Communication.
People have an innate longing to connect. Yes, even the introverts. There has never been a better time to increase communication and ensure best practices, such as 1:1’s, employee development, and performance evaluations are taking place. Employees need to hear feedback and understand how their contributions and performance are viewed by both their direct manager and the company, as well as instilling a sense of purpose by identifying how these contributions impact the overall health and strategy for the organization.
Open Yourself Up To Vulnerability.
During these touchpoints, do a lot more listening. Employees need to feel free to communicate anxieties, fears, or concerns. You can model vulnerability by putting yourself out there and sharing your own experience. As a leader, it is your responsibility to create a space where employees feel safe to share information that may be perceived as uncomfortable. When you create the ideal employee ecosystem for each individual, employees are happier, engaged, and more creative. Your company will not only foster an exceptional culture, but you will also reap the rewards financially and improve your reputation in the market.
Invest In Their Development.
Let your employees know you are invested in them and you care about their development. Take advantage of free webinars, launch a book club initiative or a mentorship program. These types of development opportunities have very little cost to the organization, yet reap solid rewards. Further, these initiatives also provide a connection point where insights can be gleaned and you can understand prospects for development that matter most to your employees. These conversations are unique to each individual, as we all have different learning styles, interests, and skillsets on which to focus.
As I mentioned earlier, treating the whole human is critical at this time. Over the past six months, we have become armchair therapists as we help employees navigate an unknown world. Leaders who have the ability to flex their style to meet the needs of their employees will experience a higher level of success and happiness in their teams and business. Ensuring employees have all the tools necessary to navigate the complexities forced upon us overnight is essential. Employee Assistance Programs (EAP) are a good example and typically low cost in comparison to the value they provide. These programs not only provide the mental health benefits needed for employees to navigate life’s challenges but often make leadership and employee development tools available as part of the package.
Becoming an employer of choice is a choice you can make. Companies must do things that set themselves apart from others and capitalize on what makes them unique. We need to stop expecting a square peg to fit into a round hole and individuality should be valued. As leaders, we must adapt to the needs of the workforce, embrace diversity, and value the unique talents each person brings into the organization.
Collectively, we have chosen to work within an industry still fighting for legitimacy. We have the opportunity in a new industry to set the standard rather than follow the status quo, and have certainly followed unconventional methods to get here. Setting the trends for employee well-being and exceptional workplaces can be the imprint we leave on the fabric and future of the working world. We are finding ourselves under a tidal wave of change. The opportunity is before us, let us meet the moment and lead with heart.
I will leave you with a poignant thought from another inspirational and exceptional leader: “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” ― Maya Angelou
Nichole McIntyre is the current Chair of the NCIA Human Resources Committee and Human Resources Director for urban-gro, Inc., a leading engineering design services company and system integrator. Nichole spent the bulk of her 20+ years in Human Resources in the Consumer Products Manufacturing industry, and intentionally pivoted her direction and passion for Human Resources to the Cannabis Industry in 2018. Her goal is to elevate the perception of both Human Resources and the Cannabis Industry through advocacy, engagement, leadership, and coaching. Nichole has served on the NCIA Human Resources Committee since 2018, and was an avid supporter of SAFE Banking legislation during the 2019 NCIA Lobby Days event in Washington D.C. Nichole holds both SPHR and SHRM-SCP Certifications and a Bachelor’s of Science in Business Administration from DeVry University. She is also currently enrolled at Keller Graduate School of Management, where she is just 4 classes away from obtaining her Master’s in Human Resources Management.
MORE Act House Vote Delayed, NCIA Submits Comments on FDA Guidance
by Morgan Fox, NCIA’s Director of Media Relations
In what House leaders have assured supporters is merely a temporary delay, lawmakers announced that the vote on the MORE Act which was originally scheduled for this week has been postponed until at least after the November election.
This legislation – which would remove cannabis from the Controlled Substances Act (CSA), expunge federal cannabis convictions, and establish programs to promote diversity in the cannabis industry and help communities that have been unfairly targeted by marijuana enforcement – was eagerly awaited as the first bill of its kind to get a floor vote in either chamber of Congress. No other de-scheduling bill, particularly one that contains robust restorative justice provisions, has ever gotten a vote since the original passage of the CSA in 1971, and advocates were confident that it would be approved in the House. In recent months, dozens of additional lawmakers have signed on to co-sponsor the bill, bringing the current total to 113.
Unfortunately, despite recent polling showing majority support for the MORE Act among Republican voters (and its job- and revenue-creating potential), some in the GOP attacked Democratic House leadership for moving forward with the bill before Congress had come to an agreement on a new pandemic relief package.
While this is certainly disappointing, House leadership has promised that the MORE Act will get a vote before the end of the year. That gives us at least another seven weeks to continue building support! In the meantime, attention is turning back to pandemic relief, where we are still pushing for the continued inclusion of SAFE Banking language in the final package if Congress can come to an agreement. There are also a number of cannabis-related provisions in this year’s appropriations bills, including removing barriers to research, protecting universities engaged in cannabis research, and preventing federal interference in state-legal medical and adult-use cannabis programs.
Please contact your members of Congress and urge them to support ALL these measures!
In other federal news…
With the help of our Policy Council, Hemp Committee, and Scientific Advisory Committee, NCIA submitted comments to the Food & Drug Administration this week providing recommendations on a number of issues related to how the agency will classify cannabis and cannabis-derived compounds in the future. You can read the full comments here. While the current comment period is now closed, the FDA has been expressing increased interest in input from a variety of stakeholders, suggesting that they are preparing for a change in policy in the relatively near future. It is very likely that there will be more opportunities to weigh in on their policies that could affect the cannabis industry for years to come.
The DEA and USDA both have open comment periods right now, so be on the lookout for more information about how you can help us influence cannabis and hemp policy at those agencies in the coming weeks!
Committee Blog: Best Practices Guide – Allergen Labeling
Determining which edible to consume is an art all by itself. Making that choice when you suffer from food allergies often makes the decision all the more challenging.
Despite the continued federal illegality of cannabis, cannabis products are still obligated to abide by federal labeling requirements regarding the disclosure and identification of the presence of common allergens, including tree nuts (such as coconut and almonds), peanuts, fish, shellfish, dairy, soy, eggs, and gluten. Labels often do identify the presence of those ingredients and sometimes even the traces thereof. Although companies are seemingly committed to following federal requirements, there is still a continued absence of additional, more specific information that could help individuals with allergies make better-informed decisions when selecting their edibles.
A commitment to providing more information in labeling of common allergens not only helps consumers but also has the propensity to battle the stigma of cannabis as an underground and unregulated industry by embracing more advanced self-regulation and increased transparency. Additional information promotes transparency in the production and packaging processes, and provides valuable information to the discerning customer in addition to promoting better business practices. With roughly one in 20 adults allergic to peanuts or tree nuts, at least 5% of purchasers are directly impacted by the information related to the presence and management of nuts in a manufacturing facility.
In the marketplace today, common label designations include “may contain traces of,” “produced in a facility that also processes” or “produced on equipment that also processes.” Rarely is more information provided. Even though broad strokes disclosures satisfy federal requirements and limit legal liability, they do not do much to inform consumers suffering from allergies who could eat something produced with care, but cannot safely or comfortably consume food products that may contain traces of. With anxiety and paranoia, a potential consequence of cannabis overconsumption, the availability of more information about the presence of allergens on a label could possibly cure or temper an unwarranted freakout. More detailed information could even help avoid emergency room visits and the related trauma and anxiety from experiencing allergic reactions or the vestiges of one. No one enjoys the associated trauma and paranoia of hives in their mouth or wheezing while under the influence of an edible because they ate something that may contain traces of and actually did contain traces of the allergen.
The “may contain traces of” designation is good for the edible manufacturer at discharging potential liability, but it does not do much for consumers that are actually allergic to the items beyond sending the signal that if they consume the product, there is a possibly a legally identifiable amount present within the edible that could potentially trigger a severe allergic reaction. The language provides little information as to why there may be traces of the allergen. For the affected consumer, the business practices used to segregate common allergens or otherwise avoid cross-contamination or contact is what is critical for determining the likelihood and magnitude of the risk of any potential contamination, and therefore the risk presented by the consumption of an edible. This language, while good for insulation from liability, is not informative as to how the traces may have occurred and has the potential to be misleading and deter purchasers that would not be deterred if the label were more accurate at disclosing where in the production chain a potential trace of contamination could have occurred.
Manufacturers currently provide notice if there are “traces of,” or if equipment or a facility contains a common allergen, but they could go further. Four potentially more informative versions of “may contain traces of” or “made on the same equipment as other items that include…” or “made in the same facility as items that include” are:
Produced in a facility, but on separate equipment,
Produced on equipment, that processes INSERT ALLERGEN(S), but using best/reasonable business practices to segregate allergens in the production and storage process.
Produced on equipment, that processes INSERT ALLERGEN(S) where the facility produces products containing allergens on different days than products not containing INSERT ALLERGEN(S).
Produced in a facility that processes INSERT ALLERGEN(S) where the facility produces products containing allergens on different days than products not containing INSERT ALLERGEN(S). All production machinery is cleaned between the productions of different types of edible products.
Cannabis edibles product manufacturers could lead the charge on providing more informative allergen disclosures by promoting the use of more descriptive labeling practices. While such a move may cost fractions of a penny in ink and packaging real estate, the goodwill it could buy is invaluable. The loyalty of the allergy afflicted consumer (and the purchasers who care for or care about them) should not be understated. If a little extra print turns one in 20 customers into a lifetime brand patron, it is probably worth the rub.
Brandon Dorsky helps clients navigate the constantly evolving global marketplace in a variety of industries, providing strategic, seasoned counsel to facilitate growth, mitigate risk and seize opportunity in the cannabis, fashion, music, entertainment and media industries. Through a wealth of experience, contacts, enthusiasm, and commitment, clients receive carefully tailored legal and consulting services to accelerate their business’s success.
Committee Blog: What’s Up With Cannabis Standards?
by David Vaillencourt, The GMP Collective, NCIA Facility Design Committee
and Alena Rodriguez, Rm3 Labs, NCIA Scientific Advisory Committee
The cat is out of the bag despite the continued federal illegality of cannabis in the United States. A few years ago, the United States Pharmacopeial Convention (USP) recognized the need for standardization to address the safety and quality of cannabis used for medical purposes for the now estimated 3 million+ patients across the country. While the National Cannabis Industry Association (NCIA) does not develop standards and does not operate as a self-regulatory organization, it strongly supports the work being done by experienced standards-setting bodies. While NCIA lobbies for federal descheduling, the involvement of the USP and other organizations is another strong indicator of progress with respect to consumer and patient safety.
The USP is a nonprofit that humbly began with a small group of physicians on a brisk New Year’s Day in January of 1820. At the time, people would turn to their local apothecary for medications, where a druggist would mix together custom preparations from hand-collected plants and minerals. The types and quantities of these ingredients varied widely, with multiple names for the same medicine. Though sometimes not the fault of the physicians, it was not uncommon for the treatment to be worse than the disease. The USP rapidly evolved from a resource to an authority, when the importation of poor-quality medicines from Europe led to the Drug Importation Act of 1848. Tragic incidents of impurities and toxins in drugs over the years ultimately led to the 1938 Food, Drug and Cosmetic Act, in which Congress declared that certain medicines sold in the US must meet applicable USP quality standards. It should be noted that the USP included standards for cannabis preparations in the Pharmacopeia from 1851 until 1942.
Nearly 80 years later, the USP and several other internationally recognized groups are responding to the need to support the cannabis industry despite the quagmire of cannabis legality. Recently, the USP formed an expert panel of clinicians, scientists, and industry representatives from around the world resulting in a peer-reviewed article recently published in the Journal of Natural Products. The recommendations offered in this article (available here) provide a valuable foundation for the alignment of testing and quality attributes for cannabis flower. It is important to note that the USP published this information in a peer-reviewed article rather than a formal compendial monograph because of cannabis’ Schedule I status. Regardless, this article is another critical milestone towards standardization of the widely used plant, and it is only possible with support from individuals with knowledge of cannabis. Fortunately, there are established platforms that we as an industry can participate in and align with, known as Standards Development Organizations, or SDOs, that work closely with the USP to continue the advancement of our industry. In fact, many SDO efforts are referenced in the USP article.
ASTM International is one SDO that has responded favorably to industry and regulatory requests for assistance in standardizing cannabis. Founded in 1898 as the American Society for Testing and Materials, the group pioneered the standardization for the steel used to fabricate rails as frequent rail breaks across the fast-growing railroad industry plagued efficient transport of goods across the country between previously disconnected cities. Of the over 12,800 global standards published through ASTM’s rigorous consensus process, nearly one-third of them are codified within our federal regulations. ASTM Standards help ensure that the products in our lives can be depended on for safety, quality, and reliability.
The next time you wear a snowsport helmet, buy a crib for your child, use surgical gloves, pump gasoline, or get a new roof for your house, thank ASTM for creating the standards that help ensure that these items are safe. And lucky for us, now ASTM is focusing on cannabis standards.
In 2017, Committee D37 on Cannabis was formed, with subcommittees focused on developing test methods, cultivation best practices, quality assurance, processing and handling, security, and electronic devices. Today, over 800 members from 26 countries are actively contributing to the development of voluntary consensus standards. To date, more than a dozen voluntary consensus standards have been passed through the highly respected balloting process, providing specifications on water activity for cannabis flower, guidance on security plans, and many more. You can learn more about Committee D37 here and become a member here.
Another SDO is AOAC International, formerly known as the Association of Official Analytical Chemists. AOAC is a third-party, international association that establishes standard analytical methods and has been around since 1884. With the help of expert volunteers, AOAC ensures allOfficial Methods of Analysis (OMA) are highly scrutinized, scientifically sound, and defensible. OMA methods are recognized in the U.S. Code of Federal Regulations and are legally defensible in court globally.
AOAC created the Cannabis Analytical Science Program (CASP) to convene experts to discuss, develop, and validate cannabis testing standards. CASP is made up of five working groups: Microbiological Contaminants, Chemical Contaminants, Cannabinoids in Consumables, Training and Education, and Proficiency Testing. So far, CASP has published two First Action Official Methods for Cannabinoids in Cannabis sativa Dried Flowers and Oils (2018.10) and the Quantitation of Cannabinoids in Cannabis Dried Plant Materials, Concentrates and Oils (2018.11) and which are the first internationally recognized methods for potency in cannabis. They have also released several Standard Method Performance Requirements (SMPRs) that are developed through a voluntary consensus process, and prescribe the minimum analytical performance requirements for analytical methods during validation of the method. You can learn more about CASPhere and register to joinhere.
The work of USP, ASTM, AOAC, and others supports effective quality control of consumable products to promote public safety. These organizations create standards that are recognized by federal and state regulations across applicable consumable industries. Standards allow consumers to trust the products they buy have been subjected to thorough safety and quality controls that are the same no matter which state you buy the product in. Each organization has created an expert panel specifically for cannabis in order to help prevent uneven approaches to safety and quality. The efforts of USP, ASTM, AOAC, and AHPA directly relate toNCIA’s mission to promote the growth of a responsible and legitimate cannabis industry. With several thought leaders active both in NCIA and these organizations, it is imperative that moving forward we liaison with each other to ensure cannabis quality efforts are in alignment.
As NCIA says, “our industry is stronger, smarter, and more prosperous when we work together.”
Committee Blog: Join Us On The Facilities Design Committee!
Make an impact in the cannabis industry!
Our Mission
NCIA’s Facilities Design Committee provides access to resources for the NCIA community and regulators that will inform the design and use of GMP-driven, sustainable and operationally efficient facilities to position our industry to compete in the global marketplace.
The FDC is open to all members of the National Cannabis Industry Association. If you have experience and passion in one of the following areas, we encourage you to apply:
Systems engineering
Controlled Environmental Agriculture
Facility Design
Environmental Systems & Controls
Cultivation Licensing
Cultivation Building
Governmental standards or Associations
Value to You
Gain recognition as a thought leader in the cannabis industry
Give back to the industry through education, advocacy, and community building
Network with other facility design experts across the U.S.
Participation Expectations & Required Commitment
Members who apply and are accepted must be willing and able to:
Webinar Recording: NCIA Committee Insights – How Can You Get More Engaged With NCIA? Let’s Talk Committees!
Applications for NCIA committees are now open through August 1, 2020!
Committees are the heart of NCIA, and one of the best ways to take advantage of your membership and be an active participant.
As an active committee member you be able to:
Network with other professionals in your issue area
Influence policy
Create content promoted throughout our networks
Raise your visibility
But don’t just take our word for it — hear first hand from the chairs of some of our committees about their experience being on the committee and highlights from this last term.
Now that COVID-19 shelter-in-place orders have eased restrictions for businesses to re-open across the country, employees and employers alike will have questions about returning to workplaces. Each city, county, and state will have its own specific requirements as to when and how you can re-open your business so you should be sure to check your own regional and municipal requirements. Whether you are getting ready to re-open or have been operating, we provide some FAQ’s to help facilitate a safe and compliant operation for your cannabis business in this new COVID-19 era.
Do my employees have to come in?
The short answer is yes, with caveats. You have the right to request that your employees return to work where the local rules allow for it. Please keep in mind that your re-opening must comply with local guidelines in order for you to require your employees to return to work. However, simply notifying them to return to work is only the start of the process. If they qualify for certain leaves, they can take that. Remember that the new Families First Coronavirus Response Act (FFCRA) will be effective until December 31, 2020. If they require accommodations, these need to be considered. Otherwise, if an employee has no special consideration and you need them in order to operate, you can take action if they refuse to return.
The practical reality is that many people are hesitant and afraid to return to work, especially without knowing how they will be protected. Most employers are being flexible about when and how they are bringing employees back to the workplace, especially if employees have been successful with working from home, have childcare issues, or are in a vulnerable population. If you are creating a workplace protection plan (see FAQ #2), consider sharing that plan in advance with your employees to ease their minds and make sure everyone knows what to do when they return to work.
Always remember, there is a difference between someone saying that they don’t want to return to work because they are generally afraid and someone saying specifically “I’m afraid to come back because I am immunocompromised.” And remember that an employee does not need to specifically ask for an accommodation. Simply advising that they are immunocompromised triggers your requirement to engage in the interactive process, which could result in modified hours, a special mask, moving a workspace, continued telecommuting, different job duties, or a leave of absence.
How can you keep employees safe?
With a pathogen as contagious and lethal as the coronavirus that causes COVID-19, employees will rightly want to know how they will be protected. To reassure employees, create a workplace protection plan that addresses the identification and isolation of sick employees, social distancing, workplace hygiene, and workplace cleaning. Share all safety steps that are being taken to maintain a safe work environment with your employees. Of course, each workplace is unique and will require different policies tailored to their specific sites.
General policies you should consider adopting include enforced safe distancing policies, temperature and/or daily question screenings, continued education on the importance of frequent hand-washing, cleaning and sanitizing of workspaces, minimal face touching, staying home when sick and self-monitoring of symptoms. Some examples to help maintain a safe worksite include having ample hand sanitizers available throughout the worksite, keeping office doors closed, wearing appropriate face coverings, marking off the 6-foot spacing with tape or other indicators, designating hallways and stairways as one-way, propping open doors to eliminate the need to touch handles, adding Plexiglas barriers at workspaces. Employers may also consider closing common areas or limiting the number of people who may use such spaces at a time.
Does the company have the right to ask about employee health history and take temperatures?
Yes. Employers are allowed to ask about coronavirus-related symptoms and take the temperatures of employees under guidance from the Equal Employment Opportunity Commission (EEOC), and some states now require it. The EEOC also permits employers to mandate that employees be tested for the virus before entering the workplace under certain circumstances, such as known exposure to someone already infected by the virus.
Testing should be administered in the least invasive way possible, like utilizing temperature guns or forehead temperatures. Testing should take place at the earliest possible opportunity at the workplace, to protect employees who have made it through already. Consider staggering start times, so that lines do not form. If a medical professional or person with medical training is available, have them administer the temperatures. If somebody with medical training is not available or onsite, the company should consider whether managers or HR employees may be trained to administer and read the test results.
If temperature taking at the workplace is mandated, the time spent being tested and waiting for a test should be considered part of the workday, and the process should be well thought out to eliminate crowding. If an employer requires the temperature be taken at home before coming in to work, the employer should consider allotting a few minutes on employees’ time cards for doing so. Consideration must also be given to providing notice to employees of the temperature screening process, data being collected and kept (if any) and the consequences for failing a screening. Please note that any data collected must be kept securely and separate from employees’ personnel files.
If an employee is sent home after screening, can employers require temperature testing or a doctor’s note to confirm they are no longer infected?
Yes. If someone has been sent home due to symptoms, administering a temperature test before allowing the employee to return to work is appropriate as the CDC recommends individuals be fever-free for at least 24 hours to ensure they have recovered. The CDC also recommends that anyone who recently had close contact with a person with COVID-19 should stay home for 14 days. The CDC, therefore, recommends that potentially exposed employees who do not have symptoms should remain home for 14 days. In such situations, please refer back to the FFCRA for requirements regarding paid leave.
Additionally, the EEOC has clarified that the ADA permits employers to require employees returning to work to provide a doctor’s note stating they are fit for duty because the inquiry would not be disability-related and/or because confirming that an employee is no longer contagious is a legitimate business necessity. The EEOC notes, however, that “doctors and other health care professionals may be too busy during and immediately after a pandemic outbreak to provide fitness-for-duty documentation. Therefore, new approaches may be necessary, such as reliance on local clinics to provide a form, a stamp, or an e-mail to certify that an individual does not have the pandemic virus.”
Can employers require employees to wear masks or other personal protective equipment?
Yes. The Centers for Disease Control and Prevention recommends the use of “cloth face coverings to slow the spread of the virus and help people who may have the virus and do not know it from transmitting it to others.” Many employers are making face coverings part of the work uniform, especially for jobs that require physical proximity. Some states and localities have required face coverings in order for businesses to re-open. Be sure to check your specific region for your own requirements. However, keep in mind that employers may be required to either provide employees with masks or other personal protective equipment or reimburse them for the expense if required to do their jobs.
Also consider whether or not to require your customers to wear masks. There may or may not be a local requirement to do so, but customers are an additional COVID-19 vector that should be considered when preparing for your employees to return. Just like employers may deny service to customers without a shirt or shoes, they can deny service to customers without a facemask.
What happens if an employee gets sick with COVID-19? What happens if someone in an employee’s family gets sick with COVID-19 and the employee is the caregiver?
Employers need to understand state laws and federal programs which have been enacted to deal with this pandemic. The FFCRA provides paid sick leave for people affected by COVID-19, as well as paid emergency family leave under certain circumstances including when the employee’s child care is unavailable for reasons relating to COVID-19 or when the employee must care for someone subject to a quarantine order or advised by a healthcare provider to self-quarantine. The United States Department of Labor has issued a helpful summary of FFCRA.
What if a co-worker gets sick?
Privacy rights must be maintained, but employers must also maintain a safe workplace and the law allows for them to do so. If temperature screening reveals a fever, that employee should be immediately sent home with return-to-work instructions. The employer should follow up with the employee regarding who they worked with, all the locations they worked and any other information to be able to notify all individuals who the employee came into contact with and comply with the most current local, state, and federal public health recommendations. If an employee calls in sick specifically with COVID-19, the employer should do the same. Actions may include closing the worksite, doing a deep cleaning, and/or requiring employees to work from home for a period of time. If deep cleaning is called for, the CDC recommends hiring professionals.
Under no circumstances should sick employees be identified by name. Notification to affected employees must not reveal any personal health-related information of an employee.
Committee Blog: Cannabis Classification and the Role of Terpenes
Cannabis is thought to have originally been domesticated in the mountainous regions of Central Asia. As humans started exploring the world, they brought the plant with them, and the plant needed to adapt to the different climates in order to thrive. This gave rise to many of the cultivars (or “strains”) we deem as “landrace,” allowing some subspecies of the cannabis plant to naturally start propagating. Since plant breeding didn’t become en vogue for thousands of years until Gregor Mendel’s work with pea plants, these natural cultivars were able to gain great genetic fitness, as well as become genetically diverse from other landrace strains as they adapted to their specific, often isolated, environments analogously to the finches of the Galapagos Islands.
We are all familiar with indica and sativa. With growing popularity of plant breeding and creating crosses of indica-dominant and sativa-dominant strains, we have largely lost true landrace cultivars that are 100% one way or the other. Almost every strain sold in the modern market is a hybrid, featuring a mixture of indica-derived and sativa-derived genes. Did you know that indica and sativa designations focus more on the phenotype, or the observable characteristics (e.g. height, leaf shape/color, and branch formation), rather than genotype, the unique DNA sequence of an organism?
In cool and dry climates, the cannabis plant leaves are broader and there is less space between branches. This creates a shorter, more compact plant that is better able to retain heat and moisture. The broad leaves help maximize photosynthesis on the otherwise short-statured indica-dominant plants. If you instead look at a warmer climate, you will see the plants grow much taller and thinner. They grow up and out more so that they can easily dissipate the heat and moisture in these warmer regions. The branches of the sativa-dominant plants are also longer and the leaves have more nodes, though they are thinner than that of an indica plant. All of these characteristics may also help prevent mold growth on a sativa-dominant plant due to better air flow within the plant.
Since indica and sativa classifications are more likely to indicate landrace phenotypes and the climate in which the cannabis plant grew in, new methods of classification are being explored to better express to consumers and patients the effects of the cannabis or cannabis-infused product they are using. For example, Leafly launched a new way for their website to categorize cannabis strains that considers terpene profiles, rather than labeling them as indica, sativa, or hybrid. Since terpenes are produced in plants other than cannabis, a description based on terpene profiles is the most compelling option, as research can be done on the effects of terpenes produced by other sources. While the entourage effect in cannabis is likely important to its variable uses in medicine, more research is warranted to fully understand the effect.
Terpenes and Terpenoids
Terpenes are plant constituents that impart olfactory, gustatory, and medicinal properties to plants. These Volatile Organic Compounds (VOCs) are “Generally Recognized as Safe” by the FDA and are composed of repeating isoprene units arranged head-to-tail to create the over 200 terpenes known to be produced in the cannabis plant. These terpenes are found in other plants as well. Terpenes generally come in three varieties depending on how many isoprene units are used to construct them: monoterpenes are composed of two isoprene units, sesquiterpenes of three units, and diterpenes of four units.
The term “terpenoid” is often used interchangeably with the term “terpene.” The difference is terpenoids are modified terpenes that contain oxygen, while terpenes are hydrocarbons containing only hydrogen and carbon. This modification usually occurs through either the movement or loss of a methyl (-CH3) group or, more commonly in cannabis, through its interaction with oxygen during the drying/curing process. As such, “terpenoids” are more correctly used to describe smokable flower, whereas “terpene” is more accurate when describing the compounds when they are being produced by the living plant.
Terpenes have three main purposes: environmental adaptation, the repulsion and destruction of predators, and the attraction of pollinators. Monoterpenes, such as limonene and α-pinene, tend to predominate in the flower portion of plants and have been shown to repel herbivorous insects in Arabidopsis thaliana, often used as a model organism of the cannabis plant, due to their volatile aromatic properties. Sesquiterpenes, on the other hand, have a bitter taste and deter larger plant-eating organisms, due to their predominance in the leaves of a plant. The sticky nature of terpenes also helps to trap bugs as they move around on the plant. From the perspective of cannabis, humans have shown to be excellent pollinators as illustrated by the diverse cannabis strains available at your local dispensary.
Terpenes are strongly inherited from parent plants and are not often affected by environmental factors over the short term. Terpene profiles, therefore, can be used to help distinguish between indica-dominant and sativa-dominant classifications due to the ratio of individual terpenes’ stimulating or sedating properties. Below are descriptions of some of the most common and best-researched terpenes. The summation of sedating and stimulating terpenes produced by the plant will determine whether the net effect of consumption will have more “indica” properties or more “sativa” properties.
α-pinene is one of the most common terpenes found in nature occurring in pine trees as well as many common spices such as rosemary, basil, and dill. Along with its role as an insect repellant, it has also been shown to have anti-inflammatory properties. It has the ability to cross the blood-brain barrier and inhibits the breakdown of acetylcholine, a neurotransmitter which can stimulate cognitive functions. This will cause α-pinene to have more of a stimulating effect.
Limonene is another common terpene found in citrus fruits. It has been shown to help with anxiety and depression by increasing dopamine and serotonin levels in the brains of mammals. Limonene has also been shown to increase alertness as well as help with weight loss and relief of gastric distress.
β-myrcene is one of the most common terpenes found in cannabis, though it is also found in hops and mangos. It gives off an earthy aroma of cloves and has been shown to have pain-relieving and anti-inflammatory properties in mice. Due to its sedating effects, it was thought to be a reliable indicator of indica strains; however, recent studies have shown that this terpene is equally present in both indica and sativa strains. The sedating properties are responsible for the ”couch-lock” effect some people experience when consuming certain cannabis strains.
β-caryophyllene has a dual use in protecting plants from grazing species since it both attracts insect predators as well as repels grazing insects. It is commonly found in spices such as black pepper and oregano and has a spicy flavor. It can act as a gastro-protective agent and is helpful in fighting stomach ulcers. It has also been shown to help combat symptoms of opioid addiction, through a process called opioid sparing. β-caryophyllene selectively activates CB2 receptors, the cannabinoid receptor primarily found in muscle tissue as opposed to brain tissue which is generally high in CB1 receptors. Due to this, it has more physically sedating properties making it a common terpene found in more indica-leaning strains.
Linalool is a terpenoid alcohol commonly found in lavender. It is a highly sedating phytochemical that is coveted for its anti-anxiety properties. It also helps as an antidepressant since it assists in serotonin-receptor transmission. As an anti-epileptic, it helps to modulate motor movements, presumably due to its sedating properties. When applied topically, it has been shown to help heal skin burns as well as treat acne.
Through a combination of these terpenes and the other 200+ terpenes found in the cannabis plant, we get a balancing act between sedating and stimulating properties. And since everything is technically a hybrid now, the cannabis industry should strongly consider other ways to categorize different cultivars, rather than just indica or sativa, to better educate the consumer on its effects.
The Scientific Advisory Committee is comprised of practicing chemists and other scientific field professionals to advise other NCIA committees as they work to develop standards and guidelines for the various sectors of our industry, ensuring that any formal recommendations produced by other NCIA committees are scientifically sound, sustainable, and legitimate.
Committee Blog: Practical Tips for Cannabis Businesses Impacted by Theft and Property Damage
As the country continues to grapple with the murder of George Floyd and its aftermath, we have seen reports that numerous cannabis dispensaries in California, Illinois, Oregon, and elsewhere have been the victims of theft and property damage. A number of shops have been hit multiple times in successive days, with many reports indicating that businesses are being targeted by organized groups not involved in protests.
The owners of these dispensaries, like many of the other business owners around them, are likely asking themselves: Is my insurance going to cover this? The good news is that, for many of them, it is likely that they will have coverage for at least some of the losses that they have suffered. What losses are ultimately reimbursed can depend on a number of factors, including what an impacted business owner does in the immediate aftermath of an incident. Thus, we provide below an outline of the steps that businesses should follow in the unfortunate event that your shop has been damaged:
File a police report.
Immediately report the loss to the relevant cannabis regulatory authority (check both state and local regulations to ensure full compliance).
Get in contact with your insurance provider and file a claim immediately. Once filed, you will receive a claim number and an assigned claims adjuster who you will work with from the very beginning to the end of the claim.
Ensure your place of business is well protected (even after the loss). Do your very best to continue to protect what you can after a loss.
Document everything. Take photos, save and review your video surveillance. Your insurance company will ask for this when you file a claim
Begin taking inventory of everything that has been damaged, destroyed, and stolen. Your insurance company will need this as well.
Review your insurance policy again and speak with your insurance professional.
Does your insurance policy cover civil unrest, theft, or vandalism coverage? Is it excluded? Is it not listed at all? Many cannabis businesses operate under property insurance policies that will cover losses for property damage and theft that occurs during a public disturbance.
Some insurance policies, however, contain “protective safeguard” endorsements creating certain requirements that the cannabis business owner must follow or a claim can be denied. Many of the requirements include a central burglar alarm, cameras, an approved vault or safe room, and other similar risk mitigation measures. Pay special attention to these protective safeguard requirements, and ensure that all are met. This can be particularly important for businesses that have already been the victims of crime. If the safety systems in question have been damaged or are otherwise inoperable as a result, make sure to put your insurer on notice of this fact and, ideally, get them to approve a temporary accommodation relieving your business of the relevant protective safeguard.
Policies may also be “sublimited” for certain types of property coverage, meaning that limits for particular types of loss are lower than the overall policy limits. Impacted businesses should look for a page entitled “Property Optional Extension Endorsement.” The types of coverage that might be sublimited include:
Employee Dishonesty;
Money and Securities;
Outdoor Property (Fences, Radio/TV Antennas/Satellite Dishes and Signs Outdoor Property (Trees, Shrubs or Plants);
Personal Effects and Property of Others (relevant if a dispensary has not taken title to product): and
Valuable Papers and Records (Other Than Electronic Data).
In addition to taking these actions, dispensary owners in cities where civil unrest is ongoing should give consideration to reducing their store hours or even closing entirely until conditions change in order to keep their staff safe. For those concerned about leaving product in their stores and having it stolen, some states, including California, allow for licensed cannabis dispensaries to remove product from a licensed facility in the face of a public disturbance or emergency. Nonetheless, businesses should always consult their state and local regulations and/or consult with an attorney before removing cannabis products from their facilities in any way that would normally be impermissible under applicable laws.
In sum, while cannabis dispensaries unfortunately appear to be attractive targets for opportunistic criminals, there are a number of steps these businesses can and should take right now to help them begin to pick up the pieces.
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by Deborah Johnson, MCA Accounting Solutions & James Whatmore, MAB Investments
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