Committee Blog: Returning To Work During COVID-19

By Heidi C. Quan and Jeffrey David
Members of NCIA’s Human Resources Committee

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

by NCIA’s Scientific Advisory Committee

From Indica/Sativa to Hybridization

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

By Stephanie Bozzuto, Jason Horst, Eric Rahn, and Ian Stewart
NCIA’s Risk Management And Insurance Committee

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.

NCIA Committees: Now Accepting Applications For 2020-2021 Term!

NCIA is excited to announce that we are accepting applications for the 2020-21 Committee term! We need your skills, passion, and wide-ranging perspectives to build upon our energetic, inclusive, and innovative committees. NCIA committees are an opportunity for our members to get engaged in specific industry issues and sectors of their professional expertise and interest.

All NCIA annual members in good standing are invited to apply for an NCIA committee seat for the 2020-2021 committee term, to commence on August 1, 2020.

NCIA committees enable NCIA members’ to engage their vast and varied areas of expertise and passion to:
effect change and influence public opinion and policy,
enhance your leadership skills,
expand your professional and personal network, and
develop best practices and guidelines to shape the future of our industry.

Requirements:

All NCIA annual members whose memberships are current may apply;
Appointees (or their employing company) must maintain a current membership throughout the term of their appointment;
Appointees may serve on no more than one committee at a time;
All committee applicants must complete the online form fully and in good faith by the August 1, 2020 deadline; and
Appointees must commit to dedicating at least a few hours monthly to their committee projects and scheduled meetings/calls. Committees may hold scheduled teleconferences, but the majority of committees’ work will be done online.

APPLY FOR A COMMITTEE

Review the list of current committees and see if one is a good match for you. If so, apply today to become tomorrow’s NCIA committee leader!

Together, we can accomplish incredible things and help steer the cannabis industry in the United States towards its bright future. Apply today for the committee that interests you the most, or reach out to Committees@TheCannabisIndustry.Org with questions or ideas.

Webinar Recording: NCIA Committee Insights – Managing Novel Risks During the COVID-19 Crisis

In case you missed it, watch the recording of this webinar from April 27, 2020. NCIA’s Risk Management and Insurance Committee presents a conversation regarding how cannabis operators can mitigate the risks that the coronavirus presents to their customers, their employees, and their businesses. Get actionable advice and expert insights regarding how to manage your risk and avoid potential liability while keeping your essential business open.

Topics addressed include:

Identifying all novel risks presented by COVID-19
Addressing the availability for insurance coverage for COVID-related losses
Creating SOPs around employee and customer safety
Increased delivery exposure and SOPs around fleet management, driver safety/protection
Managing increased cyber security risks through insurance and strong SOPs
What coronavirus teaches us about the import of proactive risk management

Speakers include:

Jason Horst, Principal
Horst Legal Counsel

Stephanie Bozzuto, Co-Founder & President
Marketing Cannabis Connect Insurance Services

Summer Jenkins, CLCS, Senior Product Development Manager
Cannasure Insurance Services

Eric Rahn, Managing Partner
S2S Insurance Specialists

Wes Gilbreath, CFO
Continental Heritage Insurance Company

Eduardo Provencio, General Council
Mary’s Medicinals

Committee Blog: Employee Privacy Guidelines In A Time Of COVID-19

By NCIA’s Human Resources Committee 

Privacy Guidelines

As employers across the country bring back their employees, coronavirus risks remain top of mind. These concerns are important to ensure both the safety of their employees and the ability of their businesses to remain open. No one wants their employees to experience a spike in infections, or to subsequently close down as a result. However, protecting employees and businesses from COVID-19 is not as simple as asking an employee if they are sick. Federal and state laws restrict the type of medical information an employer can require an employee to share, even during the pandemic.

Under the Federal Americans with Disabilities Act (“ADA”) and the California Fair Employment and Housing Act (“FEHA”), medical inquiries are generally not allowed unless they are job-related and consistent with business necessity. Under this standard, medical inquiries are allowed if the employee poses a “direct threat” to him/herself or others because of a medical condition. FEHA regulations provide that factors to be considered when determining the merits of the direct threat defense include, but are not limited to:

  • the duration of the risk;
  • the nature and severity of the potential harm;
  • the likelihood that potential harm will occur; and
  • the imminence of the potential harm.

FEHA regulations say that the analysis of these factors should be “based on a reasonable medical judgment that relies on the most current medical knowledge and/or on the best available objective evidence.”

Unfortunately, this leaves the answer to whether employers may make medical inquiries or take temperatures “it depends.” Ultimately it becomes a business/risk tolerance decision. Asking employees questions about their medical condition and taking their temperatures may be more defensible if there has been documented exposure to COVID-19 in the workplace or a high rate of contagion in the community. 

The answer will also depend on what the Centers for Disease Control (“CDC”) determines. If the CDC makes a determination that COVID-19 is significantly more severe than the seasonal flu, it could pose a “direct threat.” Under the ADA, a direct threat is “a significant risk of substantial harm to the health or safety of the individual or others that cannot be eliminated or reduced by reasonable accommodation.” When the CDC advises testing, employers will have better standing to require it. CDC guidance is available here.

The Equal Employment Opportunity Commission has also issued specific COVID-19 guidance. The EEOC has advised employers that they may ask all employees who physically enter the workplace if they: (i) have COVID-19; (ii) have been tested for COVID-19; or (iii) are experiencing symptoms associated with COVID-19. Employers may also check the temperatures of employees entering the workplace. If an employee refuses to answer or refuses to submit to a temperature check, the employer may refuse to permit him or her to enter the workplace. However, employers should reassure refusing employees that the questions are simply designed to ensure workplace safety.

Employers may then single out individual employees for temperature checks or questioning only if the employer has a reasonable belief, based on objective evidence, that the employee has COVID-19 or symptoms associated with COVID-19. Employers may also ask employees if they have had contact with anyone who has been diagnosed with COVID-19 or who has symptoms of COVID-19.  

If a manager learns that an employee has COVID-19 or symptoms associated with COVID-19, the manager may disclose this information to which employees are necessary to take action consistent with CDC guidance. As a general rule, employers should try to limit the number of necessary employees” who know the employee’s identity. Everyone informed of the employee’s identity should be told to keep the information confidential. This includes telling others that an employee may be absent or working from home, but not explaining why.  

If employers do decide to take temps, there are multiple additional issues to consider: who will do the testing? What training? Will nonexempt employees be paid for their time undergoing testing? What will the employer do if the employee refuses? What information is recorded? All of these questions should be addressed in advance, and the answers should err on the side of caution. Tests should be simple, as non-invasive as possible, and as little data should be recorded as possible. Data for each employee should be recorded separately; an employer should not compile a single list of employees and their temperatures. An employer could, however, maintain a record of a single employees’ temperature of time. In other words, a single piece of paper could track an individual employee’s temperature history, but not the entire workforce’s temperature history.

In summary, employers must be careful to ensure their employees’ privacy rights remain respected and protected as they return to work. Employers may take reasonable precautions to ensure infected and at-risk individuals do not work, but must be careful in the questions they ask and the manner in which they record and keep the information. If a diagnosis is confirmed, employers must also be careful about who that information is shared with. Everyone wants a safe workplace; employers must simply keep in mind that a safe workplace is one that ensures an employee’s physical safety as well as their privacy.  


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.

Committee Blog: Cannabis and COVID-19 – A Legal Perspective

By Sahar Ayinehsazian and Kelsey Middleton, Vicente Sederberg LLC
NCIA’s Banking & Financial Services Committee

As the COVID-19 pandemic continues to alter the day-to-day lives of humans across the globe in an unprecedented fashion, industries have made considerable adjustments to maintain their operations while protecting the health and safety of the workforce and the public. While some industries have had to cease operations to comply with “stay-at-home” orders, most states regulating cannabis have deemed cannabis essential, allowing cannabis businesses to continue operations during the COVID-19 quarantine period. The fact that cannabis was deemed essential in states such as California, Colorado, Illinois, and Michigan, demonstrates a major shift in public perception of cannabis and its utility. While challenges remain as they do for all industries, the cannabis industry appears poised to withstand the pandemic and to solidify its role in the economy. 

Despite being deemed essential, adult-use cannabis sales have begun decreasing in states such as California, Colorado, and Nevada. Washington, however, reported record sales in April highlighting the diversity of legal markets throughout the United States. States that derive considerable sales for cannabis tourism like Nevada and California may see losses due to travel restrictions and mandatory self-quarantine periods. Although early sales reports suggest that the industry is equipped to weather this crisis, April sales only reflect the market one month into the pandemic that is likely to extend through the summer and potentially into next year. Thus, much remains unknown about the industry’s potential to stave off the impacts of an increasingly likely economic recession. Still, reports show that demand for cannabis remains strong and could potentially increase as the nation grapples with the significant financial and emotional duress associated with the pandemic. 

States have taken proactive measures to ensure that patients and customers may safely access cannabis. States including California and Nevada have issued official guidance on best practices for cannabis businesses to observe to mitigate the spread of infection and preserve and promote public health. This guidance has largely prioritized the reduction of person-to-person interaction and adherence to heightened sanitation and hygiene protocols. Best practices for reducing person-to-person interaction include conducting sales by pick-up or delivery where possible, reducing the number of individuals allowed at the dispensary at any one time, and controlling the flow of visits to reduce the potential for exposure. Retailers have used space indicators like chalk, tape, and stanchions to demarcate 6-feet of separation between customers standing in line. Best practices for maximizing sanitation and hygiene include the promotion of contact-free systems such as tap-and-pay payment technology where possible, and the removal of handheld menus, tablets, and iPads, and aroma jars from dispensary surfaces. Retailers are advised to clean and sanitize commonly touched surfaces on a routine basis and to provide hand sanitizer to all employees and patrons in conspicuous locations to encourage frequent sanitization. Additionally, employers are required to monitor their employees’ health and hygiene practices. Employers should require any employer showing a COVID-19 related symptom to stay home from work. 

While some businesses can rely on federal stimulus programs such as SBA loans for COVID-19 related relief, cannabis businesses cannot. Despite being equally harmed by the pandemic as other law-abiding, tax-paying small business operators, cannabis operators are ineligible for such funding because the cultivation and sale of cannabis remains illegal under federal law. While cannabis businesses are not currently eligible for federal relief programs, it appears that cannabis businesses may be eligible to defer the deposit and payment of their share of Social Security tax. 

Nonetheless, as further proof of the growing bipartisan support for cannabis, multiple senators and congress members have requested that future COVID-19 relief packages include accessibility for cannabis businesses. One of the main reasons cited has been the cannabis industry being deemed “essential,” thereby allowing it to provide much-needed support to various states’ economies. 

While the details of a post-COVID-19 world remain to be seen, one thing is clear – cannabis will continue to play a growing and important role in the U.S. economy.  


Sahar Ayinehsazian is an attorney in Vicente Sederberg‘s Los Angeles office, where she focuses on corporate transactions, cannabis banking, and regulations. With her specialized knowledge, Sahar helped to establish and currently co-leads Vicente Sederberg’s Banking and Financial Services Department. As a member of the National Cannabis Industry Association’s Banking Access Committee, Sahar also works on strategy and educational advocacy to enable state-licensed businesses to obtain accounts at depository institutions.

 

Kelsey Middleton is a Regulatory Specialist in Vicente Sederberg’s Los Angeles office, where she focuses on licensing and regulatory compliance. Kelsey is responsible for assisting a dynamic range of cannabis clients in obtaining state and local cannabis licenses, permits and approvals, and navigating the complex and rapidly evolving regulatory landscape of the cannabis industry. She routinely helps clients prepare the requisite applications and documentation for state and local licensing and permits, and facilitates communications with cannabis industry regulators to promote efficiency and compliance throughout the licensing process.

 Prior to joining VS, Kelsey interned at the Los Angeles Department of Cannabis Regulation where she analyzed proposed cannabis legislation and approaches for enhancing the efficacy of cannabis social equity programs. 

 Kelsey obtained her Juris Doctor from the UCLA School of Law, where she was the Co-Founder and Co-President of the Cannabis Law Association, and External Relations Chair of the Black Law Students Association.

 

 

 

 

 

Webinar: NCIA Committee Insights – Cannabis Retail Success and Strategies

NCIA’s #IndustryEssentials webinars are our new weekly educational series featuring a variety of programs allowing us to provide you timely, engaging and essential education when you need it most.

The NCIA Committee Insights series showcases content produced in partnership with one of our 15 member-led committees.

According to a recent Gallup poll, 66% of Americans support the federal legalization of recreational marijuana and with that comes an ever-expanding retail footprint. This session is designed to address the unique challenges faced by cannabis retail leaders and entrepreneurs in planning their operations for success in a modern retail environment. The panel will take a look at Talent, Brand, and Compliance strategies with real-life case studies to help provide valuable take-aways for the implementation of a Retail 2.0 strategy.

Register now to join us on Monday, June 1 at 1:00 PM MT.

REGISTER NOW

Panelists:

Liz Stahura
President & Co-Founder
BDSA

Ryan Rapaport
Managing Partner
Digital Venture Partners

Melissa Stapley
Founder
MJ Hybrid Solutions

Larina Scofield
Director of Operations
Lucy Sky Cannabis Boutique

Webinar: NCIA Committee Insights – Understanding Label Claims

NCIA’s #IndustryEssentials webinars are our new weekly educational series featuring a variety of programs allowing us to provide you timely, engaging and essential education when you need it most. The NCIA Committee Insights series showcases content produced in partnership with one of our 15 member-led committees.

Members of NCIA’s Scientific Advisory Committee will discuss how label claims came to be, what they look like in sister industries, and why label claims are important for cannabis products. Attendees will leave with a thorough understanding of what drug labels look like, what food labels look like, and why cannabis labels are different. A review of state based regulatory requirements and why they matter will also be provided.

Register now to join us on Wednesday, June 3 at 10:00 AM MT.

REGISTER NOW

Panelists:

Tiffany Coleman, Director of Quality
Copperstate Farms Management
tiffanyc@copperstatefarms.com

Cynthia Shelby-Lane, MD
Shelbylane MD PC

Presented by Tiffany Coleman, Director of Quality at Copperstate Farms Management

Protected: Webinar Recording: Illinois Market – What’s Happening And What’s Next?

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Meet The Team: Rachel Kurtz – NCIA’s Deputy Director of Public Policy

I grew up an Army brat. By 1992, when I was 18 years old, I had lived in Wisconsin, New York, Texas, Oklahoma, Indiana, Alabama, and Germany. I was fortunate my father served during a 23 year period where he would never be sent into a conflict, especially as a physical therapist. I reaped the benefits of experiencing various cultures and socialized medicine. 

I started my cannabis activism in 1995 volunteering with the Washington Hemp Education Network in Olympia, WA, while attending The Evergreen State College. Following a stint in Congressman Brian Baird’s district office, I went to law school at the University of Washington School of Law, figuring that having a law degree would give me more respect while pushing for such a controversial issue. Serendipitously, during my 2L year, the King County Bar Association (where my school was located) started a Drug Policy Project, where I was fortunate to get a job after graduation. I worked there, and simultaneously for the Voluntary Committee of Lawyers, until around 2010 when my boss was running for his third term in the state legislature and I wanted to focus on more local issues around medical cannabis implementation.

I spent some time as an acting-executive director for the Cannabis Defense Coalition, advising businesses on the medical cannabis laws, and became a partner in a medical authorization clinic and wellness center. I was also volunteering with Seattle Hempfest — where I started in 2004 and have continued to commit my free time to this day, now as part of the board of directors.

After the legalization initiative passed in Washington state in 2012, I began using my law degree to represent businesses during the licensing process, working with Wykowski Law and Gleam Law. But billing clients was not for me, and circumstances in my life made me want to run a cannabis business. 

It was 2016, and by then I had moved to Oregon where they had also passed a legalization initiative. With a partner who had previously had a successful medical cannabis business, spent a year forming the business and pitching it, only to fail to secure enough funding to continue in such an expensive endeavor.

I became disheartened in the whole process and the future for all small businesses trying to make it in the industry. I knew the only way to truly have a successful industry that worked for all stakeholders and citizens was to legalize at the federal level, and the main organization focused on that effort was NCIA.

On a whim, I looked at the NCIA website to see if they were hiring. Lo and behold, they had a business development position open and wanted someone located in the Pacific Northwest and connected in the industry. Business development wasn’t quite in my skill set, but we made it work and I have had a hand in multiple areas at the organization since I started January 2017. My biggest effort so far has been the creation and development of NCIA’s Allied Associations Program; it has been very satisfying bringing together cannabis trade associations from around the country.

I am now Deputy Director of Public Policy and feel so fortunate to work with the brilliant Andrew Kline and all the work that is coming out of the Policy Council. I continue to work with the Allied Associations Program, alongside Amy Rose, to keep my finger on the pulse of state policy, and I’m coordinating NCIA’s member committees and their content, along with Morgan Fox.

Moving forward, I’m feeling like probably most people, ranging from the anxiety of existential uncertainty to the optimism of knowing cannabis is considered essential in society and the endless possibilities as we all navigate this new normal. The creativity and tenacity of all my amazing colleagues at NCIA and our members leave me full of hope.

Webinar Recording: Communications Strategy During Times of Crisis and COVID-19

In case you missed it, watch this webinar recording from April 8. With the cannabis industry customer acquisition and service models disrupted by the pandemic, it’s critical to understand that what you do today will affect your business now and have a large impact on your future. Adjusting communications to focus on brand and strengthening bonds with existing customers will help you minimize damage and promote future growth.

In this webinar, crisis experts Jeanine Moss (Chair of NCIA’s Marketing and Advertising Committee) and Nicole DeMeo of Outfront Solutions will outline immediate and practical steps you can take to address crises before, during, and after they’ve occurred. They will provide specific recommendations for the cannabis value chain including cultivators, manufacturers, distributors, retailers, and ancillary businesses. Learn how to build trust and brand loyalty in times of crisis with customers, employees, directors, shareholders, and vendors so you come through with a strong platform for growth and knowing you’ve done all that you can for your stakeholders.

Webinar: NCIA Committee Insights – Illinois Market – What’s Happening and What’s Next

Join us on Monday, May 11 at 1:00 PM MT for this webinar.

How is the 11th state to permit adult-use cannabis doing, and what’s coming next? Want to get your foot in the door? Join us in a lively conversation about Illinois application and licensing.

Considering expansion to Illinois from another market? Learn how Illinois differs from other markets on some key issues. Think it’s essential that states successfully innovate to promote social equity?

We’ll discuss what Illinois is doing well and where the gaps are in regards to their Social Equity program. Join industry thought-leaders from NCIA’s State Regulations Committee as they discuss these crucial topics and more.

REGISTER NOW

Learning Objectives:

  • Understand License Types
  • Learn about Social Consumption in Illinois, and What’s Coming Next
  • Compare Illinois Marketing and Advertising Differences
  • How Illinois is Handling Social Equity

Committee Blog: Interstate Commerce – Breaking the Laws of Economics (Part 3)

By Gabe Cross and Gary Seelhorst
Members of NCIA’s State Regulations Committee

Legal cannabis, for all of its promise, has failed – in some markets spectacularly – to live up to its economic potential. But while each self-contained state market faces its own combination of political and regulatory challenges, the core of the problem everywhere is basic economics. Legal markets exist to efficiently move goods from where they are best produced to where there is the greatest demand. But cannabis, straddling the line between emerging state regulation and the remnants of federal prohibition, has negotiated that legal chasm by violating the inviolable laws of supply and demand, with predictably disappointing results. Perhaps now, in the face of a disastrous recession, with legal and legalizing states in desperate need for jobs and economic stimulus, is the time to get it right by allowing licensed commerce between legal markets.

The inability to move cannabis across state lines creates myriad problems for legal cannabis market operators that have far-ranging effects for all stakeholders in the cannabis industry, from investors to employees down to the patients and consumers who use the end products. The hindrance to economic activity also slows economic growth, employment, and tax revenues to states that have legal cannabis sales.

Oversupply Vs. Undersupply

Oversupply of cannabis in states like Oregon, which has excellent growing conditions and a favorable regulatory environment, are completely artificial and created not by the true excess of cannabis, but by the current inability to export to more populous states. This oversupply causes prices to plummet, which benefits consumers in the short term but is disastrous for small and medium-sized businesses and has far-reaching impacts on the communities that rely on this agricultural cash crop. Long term, the effect of these artificially low prices is that small businesses fail and large businesses take their assets to scale, which reduces employment and revenues in the communities that produce cannabis and extract the profits for investors in the large firms. This reduces competition and diversity in the industry, which hurts the same consumers in the long run who briefly benefited from the low prices. This is not a theoretical or academic argument, as we have seen these exact dynamics play out in Oregon over the past three years, with a staggering failure rate and rapid consolidation across the industry. Hundreds of millions of dollars of local capital have been eradicated as small businesses funded by friends and family have been forced to sell out to larger operators just to cover the worst of their debts.

In states which experience undersupply of cannabis, whether due to poor growing conditions or unfavorable regulations (or both) prices rise, hurting legal customers and patients of state-legal operators right away. Businesses can ultimately suffer losses of potential revenue, even as prices climb when consumers turn to cheaper cannabis from the illicit market. This undermines the legal systems set up by these states and pushes consumers to less-safe, unregulated products. As consumers drift from the legal to the illicit market, again the small and medium-sized businesses that currently represent the majority of the industry become financially unsustainable will suffer most, with the same end result to cannabis stakeholders as an oversupplied market.

Meanwhile, the artificial boundaries make scaling a business nearly impossible without access to an unlimited pool of capital. If a company from Washington, for example, wished to scale up and access new markets, they would have to completely recreate their entire supply chain, and most of their administrative operations, equally increasing their overhead with physical space and labor, for each new state that they wanted to enter. Effectively, they would have to create a brand-new small business in each state instead of scaling their operations efficiently and just expanding sales efforts to new territories. This is complicated in the extreme, both logistically and financially. What is worse, those redundant operations will become completely obsolete when cannabis is de-scheduled and interstate commerce allowed. This will almost certainly lead to a mass lay-off in the cannabis industry for all multi-state operators seeking to consolidate their operations. This will improve their cost competitiveness and further accelerate price drops that particularly hurt small businesses and stakeholders across the industry.

In fact, the extreme difference between the current state of the industry and a future in which interstate trade is allowed creates perverse incentives to investment, as opportunities that may be attractive in the short-term will ultimately prove disastrous long term. For example, massive energy and water-intensive indoor growing operations would be needed for New York to supply its population locally, and those facilities would require billions in investment dollars. These investments would look fantastic if one could be assured that the current regulatory environment would not change. But, if de-scheduling or other federal action allows for interstate trade, these facilities would have only a few years to reap the benefits of high margins before having to compete on cost with cannabis grown outdoors in the fertile Emerald Triangle of Northern California and Southern Oregon, which can produce much larger quantities of high-quality cannabis with a fraction of the inputs.

Newly legal net consumption states like New York and New Jersey will struggle to match supply to demand for years after initial legalization, resulting in millions of dollars of lost revenue, lost employment opportunity, and lost tax collections as the state struggles to develop the capacity to meet demand in a place that has no history of large scale production. If states that have historically been net importers plan for interstate trade from the outset, they can have a thriving retail industry with fully stocked shelves by taking high-quality products from producer states like California, Oregon, and Colorado within months of being able to import. The rapid change from essentially no legal industry to a robust, rich, and diverse retail environment would provide immediate economic stimulus in the form of jobs, thriving small businesses, and tax revenues. If new states are forced to rely solely on cannabis that is grown, harvested, processed, and distributed within state lines, it could take many years to develop the full economic benefits that a legal market could bring to bear.

All of these issues can be avoided, or at least mitigated, by a shrewd approach to incremental interstate trade instead of an instantaneous switch from 25 or more siloed industries to one national, or potentially international, market. The dynamics of how different state regulations interact can be tested and worked out thoughtfully, allowing for a more seamless transition and a clear roadmap for federal regulation when cannabis is de-scheduled. Successful interstate trade on any scale, between even just two states, will clearly signal to investors that the future of interstate trade is of pressing urgency to incorporate into their investment strategy. An investor in New York could then focus on opportunities related to local product development with the promise that affordable raw materials would be available from California and skip investing in indoor agriculture. Consumers and patients in states that allow for trade across their borders will instantly have access to a wider array of products, and as the size of the market that the industry has access to increases the dramatic supply and demand swings will be dampened by a larger and more diverse base of both consumers and producers.

Ultimately, the purpose of markets is to maximize the efficiency and utility of the flow of goods. They should move from the places where they are cheapest to produce to the places where the demand is highest. This is most effective with commodities and consumer goods, like cannabis. The current restrictions against moving cannabis across state lines completely hobble the market’s ability to perform this critical function. The result is bad for producers, consumers, regulators, and state governments. Interstate commerce for cannabis means better markets for producers, more choice for consumers, and a massive economic stimulus for all participating states in the form of job creation and increased tax revenues.

Be sure to check out the first two blogs in this series:
Ending The Ban On Interstate Commerce
Interstate Commerce Will Benefit Public Safety, Consumer Choice, And Patient Access


Gabriel Cross is a Founder and CEO at Odyssey Distribution, LLC, a distributor for locally-owned craft cannabis producers and processors in Oregon. Gabe worked in the sustainable building industry for a decade before starting Odyssey and brings his experience with sustainability and systems thinking to his work in the cannabis industry. Odyssey manages logistics, sales and marketing for boutique producers so they can focus on creating great craft cannabis products for the Oregon market.

 

Gary Seelhorst of Flora California has a passion for developing high-quality cannabis products so their most therapeutic effects can be realized. His 25 years in pharmaceuticals and medical devices helps him bring scientific rigor to the cannabis industry. Gary is very active at both the State and Federal level as an advocate for policy reform/higher quality standards.  He enjoyed lengthy stints at Eli Lilly and Pfizer (in clinical development and corporate development) and worked with several start-ups developing corporate and compliance strategies. Gary has a B.S./B.A. from UC San Diego in Biochemistry/Psychology, an M.S. in Clinical Physiology from Indiana University, and an MBA from the University of Michigan.

Committee Blog: First The Vaping Crisis, Now COVID-19 – A Cannabis Physician’s Perspective

by Cynthia Shelby-Lane, MD
Member of NCIA’s Scientific Advisory Committee

The vaping crisis was first reported in June 2019. In October 2019, the U.S. Centers for Disease Control and Prevention (CDC) coined a new medical term describing the cases of severe pulmonary disease that have occurred among e-cigarette and vape users, E-Cigarette and Vaping Associated Lung Injury, or EVALI. EVALI’s primary cause was determined by the CDC to be vitamin E acetate contamination, mostly in illicit market vaping products, although research into this condition continues.

By the early fall of 2019, the National Cannabis Industry Association (NCIA) formed a Safe Vaping Task Force to respond to the crisis. Together with NCIA’s Policy Council, they released a white paper in January 2020 detailing information about vaporizer components, formulations, testing, governmental response, and recommendations for the industry. 

As the COVID-19 health pandemic takes front and center stage on the world scene, vaping related issues and EVALI, becomes even more of a health concern as the novel coronavirus causes respiratory issues. While reported cases of EVALI are slowing down, this public health crisis still looms over us,  and it’s been very challenging to fully solve this mystery illness associated with vaping e-cigarettes, and other electronic nicotine delivery systems (“ENDS”). Furthermore, it’s been more difficult to stop the primary root cause: the illicit market.

VAPING, EVALI, AND COVID-19

We’re experiencing a worldwide public health crisis with coronavirus and it’s also affecting the Marijuana industry, as we face “stay at home” orders, slower production or reduced access in some areas, and fear from the community about vaping related respiratory illnesses, EVALI, and death due to COVID-19. It begs the question:  Is vaping safe and could vaping put you at greater risk of severe illness during this coronavirus pandemic?

Some health experts say vaping can increase the risk of developing COVID-19 complications and spreading the virus to others because many people share vaping devices. A Bloomberg article was published last month, stating the FDA says “vaping could compound health risks tied to virus.” The Attorney General of Iowa along with scientists sent the FDA a letter commenting that they should be more careful giving advice at a time like this, especially given “the pronounced difference in risk between smoking and vaping.”

The Food and Drug Administration (FDA) has supported both positions on vaping but now says there is a lack of evidence to support the worsening of health in conjunction with vaping and COVID-19, while also considering that underlying conditions could be the real culprit.

According to the CDC, those with chronic lung disease are at higher risk for severe illness. The conditions listed with the CDC do not include EVALI, but perhaps vaping behaviors should be considered when determining risk. I am a member of Doctors for Cannabis Regulation (DFCR), an organization that supports the legalization and use of cannabis. DFCR cautions against smoking and vaping during the COVID-19 pandemic because we just don’t have enough research yet.

After reviewing the limited literature, it must be noted that “e-cigarette use” and vaping have cardiovascular risks. Buchanan and colleagues reviewed the limited available preclinical and clinical data and concluded that “E-cigarette use is associated with inflammation, oxidative stress, and haemodynamic imbalance leading to increased cardiovascular disease risk.”  Current evidence is available primarily from acute studies and the effects of chronic exposure remain an urgent research question.

PERSONAL PHYSICIAN RESPONSE

As an emergency physician, functional medicine specialist, and medical cannabis doctor, I’ve examined, certified, and managed patients for medical marijuana use in Michigan since 2014. As a cannabis physician, I routinely review cannabis-related science and research and its therapeutic effects, based on forms of consumption, frequency of use, and limited data on patient dosing. I evaluate patients for their therapeutic benefits and patient outcomes obtained by using marijuana in various forms of consumption, in conjunction with their other medications.   

As a cannabis physician, I work very hard to get to the source of my patients’ medical issues or problems related to their medical need for cannabis. This also means giving them direction about the use of cannabis, cannabis products, and noting any side effects related to their method of consumption and use of marijuana, hemp, and CBD.

Perceiving the same thing as the general public, my patients frequently say, “I thought vaping was safe.” This is still the case even during this ongoing public health crisis with EVALI and now, COVID-19.  

Pertinent health questioning should always involve asking patients about their forms of usage of cannabis, their daily intake, and noting if a person has any side effects related to cannabis usage or any other medications. Since vaping related illnesses were first reported, I continue to educate patients about the possible side effects of vaping. For some people, problems related to vaping may have been present since they started vaping, but were disregarded because they thought it wasn’t serious or of much concern. We need more research to better inform educational programs so patients and consumers can make better-educated decisions on which marijuana products they should use.  

HEALTHCARE, THE CDC. AND COMMUNITY RESPONSE

“Do you vape? Do you smoke? Do you have an underlying lung disease such as asthma, chronic obstructive pulmonary disease (COPD, e.g. emphysema), heart disease, or any respiratory problems?” These are the most important questions doctors and healthcare providers should ask patients who present with respiratory symptoms, especially during the worldwide COVID-19 pandemic. All healthcare providers, whether on the frontlines or not, must change their assessment of patients to ask about their lifestyle and any respiratory-related health conditions (past and present). This includes addressing smoking, vaping, and potential side effects.  

Patients often delay seeking treatment and the biggest challenge doctors face is that patients might lie about vaping out of fear they will be identified publically or criminally charged if they procured their vaping products from the illicit market. Doctors and other health care providers need accurate information to make a diagnosis and should maintain a non-judgmental attitude and confidentiality when asking patients about their lifestyle and social history.

Detailed information has been created by the CDC for ongoing updates regarding EVALI and related illnesses. Specific information for healthcare providers can be found here.

New tools for physicians include an updated algorithm for the management of patients with suspected EVALI and a Discharge Readiness Checklist. These documents are recommended for use by doctors, hospitals, clinics, and health care professionals and should be followed to help with systematic care and prevention. These tools have been used for EVALI.  There have been major updates since the COVID-19 pandemic as of December 2019.

THE FUTURE OF EVALI: CONTAMINANTS AND CONSUMER RESPONSE

According to the CDC and available data, it appears that vitamin E acetate is primarily associated with EVALI, but there could be other substances that are responsible. We now know the illicit market is using vitamin E acetate to dilute their products, but they could use other harmful chemicals in the future. To reduce the risk of lung injury, consumers should purchase vaping products from the regulated market, where products are tracked and tested. 

Because there is still so much research to be done, I recommend that anyone who continues to use e-cigarettes or vaping products should monitor themselves for symptoms related to EVALI and see a healthcare provider as soon as possible, especially if you are experiencing the symptoms below.

  • Patients have reported symptoms such as:
    • Respiratory symptoms, including cough, shortness of breath, or chest pain;
    • Gastrointestinal symptoms, including nausea, vomiting, stomach pain, or diarrhea; and
    • Nonspecific constitutional symptoms, like fever, chills, or weight loss.
    • Exposure to COVID-19, testing positive or hospitalized and placed on a ventilator
  • Some patients have reported that their symptoms developed over a few days, while others have reported that their symptoms developed over several weeks.

The American College of Cardiology also released Cardiac Guidelines for cardiac implications of COVID-19, which may mimic respiratory symptoms.  

As I mentioned earlier, the FDA previously stated that vapers were at an elevated risk of developing complications tied to COVID-19.  However, the FDA also admitted there is actually no “evidence” that vaping makes COVID-19 outcomes worse as noted in this article outlining the FDA’s stance on vaping and COVID-19.

So the jury is out and we are still waiting for evidence on the long term safety of vaping. As a member of NCIA and the Scientific Advisory Committee, I believe that vaping and it’s long term effects due to acute and chronic exposure remains an urgent and ongoing research question. Is vaping safe, does vaping cause higher risk if you contract the novel coronavirus, and do synthetic flavorings, diluents, or possible contaminants within vaping devices cause harm? More research is warranted.

 

Committee Blog: Facts About Current Good Manufacturing Practices (cGMPs) And Their Role In The Cannabis Industry

By Ellice Ogel, Tyler Williams, Peter Dougherty, David Vaillencourt, Trevor Morones
NCIA’s Cannabis Manufacturing Committee

A Primer on current Good Manufacturing Practices

What are GMPs?

Good Manufacturing Practices (GMP) are minimum requirements to ensure that products are created in a manner that ensures they are of consistent quality and safe for their intended use. If a product is found to be produced in a facility that does not meet GMPs, they can be considered adulterated and unsafe. In the U.S., the U.S. Food & Drug Administration (FDA) regulates the manufacture and sale of food and beverages, dietary supplements, pharmaceutical products, and cosmetics by requiring adherence to GMPs. The “c” in cGMP stands for current, meaning that how companies conform to GMPs must continually evolve with the development of new scientific research and industry best practices. Today, the two terms are used interchangeably. While cannabis is not recognized as a legal product at the federal level, federal legalization will inevitably result in the requirement for cannabis producers to conform to cGMPs. 

cGMPs can be broken into six major sections (1) Management Commitment, (2) Risk Management, (3) Quality Management Systems, (4) Site & Facility Management, (5) Product Controls, and (6) Staff Training (Figure 1).

Figure 1 Major elements of any system that follows Good Manufacturing Practices

Why are cGMPs important?

cGMPs are important for every industry to ensure manufacturers are producing safe products. A site that isn’t following the minimum requirements for cGMPs in their specific industry is putting the basic well-being of consumers around the world at risk, which the FDA terms adulterated. cGMPs provide assurance that steps within the manufacturing process result in passing final product testing. Final product testing alone is not enough to ensure the safety of consumers. In most cases, final product testing is completed on a small sample batch, so that manufacturers are not wasting the final product on sampling and testing. For example, if the manufacturer is producing 1 million dietary supplements, the manufacturer might only test 100 tablets from that batch. This means that if cGMPs are not being followed and there is no consistency in the safety of producing that product, then some of the products may be safe for consumption, while others may not. This results in product recalls or withdrawals, damage to brand reputation, and lawsuits. A recent study by the Denver Department of Health found that 80% of cannabis products on dispensary shelves failed testing despite passing final batch testing prior to sale.

What do cGMPs include?

Every industry regulated by the FDA has its own guidelines for cGMPs, which are found within Title 21 of the Code of Federal Regulations. Unique differences between cGMP requirements for each industry exist. If your company has multiple product lines that fall into any of these different industries, understanding how these differences will impact you are critical. Figure 2 provides a high-level overview of the major GMP topics that are required by industry.

Figure 2 Summary table of major FDA cGMP regulations by industry sector

 

 

Industry Type Location of primary GMPs within 21 CFR
Food & Edibles 21 CFR 117
Dietary Supplements 21 CFR 111
Pharmaceutical 21 CFR 211
Cosmetics See Draft Guidance for Cosmetic Good Manufacturing Practices

Figure 3 Table of the major industry types regulated by the FDA and where one can find the major cGMP requirements


Not all GMP topics are referenced in the primary section of the CFRs, which can make it difficult for people who are new to GMPs to ensure they are appropriately prepared. For example, the food and beverage cGMPs (21 CFR 117) does not include packaging and labeling controls, whereas the pharmaceutical cGMPs (21 CFR 211) does include packaging and labeling controls. 21 CFR 101 is home to packaging and labeling statues for the food and beverage industry. 

Each sector regulated by the FDA has overlap which contributes to talent acquisition/recruitment from other industries. 


THIRD-PARTY cGMP AUDITS

What are Third-Party cGMP Audits?

A third-party cGMP audit is a systematic independent and documented activity in which objective evidence is gathered and assessed to determine if the site’s cGMP system is appropriate and effective. In the 1990’s third-party GMP audits were like an inspection you would receive from the FDA or local health department. This means there was a heavy focus on the building itself and what was happening on the production line during the time of the audit. Nowadays, cGMP audits typically include much more than what is required from the Code of Federal Regulations (CFR). Examples of this include extra requirements for Hazard Analysis Critical Control Points (HACCP) and a much heavier review of documentation to ensure best practices are being followed all the time and not just on the audit day.

Benefits of Using an Experienced and Accredited Certification Body

One thing to keep in mind when considering a third-party cGMP audit is whether or not the audit is accredited. Certification Bodies are accredited (approved) by an Accreditation Body, to ensure their internal procedures and audit processes follow strict guidelines for different audit standards. If approved, the CB gets accredited to that specific audit standard. This along with direct oversight of the audit Scheme Owner and the Accreditation Body ensure that the Certification Body has qualified auditors and that the entire audit process goes through several quality checks before it becomes “final.” In the U.S., the three major accreditation bodies approved to do this are:

  1. American Association for Laboratory Accreditation  
  2. ANSI National Accreditation Board (ANAB) 
  3. International Accreditation Service (IAS)  

For more information on this process, one should refer to the International Accreditation Forum (www.iaf.nu).

WHY SHOULD MY COMPANY RECEIVE A 3rd PARTY cGMP AUDIT?

Unlike the food & beverage, dietary supplement, pharmaceutical, and cosmetics industries, cannabis is federally illegal in the United States. This means there are no federal regulations for cGMPs in the cannabis industry. However, some states, such as Florida, have taken the initiative and implemented requirements to have all cannabis facilities become audited to a cGMP standard before they can receive their license to begin manufacturing.

As the cannabis industry continues to evolve, retailers and others downstream in the supply chain will demand that cannabis manufacturers provide evidence of a certain level of quality and safety in their products. An attestation or certificate from a third-party demonstrating that your facility meets cGMP requirements is an internationally recognized way to provide that evidence and establish trust. Globally, third-party cGMP audits are crucial to maintaining product safety and quality by providing a third set of eyes to verify what is working and what is not. Besides regulatory requirements and customers requiring your facility to get a third-party cGMP audit, there are numerous other benefits to receiving a cGMP audit. Some of these benefits include the following:

  • Reduction in failed product testing
  • Improvement of product safety
  • Improvement of product quality and consistency
  • Eliminating potential risks and possible recalls
  • Marketing advantages over competitors who are not audited by a third-party
  • Improvement to consumer confidence and an increase in brand loyalty

ROADMAP TO cGMP CERTIFICATION

Management Commitment

It is essential to the entire cGMP system to have commitment from top-down. Without this, your site will not receive the resources (e.g. people, equipment, tools, budgets) it needs to implement an effective cGMP system. The culture of an organization requires everyone to practice what is lectured. Simply; Say what you do, do what you say. 

Start Preparing Early

Be realistically courteous to the timeline by generating an internal analysis. Using the scheme, the audit will be against, create a list of programs you currently have, and which are missing. Working towards a better score early will provide greater long-term value. 

The very first thing you need to do before you start making major changes to your facility or procedures is to identify which GMP standard or standards you intend to meet. With this established, you can select a Certification Body and obtain a copy of the audit form or checklist that they will use to assess you. 

Assess Your Current Level of Conformance

Establish an audit team and conduct a thorough assessment of your current organization. If this is new to your organization and staff, it is beneficial to work with a GMP expert that has experience in both cannabis and the cGMP program you are going to be audited against. Review your entire system against the audit checklist and highlight or markup items your site is already doing. This allows you to focus on the things you are missing and close any “gaps”.

Implementation and Teamwork

The preparation of an audit should never rest on the shoulders of one person. Your site should establish a multidisciplinary/interdepartmental team to implement the various tasks based on the findings from your initial assessment. Collaboration is key to successfully preparing for a cGMP audit, especially when timelines set by upper management are very stringent.

Training

Training is essential in preparing for your cGMP audit and business in general. This helps close the gaps between what your safety and quality department has developed and what your front-line employees are applying. All employees should understand what cGMPs are and how it applies to and benefits their daily activities.

Establish Your Internal Audit Program

Conducting internal audits is an effective way to not only prepare for your cGMP audit but to continually improve your organization. Breaking down your entire audit checklist into department or process-specific sections, you can establish the frequency of auditing these bite-sized sections. Should they be reviewed annually, semiannually, quarterly, monthly, or continuously throughout day-to-day operations? Some things, like reviewing your suppliers, may only need to be done annually, while things such as pre-operational inspections should be performed daily. Always use the actual audit checklist to observe your documents and facility to see if there are any gaps. Whenever possible, the person or team conducting the internal audit should never review their own work. Establishing any issues or non-conformances should be noted, evaluated, corrected, and closed out.

Schedule Your Third-Party Audit

A third-party mock audit is the closest thing you can get to an actual audit. This is where a third-party company would come in and evaluate your site to the specific cGMP standards and give a formal report over any deficiencies found during the assessment. This is a great way to test your preparedness before the actual audit.

Address Non-Conformances and Celebrate!

Your auditor will almost certainly identify areas where you are not fully compliant, known as non-conformances. Depending on your level of preparedness, you will hopefully have only a few Minors, but non-conformances can be classified as Major or Critical. You will work with your auditor to establish actions and a timeline to effectively resolve these non-conformances and provide follow up evidence of their closure. After successfully closing out your non-conformances, you will be rewarded with a certificate or attestation. Sit back, relax, celebrate! With a cGMP system in place, the established intervals to audit your system will ensure you have the tools and knowledge to maintain your cGMP status!

Member Blog: How Risk Management Can Heal Medical Marijuana Businesses

by Steve Schain, Esq., Senior Attorney at Hoban Law Group

Envision managing the risk of a volatile, staggeringly lucrative, 100 percent federally illegal enterprise. Toss in ridiculously inconsistent federal, state and local regulations, insanely evolving technologies and efficiencies, and an industry-wide disinclination to “play by the rules.” Remember to remove the safety net, because neither cannabis businesses, nor their owners, are entitled to bankruptcy law protection.

However, when armed with decent risk management fundamentals, a marijuana-related business (“MRB”) can diminish most horrible outcomes, fortify the enterprise’s sustained growth, and maybe even get rich along the way.

Risk management is the identification, evaluation, and prioritization of risks followed by coordinated and economical resources application which minimize, monitor, and control unfortunate events’ probability or impact. 

Identifying Marijuana-Related Businesses’ Loss Exposure

The Comprehensive Drug Abuse Prevention and Control Act of 1970 prohibits marijuana’s manufacture, distribution, dispensation and possession and lists it next to heroin as a Schedule I controlled substance having “a high potential for abuse”.  21 U.S.C. §§ 801, Et. Seq (1970). Because of marijuana’s one hundred percent (100%) federal illegality, MRB’s are denied many standard “risk management tools” (like credit cards, bankruptcy law protection, and federal patents and trademarks), assembling a “risk management insurance, accounting, and legal advisory team” could prevent an insufficiently prepared MRB from foundering. 

Risk management is the process of anticipating losses and developing a plan to survive them through: (1) identify each loss exposure (ex., being sued for a defective product); (2) evaluating each loss exposure’s frequency and severity; (3) weighing, then selecting, each exposure-managing-technique; (4) deploying exposure managing techniques; and (5) reviewing evaluating and improving risk-management plan.  

An MRB’ “loss-causing-events universe” encompasses: (1) people (owners, investors, employees, customers and vendors); (2) property (buildings, equipment, crops, inventory, vehicles, data, cash, intellectual property); and (3) profits. 

Although people are a MRB’ most valuable asset, and their welfare is the first priority, even the most safety-conscious businesses experience job-related injuries costing thousands in medical expenses and lost productivity. Through enacting safety plans and rigorous employee training, accidents’ frequency and severity can be minimized, employee health and welfare can be protected, and workers’ compensation insurance coverage premiums can be stabilized. Similarly, to prevent a dying investor’s ownership transferring to a less than cooperative relative, MRBs could obligate owners to execute buy-sell agreements requiring their survivors to sell decedent’s portion to the surviving partners. 

Unlike people, damaged or destroyed property can be repaired and replaced and its “useful life” can be accurately anticipated and amortized. Unfortunately, due to federal prohibition, MRBs are denied many standard insurances (like crop or cash exceeding $25,000), federal trademark and patent protection, and banking and credit card services. 

MRBs’ profits and valuation create the greatest vulnerability and regulatory fines and penalties, business interruption, and lawsuits impose the most perilous risk. Because they endure federal, state and local regulations, MRBs are vulnerable to fines and penalties from federal agencies, state agencies, and each municipality and borough in which they operate.

“Business interruption loss” is where an event halts an MRB’ operations like a wildfire’s soot and ash wiping out a grower’s crops immediately prior to harvest. Before the ensuing revenue-generating-grow-cycle is completed, employees, utilities and rent still require payment and, unless it has 6 months of cash to survive a revenue-less 180 day period, an MRB could get crushed. 

Lawsuits range from a single plaintiff seeking damages to class actions in which an entire group of claimants seek compensation. Each year defective, faulty or misused products cause serious injuries and property damage. Although primarily seeking remuneration for personal injury, property damage, or economic harm, product liability claims may also seek punitive relief to punish the defendant and redress harms allegedly done to society. Defending litigation or settling claims can materially drain a company’s resources requiring additional regulatory requirement compliance, developing/ disseminating product warnings, instituting a product recall, deploying employee time to investigate/mitigate claims, investigating/testing products and assessing risk, and hiring expert consultants. 

Bankruptcy’s Unattainable Protections

Because of marijuana’s one hundred percent (100%) federal illegality, and because bankruptcy can’t be used to facilitate federally illegal activity or administer assets that can’t be possessed or sold under federal law, bankruptcy protection is denied to both marijuana growers, processors, sellers, and transporters and the parties that own them.

Generally governed by federal law, called the “Bankruptcy Code” (“Code”), the bankruptcy system allows debtors to either dismiss or partially satisfy debts they are incapable of fully paying, and, upon filing, creates an “automatic stay” period during which creditors are prohibited from attempting to collect. Bankruptcy petitions are filed in a federal bankruptcy court governed by federal law, although state laws may determine how debtors’ property rights are affected (ex., validity of liens or exempting property from creditors). 

Bankruptcy’s most common form is a Chapter 7 “liquidation” in which the court appoints a trustee to collect and sell debtors’ non-exempt property and distribute proceeds to creditors. Because most state allows debtors to keep essential property, Chapter 7s are usually “no asset” in which there are zero saleable assets to fund a distribution to creditors. 

Bankruptcies allowing debtors to keep some or all of their property, reorganize and use future earnings to pay off creditors fall under Code Chapters 11, 12 or 13. Individual debtors usually file Chapter 13s, business entities file Chapter 11s, and Chapter 12 filings mirror Chapter 13 but are only available to “family farmers” and “family fisherman” and provide more debtor favorable terms.

Because the bankruptcy system cannot be used to facilitate illegal activity and the Code provide no mechanism to administer assets that cannot be legally possessed or sold under federal law, bankruptcy protection is unavailable to both Plant Touching MRBs and the parties that own them.

First, because the United States Trustee Program prohibits debtors with marijuana-derived-income-or-assets from proceeding, Plant Touching MRB’s Chapter 7 petitions are usually dismissed upon filing. April 26, 2017 Letter from Clifford J. White, Director, Executive Office for the United States Trustee to Chapter 7 and Chapter 13.

Second, even if a compliant state-licensed MRB debtor is involved, most bankruptcy courts dismiss cases involving marijuana-derived-income-or-assets. In re Arenas, 535 B.R. 845 (B.A.P. 10th Cir. 2015) (denial of marijuana grower/seller and legal dispensary landlord’s motion to convert to Chapter 13 and Chapter 7 dismissal because debtor is unable to propose feasible plan without violating federal law and trustee’s estate administration duties by selling debtors’ assets); In re Medpoint Management, LLC, 528 B.R. 178 (Bankr. Az. 2015) (dismissing “owner of intellectual property leased to marijuana products seller” due to “dual risk” of assets’ potential forfeiture and trustee’s CSA violation in administering estate).  

This “bankruptcy protection denial” also may extend to Non Plant Touching MRBs. In re Way to Grow, Inc., (Bankr. D. Col., Dec. 14, 20l8 No. 18-14330)(because hydroponics equipment seller knew or had reason to believe that customers would use equipment to grow marijuana, bankruptcy dismissed because business deemed illegal under 21 U.S.C. §843(a)(7)).


2019 National Law Journal “Finance, Banking, & Capital Markets Trailblazer” award winner, Steve Schain chairs global cannabis law firm Hoban Law Group’s PA and New Jersey practice and chairs its Financial Services Group. With 17 offices and 52 lawyers, Hoban Law Group is the only practice 100% devoted to cannabis and hemp law. Admitted to practice in PA and New Jersey, Steve represents entities, governments, and individuals in litigation, regulation, compliance, preparing and submitting license applications, entity formation, and drafting legislation. A nationally recognized consumer finance litigation, banking law, and cannabis law expert, Steve is a The Legal Intelligencer, New Jersey Law Journal, and Cannabis Business Executive columnist, frequent Pennsylvania Bar Institute, and National Bar Institute author and lecturer and serves as a court-appointed judge pro tempore and arbitrator. 

NCIA Committees: Spring 2020 Update On Achievements And Projects

NCIA’s member-driven committees are an opportunity for individuals from NCIA member companies to get directly involved in specific industry issues and sectors. These volunteer-driven efforts engage members’ expertise and passion to drill down in those areas to effect change, provide professional development opportunities, and develop best practices and guidelines that will shape the future of our industry.

We recently checked in with these various committees to learn more about what they’re up to and what projects they’re working on this term. Get updated on their activities below.


Risk Management & Insurance Committee (RMIC)

The RMIC has recently contributed to several NCIA white papers and educational webinars. They are currently working on an insurance manual. The committee has divided into sub-committees responsible for managing white papers, webinars, and the manual. 

Scientific Advisory Committee (SAC)

SAC’s vision is to disseminate educational materials to NCIA members on scientific topics in the cannabis industry and to advise on other NCIA initiatives, ensuring that any formal recommendations produced are scientifically sound, sustainable, and legitimate. This term, SAC published a blog discussing why everyone should know about the endocannabinoid system.

SAC is working on other pieces addressing topics such as the recent vape illnesses from a physician’s perspective, indica versus sativa designation, how cannabis can help the opioid crisis, common scientific myths confusing the industry, and budtender and consumer education about the endocannabinoid system.

SAC is also developing a webinar that discusses what should be on a label, how to read a label, and how to associate what’s on a label with either statements on efficacy or marketing/branding.

Cannabis Cultivation Committee (CCC)

The committee has recorded two podcast episodes for NCIA’s Cannabis Industry Voice Podcast. The first was a Cultivation Best Practices Roundtable, hosted by Noni Goldman of the CCC. In that episode, Cody Hitchcock of Smokey’s 420 and James Cunningham of Fog City Farms were interviewed to shed light on their different growing styles and techniques, focusing on the ways that they implement sustainability in their operations.

The second soon-to-be-released interview was with High Times’ new CEO Stormy Simon, and was hosted by CCC Chair Mo Phenix and member Noni Goldman. This interview explored Stormy’s history and how she got to where she is today, as well as what High Times is up to, and where Stormy sees the industry going.

More podcasts to come in the next couple of months from the CCC! Keep an eye out for an episode or two on regenerative agriculture.

Packaging & Labeling Committee (PLC)

The PLC sub-committees have each contributed to a blog or presentation up to this date. The Sustainability sub-committee has worked with Kaitlin Urso and team in regards to their White Paper. A panel discussion proposal has been submitted for future NCIA conferences. 

NCIA’s Northeast Cannabis Business Conference in Boston (February 2020) Panel Discussion on the Future of Cannabis Packaging went great!

State Regulations Committee (SRC)

NCIA’s State Regulations Committee has continued to produce content to help educate and inform members on the latest developments in the world of state regulation of cannabis. As the industry’s law and regulations change quickly across the country, the SRC members stay ahead of the curve and share their insight in a variety of forms. These projects include panel presentations at NCIA conventions, published blogs, and interactive webinars. In this quarter, they published three blogs, produced one webinar, presented on two panels, and participated in an NCIA summit.

Blogs Published:

The Social Consumption Sub-Committee published “California Social Consumption Leads the Way” by Debby Goldsberry.

The Interstate Commerce Sub-Committee published two blogs: 

The first blog “Ending the Ban on Interstate Commerce” was published on January 15, 2020. 

Shortly thereafter, it followed-up with “Interstate Cannabis Commerce Will Benefit Public Safety, Consumer Choice, and Patient Access.”

Another sub-committee that aims to provide advice on governmental relations published the blog “Working With Your Local Government as a Cannabis Cultivator.

Webinars:

As the committee strives to keep everyone updated on burgeoning legal topics, the SRC committee presented a webinar on Michigan, a newly regulated market. The webinar provided information on this key Midwestern state, “Michigan’s Adult-Use Market – What Comes Next?

Conferences:

SRC members also traveled from across the country to share their expertise on panel sessions at NCIA’s Northeast Cannabis Business Summit in February 2020 in Boston.

The Social Equity Sub-Committee leaders, Erin Fay, Chris Jackson, and Margeaux Bruner provided helpful insight during their session, “What You Need To Know For Winning Applications and Successful Operations That Promote Diversity and Inclusion.”

Sean Donahoe and Gabriel Cross of the SRC’s Interstate Commerce Sub-Committee presented on the issues surrounding interstate commerce and strategies for preparing for this anticipated change in the cannabis industry.

Also, SRC members participated in the NCIA’s summit about tackling the illicit market.

The State Regulations Committee is excited about its work and continues to stay knowledgeable about the ever-changing legal and regulatory landscape. Their projected work includes a webinar on the Illinois adult-use market and a wide range of written projects. Stay tuned!

Banking & Financial Services Committee (BFSC)

The committee’s vision is to provide the NCIA member base with current and actionable information related to Banking and Financial Services in the State legal cannabis industry.

They have implemented monthly newsletters for the member base and have been extremely active in response to the proposed federal legislation regarding banking and the cannabis industry.

Human Resources Committee (HRC)

The Committee’s vision is to provide best practices in all disciplines of Human Resources to NCIA members. They have worked on a couple of blogs this year around the recent reduction in force trend and will be releasing a few blogs providing some recommendations for how cannabis employers can navigate CV-19 when it comes to their workforces.

The HR Committee is working on a very exciting case study. They are looking forward to releasing the first few modules of it this summer!

Marketing & Advertising Committee (MAC)

The MAC coalesces the talents of 20 of the industry’s top-tier marketing and communications professionals around three focus areas: Education, Advertising Access and 2020 political goals. The committee uses their personal, professional and business skills and networks to help build a responsible, legal cannabis industry. The committee is producing best practices, webinars, workshops and social media campaigns to aggregate and generate support from NCIA members, the public, media, government and business leaders.

The MAC Education Subcommittee has focused its energies on developing a Speakers/Expert Directory with a goal to launch by year-end.

The 2020 Subcommittee has created its first infographic covering Oklahoma’s 2020 ballot initiatives; infographics for additional states with legalization initiatives on the ballot this year will follow soon.

The Advertising Access Subcommittee is adding more states (as they come online) to their overarching list of “Do’s and Don’ts” for compliant cannabis advertising. Those are pending editing and legal review and will be published on the NCIA website soon thereafter.

The committee is also working on upcoming webinars including “Advertising Best Practices.” 

Cannabis Manufacturing Committee (CMC)

The Cannabis Manufacturing Committee is focusing on reviewing existing business practices and state regulations of concentrates, topicals, vaporizers, and edibles ensuring the manufacturing sector is helping shape its destiny.

Their first informative blog using lessons learned from the e-cig sector exists in on-going discussions with NCIA’s Safe Vaping Task Force. 

They are also working on their second publication, “Facts About Current Good Manufacturing Practices (cGMPs) And Their Role In The Cannabis Industry” which will be a resource for essential businesses.

In addition to the work the CMC is carrying out, they are collaborating with other committees to help create an NCIA resource library.

The CMC Testing sub-committee is working on writing blogs about “Positives of Testing” (from the operator’s view), and “Nomenclature: Cannabis Nomenclature Register” for publication.

Retail Committee (RC)

Members of the Retail Committee attended NCIA’s Northeast Cannabis Business Conference in Boston in February 2020 to participate in an educational panel on Retail 101. The committee has an upcoming webinar in April: “Retail: Tips and Best Practices” which will include 4 panelists that are currently license holders or working in licensed dispensaries in 3 different states (CO, CA, WA), and will also address some tips and best practices for the current CV-19 climate.

Facilities Design Committee (FDC)

Committee member David Vaillancourt of The GMP Collective appeared on NCIA’s weekly podcast, NCIA’s Cannabis Industry Voice, in February 2020 to discuss GMPs (Good Manufacturing Practices) in an episode titled “Revolutionizing How Cannabis Producers Achieve Success.”

 

Committee Blog: Working With Your Local Government as a Cannabis Processor

by NCIA’s State Regulations Committee

If you want to open and operate a regulated cannabis business, there’s no avoiding local government. Every state grants different amounts of power to towns and cities, with some allowing localities to ban cannabis businesses outright, and others simply giving them the same power over time, place, and manner of operations that they have for other businesses. But since cannabis can be a hot-button issue, a proposal to open a cannabis facility often attracts far more attention than opening any other type of business.

To help NCIA members and other cannabis entrepreneurs navigate local government, we at the State Regulations Committee have launched a series of blog posts, with each taking a close look at a different type of cannabis license. Last month, we published our first post, “Working With Your Local Government as a Cannabis Cultivator.” 

Today, we’re moving one step down the supply chain and talking about cannabis processors (sometimes also called manufacturers or infusers). Since state programs vary widely, with some licensing cannabis processors independently and others combining processing with cultivation (or even a single vertically integrated license), we will be focusing on the operations rather than the licenses themselves. If you’re seeking a combined license, be sure to read the blog for each activity your business will be allowed to engage in — while there is some overlap, there are also some major distinctions in how different operations can most effectively interact with municipal officials, and you will need to be well-versed in answering questions unique to each phase of your business.

ECONOMIC IMPACT

Like the three rules of real estate being “location, location, location,” the three rules of economic development are “jobs, jobs, jobs.” When proposing a new business in a town or city, local officials are going to want to know how many jobs it will bring, as employment can put money directly into the hands of their constituents and have ripple effects throughout the local economy. 

In addition to the raw number of jobs your business will create, it’s also important to highlight the qualifications for those positions. Processing facilities often need to have highly qualified individuals with PhDs or other certifications to manage production processes, and officials will be happy to see the salaries that come along with such positions. Entry-level jobs, such as working production lines, are also worth talking about — even though they have lower salaries than someone with a doctorate, it’s usually much easier to hire local talent for these positions. Any commitment to hiring locally as much as possible is usually a big plus to politicians. Additionally, be sure to mention how much these new employees will add to the local economy, through all the typical living spending they will do.

Setting up and maintaining your facility will also have a major economic impact, especially in smaller communities. If you’re constructing a building to suit, get estimates from your contractors about the jobs your project is supporting, and let officials know how much you’re investing in the build-out. If you’re moving into an existing space, you’ll almost certainly be doing significant renovations to meet the state’s strict safety standards, which is also worth talking about. Towns and cities that are struggling economically will often be very happy to see unused commercial space become occupied, especially if those properties are being improved. If possible, also identify local contractors (like electricians) or suppliers (like lumberyards) you will use for construction.

Finally, there are direct payments to the local government. While officials love to see any sort of economic development, they still have services to provide and a budget to balance, and will want to know what the municipality will be receiving directly. Calculate your building’s expected property taxes, both on an annual basis and 5-10 years out — since cannabis licenses are usually very difficult to re-locate, emphasize that you are in it for the long haul. Be sure to understand your states’ tax structure, and know whether there are any local taxes that the town will receive, or if towns that host cannabis licensees receive any portion of state tax revenue. 

PUBLIC SAFETY

The top public safety issue in local officials’ minds when it comes to cannabis processing is almost surely to be butane fires and explosions. This is for good reason — while hydrocarbon extractions can be very safe and effective when done properly, when done improperly they can be incredibly dangerous. City councilors or fire chiefs may have read some of the many headlines about butane-related accidents over the past few years, and it’s up to you to address these concerns directly and honestly. Of course, before diving into these conversations, check to see if the municipality or county has already banned such extraction methods, as some state laws allow local control in this area.

If you’re not planning to perform hydrocarbon extractions at your facility, be sure to tell that to your local officials. They may not realize that there are many other types of cannabis extracts that do not present such safety risks, such as CO2 extracts (carbon dioxide is not flammable, and similar processes are used for decaffeinating coffee) or bubble hash (which uses only cold water). If you have zero interest in ever using hydrocarbons in your facility, putting this agreement into writing may make local officials even more comfortable.

If you do plan to perform hydrocarbon extractions, educating officials on the risks and safety measures is paramount. Most states have extensive regulations on how extraction labs must be set up, which you can email or print out for meetings to demonstrate what you’ll need to comply with. Since the vast majority of butane-related accidents have come from illegal labs with makeshift equipment, show officials the equipment you’ll be using, emphasizing the price and professional quality. The manufacturers may even have fact sheets or other information you can share to demonstrate the safety of their equipment. As you educate officials on your methods and equipment, be sure to keep open lines of communication with the fire chief and building inspector, who will have the most expertise and authority on this aspect of public safety.

Beyond the processing-specific concerns about fires and explosions, all cannabis businesses will have to deal with officials’ concerns about theft. These may be particularly acute for processors since your end products have a much higher value-to-weight ratio than raw cannabis plants. To address these concerns, explain the security requirements in state laws and regulations, and any areas where you are going above and beyond what is mandated. Things like external security cameras and floodlights can both protect your own business and your neighboring community, making a cannabis business a net gain to public safety.

COMMUNITY IMPACT

Once economic development and public safety have been considered, local officials will wonder about the broader community impact of your cannabis business in areas like odor or traffic. This is an easy topic for processors, as they arguably have the smallest impact of any type of cannabis operation.

Processors are generally much smaller than cultivation facilities, and since they’re not full of growing cannabis plants, they also have much less odor to address. Unlike a dispensary or retailer, processors are not open to the public, so town planners won’t need to worry about an influx of traffic. Once you explain how you’ll be operating, local officials should be able to rest easy knowing that to an outside observer, your business will be virtually indistinguishable from a commercial kitchen or light manufacturing facility. If there are still concerns about odor, inform them that modern odor mitigation technology can completely eliminate any odor from leaving your facility.

GOING FURTHER

Once you’ve explained what you’d like to do and how you think your facility would fit into the local community, the conversation isn’t over — it’s just beginning! If the local government needs more time to consider your proposal, then it’s good to keep in close touch and address any additional concerns they have as they arise. If the local officials are already comfortable with your business and are welcoming it into their community (or if your state law doesn’t give local officials the power to stop you from opening up), it’s still great to build that relationship and keep an open dialogue.

Elected officials usually need to know a little bit about everything, but don’t have the bandwidth or in-house expertise to go very deep on most subjects. That’s where you, someone working full-time in the cannabis industry, come in — you almost certainly know more about state laws and regulations than they do, which is a great opportunity for you to serve as a resource. If you hear about changes in the law or proposed bills that could impact their town or city, send over news articles or bill text to help keep them informed.

Once you’re open, it’s always great to offer tours of your facility. This will help officials gain first-hand knowledge of what you actually do, and in municipalities where legal cannabis is new, it can help dispel negative stereotypes and demonstrate how professional you and the rest of the regulated cannabis industry are.

Be sure to stay tuned for future installments in this series, where we will be addressing other cannabis license types. Our next blog will focus on retail.

Committee Blog: Clean Workplace Environments

By NCIA’s Human Resources Committee

NCIA’s Human Resources Committee hopes that you and all your employees are healthy during this outbreak. Many states continue considering cannabis-related business as ‘essential,’ so the HR Committee met to discuss ways NCIA member companies could navigate the impact of the COVID-19 outbreak on our cannabis businesses to help ensure you and employees minimize your risk of spreading and contracting the virus in the workplace. 

We are confident that our fellow member companies strive to create a safe and healthy work environment for their employees, but we have brainstormed a few extra precautions cannabis companies may want to consider during this outbreak.  

One of the best resources we have seen thus far are the WHO guidelines put in place for workforces.  

Some additional best practices we have seen from dispensaries, processing facilities, and cultivation sites are as follows:

Time Login/Logout

Consider using an app so employees can login/logout on their own phones versus signing in/out, using a time punch system, or everyone logging in/out on the same computer system.  

Cash Handling

We know that cash handling & computers being used by multiple people is a concern for many employees. Consider purchasing gloves for employees to use. If gloves aren’t available due to medical personnel needing these supplies at this time, offer additional breaks so employees can wash their hands between each transaction with a customer.  

Product Packaging Handling

If you’re in a state where customers are allowed to touch the product packaging or sample containers, consider also having gloves available for customers to use. You should also have some form of cleaning wipes available to wipe down packaging, sample containers, etc. after each customer has touched them, along with wiping down cabinet tops between each customer. Seeing as these supplies are sometimes not available at this time, consider putting up a notice stating that in order to keep customers safe during these times, only Store Employees will be handling product packaging.  

Safe Distancing

For retail stores, you may want to even consider installing plastic/glass barriers (think similar to what we had back in the medical days or you see at banks) in order to keep employees/customers safe. For Producer/Processer cannabis companies, you should try to keep employees at the 6-foot minimum distance. If you’re not already operating in multiple shifts, you may want to consider doing this as well so you can continue regular production but space out workers so they feel safer in this environment.  

Hand Washing

Add additional hand sanitizer stations and consider hiring additional staff and/or appointing one of your current staff members to wipe down all surfaces every 30 minutes. 

Thermometers

Consider purchasing thermometers for each employee so they can check their temperature multiple times/day.

Curbside Pickup or Appointment-Based Purchasing

Consider adding to your website a mechanism for customers to pre-order online with curbside pickup, or to schedule an appointment to visit your store. This can help to keep the number of customers in your store at any given time relatively low, while maintaining consistent business throughout the day. 

Encourage Delivery

While not all states have delivery available, those that do should try to encourage its use. This will help limit contact between your workers and customers. 

We are sure our fellow members will have plenty of other valuable suggestions, so we encourage you to share your best ideas in the comments section of this blog post, on NCIA’s Facebook page, so we can all work together to keep our cannabis community safe during these times. 

Committee Blog: California Social Consumption Leads the Way

by Debby Goldsberry, Magnolia Wellness
NCIA State Regulations Committee – Social Consumption Subcommittee Co-chair

It was January 28, 2020: It’s a full house at the Berkeley City Council meeting, with comprehensive changes to the city’s marijuana regulations on tonight’s agenda. The biggest issue, with supporters of both sides attending, is the vote to consider legalizing cannabis consumption at specially designated licensed dispensaries. 

The proposal to allow smoking, vaporizing, and consumption of edible goods is supported on one side by a phalanx of marijuana advocates and dispensary operators, and on the other side, it’s the city Health Department and Berkeley’s famously NIMBY neighbors. This conflict runs deep; cannabis users want dignified, legal facilities where they can gather and use marijuana, and several dispensary neighbors and the health department want this idea squashed, full stop.

Fact is, people have long gathered together to share cannabis, as shown by an extensive recorded history of use. This spans from ancient Sumerians, who built huts and vaporized cannabis on burning coals inside, to underground marijuana smoke-ins in the 70s and 80s, to now, where cities are licensing legal cannabis consumption facilities for adults. 

California is helping lead the United States consumption lounge movement. For example, California’s Bureau of Cannabis Control (BCC) regulations (Section 5025) explicitly contemplate the possibility of consumption lounges, stating that “this section shall not be interpreted to prohibit cannabis consumption on the premises of a licensed retailer or licensed microbusiness authorized to engage in retail sales,” as long as they are locally licensed and approved.

Already, numerous California cities have created licenses for this, including Oakland, San Francisco, Emeryville, West Hollywood, Palm Springs, and Santa Rosa. 

The state law also created Temporary Cannabis Event Licenses, where onsite consumption is allowed at festivals like the High Times Cannabis Cup and the Emerald Cup. Yes, with city or county and state permission, it is possible to throw your cannabis dream event, but there are a limited number of locations in only a handful of places that allow these uses (including my hometown, Oakland). This makes it hard to get these licenses, and the costly and complicated regulations are hard to meet once you have one. Anyone hosting a Temporary Cannabis Event can expect to interact closely with the BCC regulators, who will surely attend to ensure compliance.

Cannabis consumption facilities are nothing new in California. They have long existed, ever since Dennis Peron opened his first dispensary in San Francisco in the early-1990s. His famous location on Market Street was five stories high, literally, as each floor contained tables, couches, and chairs where patrons could hang out and consume cannabis. When the Compassionate Use Act of 1996 passed, collective dispensaries started opening across the state, despite federal illegality and the occasional raid because of it (Dennis was raided by the feds and forced to close in 1998). 

I opened my first cannabis consumption lounge at Berkeley Patients Group in 1999, which was long before it was legal to do so. This was under the cover of tolerance provided by Proposition 215; after all, not even dispensaries were actually made legal by this groundbreaking initiative. That didn’t happen until the state legislature passed the aptly named SB 420 in [year], after which most cities grandfathered in their existing cannabis dispensaries. (Not all, though. Some municipalities used this transition as an excuse to ban dispensaries, or to close existing ones, during long periods of regulatory contemplation.) Berkeley allowed onsite consumption until the early 2010s, when the local regulatory processes changed. Hence, the City Council vote tonight to decide the fate of onsite consumption here once again. 

Now, I own Magnolia Wellness dispensary in Oakland, where local regulations have allowed cannabis consumption at specifically licensed dispensaries since 2017. Magnolia’s Dab Bar and Vapor Lounge was the first legal consumption lounge in the East Bay. We have café style tables, a gorgeous full, copper top bar, glass dab rigs with e-nails, Vapexhale and Volcano vaporizers, and a variety of tasting events where people can try samples. Unfortunately, Oakland’s dispensary law only allows vaping, edibles, and topicals, limiting smoking to additionally permitted outdoor patios, none of which currently exist. (Full disclosure: I also co-own Hi Fidelity dispensary in Berkeley, too.)

San Francisco, on the other hand, has more than a dozen shops where cannabis smoking, vaping, and edibles consumption are all allowed. SPARC, one of the first lounges in the city, has tasteful tables and chairs right in the main dispensary, where volcano vaporizers can be used onsite. Vapor Room, a few blocks away, is a smaller neighborhood joint, with a handful of seats for people to sit and enjoy smoking or vaping. According to owner Martin Olive, it was a costly HVAC system, at a near six-figure expense, that allowed his facility to host its cannabis smoking patrons. Moe Greens, the latest licensed lounge to open in the city, took four long years to get licensed, but is now a beautiful facility, with cushy booths for smoking and a counter service dab bar with top-of-the-line e-nails and dab rigs for patrons to use.

West Hollywood is the biggest news on the California consumption lounge scene, as the city recently licensed 16 facilities for on-site consumption. Half of these facilities will allow retail sales and consumption, while the others are allowed to sell only single-use items, designed to be consumed café style, while patrons are on-site. This plan has been controversial, though, because in issuing these licenses, the city took permits away from several of the long-existing dispensaries, re-issuing them to new operators. The ensuing lawsuits and legal battles will surely play out through 2020. 

There is another big problem in West Hollywood: the state law does not match up with their rather forward-looking ideas for cannabis cafes. For example, cannabis cannot be blended into café food and served on the spot, as the city imagined when creating this law; Cannabis can only be sold pre-packaged and tested, per BCC regulations. Furthermore, state-licensed cannabis businesses are not allowed to sell anything but cannabis products (and a shortlist of branded items like mugs, lighters, and pipes). In other words, they can’t sell non-infused foods or beverages like coffee, soda, or tea (or, since we are talking West Hollywood, kombucha and smoothies).

Until state law changes, the plan is stuck in limbo, with facilities looking for creative workarounds to allow food and beverage service. 

So, despite the West Hollywood ordinance passing in late 2018, only one facility has opened there, and even this has hit roadblocks. In fact, they recently re-branded after only a short time in business, from Lowell’s Café to the Cannabis Café, after a regulatory crackdown hit the Lowell’s brand hard. It remains to be seen when the other 15 cannabis lounges will open there. 

Back in Berkeley, staff from the Health, Planning, Police and Economic development offices joined forces with the Berkeley Cannabis Commission to present the City Council with a comprehensive plan to update the city’s cannabis ordinance. Diverging opinions meant that the agenda contained competing proposals on several of the ten proposed ordinance changes, with the Cannabis Commission leading efforts to create progressive changes, and the Health Commission stuck on the old trope, “we need more research.” 

Elizabeth Greene, City of Berkeley Senior Planner, explained to Council that these proposals have been in development since 2017, with the goal of expanding the rules to protect the entire cannabis supply chain, from seed to sale. This includes development of two new license types, cannabis consumption lounges and non-retail dispensary licenses. 

“State law allows for consumption lounges as part of a retail license, as these are the only facilities open to the public,” Greene says. “Currently, consumption lounges are not permitted in the City of Berkeley.” Her presentation made it clear that city staff recommended cannabis lounges be permitted, despite the worries of the Health Commission, whose representative commented that “legalization is new,” despite that cannabis sales have been regulated by the city for around 20 years. 

Long time senior advocate, and ICANN dispensary owner, Sue Taylor spoke eloquently in support of the proposal to allow lounges. “Seniors need a place to learn about cannabis, how to use it and dosing, and you could do that in a vape lounge. I can’t go into their homes, but I can provide this education at a lounge,” says Taylor. “It’s not like a bar; at a bar, you just get sicker. A vape lounge helps people.”

Ultimately, the City Council agreed. By 11:30 PM, Mayor Jesse Arreguín called the vote, with the Council unanimously approving the entire proposal. Supporters filled the room with cheers, and long-time advocates like myself reflected on the fact that, yes, hard work and determination do pay off. Together, we may just end prohibition, once and for all — and have some fun, too. 

 

Committee Blog: Cannabis Banking – Regulatory Outlook and Effective Compliance

by Angela Lucas, Managing Partner and Co-Founder, Sterling Compliance, LLC
Member of NCIA’s Banking & Financial Services Committee

During a recent webinar, we polled the audience on their current positions on offering financial services – traditional financial services – to direct marijuana-related businesses (MRBs). The results, as you might imagine, were mixed but we identified one common theme: The vast majority have taken action to address cannabis banking issues. This has been the theme we’ve been championing for years. The dichotomy between state and federal cannabis laws has placed our financial institutions in a precarious position: Bank the cannabis industry, be first to the market in doing so, create a non-traditional revenue stream and help to solve public safety and other logistical issues by solving the all-cash conundrum OR continue to watch from the periphery as others take the leap?  

We see the number of financial institutions – banks and credit unions – that offer financial services to cannabis businesses expanding, but not to the level suggested by FinCEN SAR data. There remains a critical need for financial services within the cannabis industry.

Why the hesitancy in tackling this issue?

The current regulatory environment is a critical factor. As it stands, our industry is relying primarily upon the FinCEN guidelines to offer financial services to cannabis-related businesses. These guidelines, coupled with a surge of proposed legislation and a regulatory perspective on risk-based risk-taking, have allowed financial institutions across the country to effectively provide financial services to cannabis-related businesses. There is a key term we’ve been using: cannabis-related businesses. Within this term, we encompass direct and indirect marijuana-related businesses, hemp, and CBD entities. The majority of those polled feel more comfortable with hemp and CBD entities primarily due to the passage of the 2018 Farm Bill. Getting into the intricacies of how the Farm Bill and the USDA’s resulting interim final rule have added a layer of complexity to banking hemp and CBD businesses is more than we can cover in this blog post. Let’s focus instead on those providing financial services to direct MRBs, those that are state-legal, licensed cultivators, extractors, and dispensaries.

It IS possible to actively bank direct MRBs, to offer stable banking services that bring the cash off the street and provide a means for these businesses to operate more effectively and efficiently, and surely in a less costly manner than an all-cash business. The regulators are not criticizing financial institutions for providing financial services to MRBs; they review these services as they would any higher-risk, complex activity. When an institution takes on too much too fast or does not have sufficient controls to know whether it actually has a higher risk or complex business concentration within its customer base, the regulators will be critical… as they should be.

So, what are they looking for?

This goes back to the theme we mentioned: Financial institutions actively addressing cannabis banking issues.

Every financial institution, whether it intends to bank direct or indirect MRBs, hemp or CBD should have a Cannabis Banking Program that assesses the inherent risks of doing so, speaks to the controls necessary to effectively manage those risks, and determine whether they are well-positioned, or have a risk-appetite for, providing financial services to the cannabis industry. Conversely, if a financial institution that has no appetite for, or does not reflect sufficient regulatory health to bank cannabis, it must establish effective controls to ensure that position can be maintained.  

But, this post is about empowerment. It is about speaking to the regulatory environment in which we find ourselves. It is about providing the perspective that banking marijuana, hemp and CBD CAN be done effectively, safely and soundly. Yes, there is a significant level of infrastructure needed to do so. Yes, it does come with the need for ongoing, strong risk management and control enforcement. Yes, it can be a bit scary. By establishing a Cannabis Banking Program, comprised of a comprehensive risk assessment that drives an equally comprehensive policy, a financial institution can provide financial services across the spectrum of marijuana, hemp and CBD, and undergo regulatory scrutiny with confidence. Moreover, such a program has become a regulatory expectation to support a financial institution’s cannabis position. This is also not a program where a financial institution will set it and forget it. The risk assessment and policy must remain dynamic as legislation evolves, as regulatory perspective changes, and as a financial institution’s position or outlook may shift.

This is an industry that has already proven prolific. This is a time that will be ingrained within our nation’s history. Let’s be remembered as those who championed the issues, established the country’s infrastructure, and set the standard for those who follow.  


As a former Federal bank regulator and seasoned consultant, Angela’s knowledge of regulatory compliance, risk management and investment advisory services has established her reputation as a leading resource within the financial consulting industry, spanning consumer protection and anti-money laundering statutes, fraud and cannabis banking issues.  

Angela is the Managing Partner and Co-Founder of Sterling Compliance, LLC, a consumer compliance consulting firm based out of Pittsburgh, Pennsylvania.  Sterling specializes in consumer protection and anti-money laundering compliance within the community banking industry and enjoys a significant online presence with a client base spanning the coasts.  

In December 2019, Angela joined Integrated Compliance Solutions, LLC (ICS) upon the ICS acquisition of Sterling Compliance as an independent operating subsidiary.  Angela oversees the firm’s Compliance Strategies division, of which cannabis banking is a significant component. ICS is a financial technology, banking compliance and innovative payments solution provider helping financial institutions with complex solutions.  In joining the ICS team, Angela has continued the firm’s mission of bringing its complete SEED-TO-BANK™ solution to financial institutions and cannabis-related businesses throughout the United States, and has expanded the firm’s industry engagement as a well-respected authority on the regulatory and compliance issues surrounding cannabis banking.  

 

Committee Blog: Opportunities & Challenges with Next Gen Packaging In the Legal Cannabis Market

by NCIA’s Packaging and Labeling Committee/ Next-Gen Sub-Committee
Lisa Hansen, Plaid Cannabiz Marketing & Brian Smith, Satori Wellness 

What Is Next Gen, Anyway?!

It’s a new year, a new decade and quite frankly—a new era of packaging in the cannabis industry. We are officially face-to-face with next gen packaging in our ever-growing market. But what is next gen packaging, anyway? By definition, next-generation packaging is “basically a packaging technology, which possesses different advanced features, such as traceability, offers various benefits such as product shelf life extension and provides product quality information.” 

Essentially, it’s taking our cannabis packaging to the next level.

The Growing Opportunities

With new products, formats, and technologies available, the opportunities for next gen cannabis packaging are limitless. In fact, there are so many options for next gen technologies that our NCIA Packaging and Labeling Committee has organized a subcommittee that is dedicated to the topic. We’ve also created subcommittees for Sustainability, Honesty in Labeling and Intellectual Property and Protection. A new era for packaging indeed!

Today’s cannabis cosumers are supporting the legal market for its quality and transparency, and today’s cannabis retailers need accessible platforms to educate them. These dynamics create an environment where next gen packaging (and merchandising) can really shine. With these new tools, brands can immediately engage, inform, and incite action.

Dreams Vs. Reality

While our hopes are super high for next gen cannabis packaging, the reality can be a bit of a buzzkill. In a state-by-state market, the variables for packaging create an inherently significant expense. And with regulations frequently shifting, it makes investing in premium packaging challenging, to say the least. There’s also the complication of managing data and actions behind a next gen platform. Worth the effort? We sure think so. And the good news is that next gen packaging is designed to be measurable so there’s data to evaluate its impact. 

Promising Examples

The applications of next gen packaging for cannabis are seemingly limitless. Everything from a simple QR code, to complicated anti-counterfeiting technology, are possible. Augmented and virtual reality, scratch and sniff add ons, and improved breathability all present powerful opportunities to quickly and effectively affect a purchase decision. 

KURZ is really pushing the boundaries of cannabis packaging with value-added security and technology solutions that are not only effective but purposefully decorative. Think holograms on packaging that can be used for anti-counterfeiting and other special finishes that add pop but are also sustainably produced. Now we’re talking next gen! 

BUNDLAR is getting ahead of the curve with what they call “AR made Easy.” By making aspects of AR technology publicly available as well as offering customization, brands can more easily experiment with this exciting new platform. 

The strategic approach to structural design that Greenlane is taking and the inspiring steps SANA Packaging has made with hemp-based materials are other compelling examples of the momentum in next gen packaging. Perhaps the most promising example of all is that as an industry, we’re just getting started. 

New Decade, New Attitude 

Our subcommittee predicts more exploration in cannabis with packaging that covers the exciting world of next gen possibilities in this new 2020 era and beyond. Which brands will step up? Will retailers ask for it? Will consumers pay for the experience? In an industry that refuses to stand still, these questions will inevitably be answered. The Packaging and Labeling Committee will be watching and sharing more examples and insights in additional articles.

Are you using next gen packaging? Drop a comment and share your experience!

Committee Blog: Interstate Cannabis Commerce Will Benefit Public Safety, Consumer Choice, and Patient Access (Part 2)

By Sean Donahoe, Founder and CEO, Sungrown Developments Inc.
Member of NCIA’s State Regulations Committee

In Northern California’s legendary cannabis growing region of Mendocino, the elected county sheriff was recently a competitor at a homebrew festival, jovially pouring samples of his “Pretty Sour Powerful Sider” (jokingly referring to the “Public Safety Power Shutoffs” recently implemented by the electricity utility PG&E to prevent wildfires.) While this relaxed scene of neighbors bonding in the wake of shared inconveniences was not exceptional in itself, here, Sheriff Allman was posing for selfies with licensed (but possibly a few unlicensed) cannabis cultivators sharing the liquid bounties of harvest for the benefit of a local nonprofit.

For nearly a decade, the elected officials and staff of Mendocino county have worked together to normalize the local cannabis farmers by providing a pathway for medical cannabis cultivation permits, long before the state established a licensing system. This public policy process brought once-outlaw cannabis growers into conformance with every regulation of modern life: from building code standards to streambed alteration regulations to the quantification of gross receipts for tax collection. Bringing regulators onto these farms has curtailed previous practices that may have threatened consumer safety: pesticide and other chemicals are now tracked and regulated, while every gram can now be tracked back to its very plot of origin (in case of a safety recall or other concerns post-harvest.) This has been unquestionably difficult for and disruptive to many heritage and small farmers, but it has also allowed in these regions for simple scenes of social bonding and neighbors trusting neighbors again, as participants in the illicit sector were normalized into first their local county’s community then into a system of state license and next (hopefully soon) into a web of regulated interstate commerce. The process of bringing every farm into the regulated supply chain is far from complete, of course, and there are still illicit operators producing for consumers in urban areas in the state and beyond.

Rather than dwell on the incomplete success of California’s ongoing efforts to bring order to the world’s largest cannabis marketplace, it is essential to focus on the quality of life benefits from every cannabis operation successfully brought over from the traditional market to the regulated sector. Each licensed operation makes for one more safe workplace, one more source for lab-tested products for consumers and patients, and one more farm abiding by environmental regulations while providing stable employment and economic sustainability in rural communities. Under the previous medical cannabis paradigm, while there was certainly an abundance of responsible operators, there was virtually zero guidance from the state on matters of workplace safety, manufacturing standards, or environmental compliance. We are now several years into a robust legislative and administrative rulemaking process that has established a (mostly) clear set of rules of the road for commercial cannabis activities. It has unquestionably been a bumpy road for many of the legacy farmers to comply with new regulatory standards, but we are nonetheless able to say that there are now thousands of well-regulated cannabis farms in California (and southern Oregon) eager to sell their clean and craft quality products in a hopeful system of interstate commerce.

Has every cannabis farm in California transitioned? Of course not, but neither have the illicit cannabis economies been entirely supplanted by adult-use cannabis retailers in Colorado and Washington. Sensible and sustainable cannabis policy reform is a process, not a simple flipping of a switch from “illegal” to “legal,” and Americans should be realistic about the progressive and iterative nature of this process. This process, like most evolutionary processes, has already experienced several inflection points, transformative moments that noticeably shifted public opinion or opened up new frontiers in policy reform. While the earlier era of medical cannabis state laws certainly created a base of public opinion and laws, it was questionably the passage of adult-use ballot measures in Colorado and Washington which brought onto the global stage and accelerated the awareness that adult consumers could buy cannabis in clean, responsible retail locations rather than furtive or even dangerous transactions in the illicit marketplace

Throughout this policy process, we have established that licensed retail options can be scaled without negatively affecting public safety and are highly efficient competitive enterprises, offering consumers ample product selection and low prices. In both Colorado and Washington states (but also in later states) we have seen imbalances for some time as market forces, regulatory factors and new cultivation capacity coming online have all helped to create price fluctuations, product shortages, and other supply disruptions. These disruptions were not unique to these early states and will likely continue in every market as new in-state regulated options come online in fits and starts (but when interstate commerce becomes possible we should expect significant price fluctuations unlike any seen to date.) During these fiscally trying periods, we have often seen cannabis operators attempt to cut corners on compliance to make ends meet, which can lead to compromised consumer safety and public safety. The goals of consumer availability and cost competitiveness should be foremost in the minds of policymakers crafting cannabis policy reform nationwide, most notably in the anticipated markets of the Northeast. As these next anticipated adult-use states are designing the framework of their retail and distribution systems, strong consideration should be taken on the potential benefits of quickly and effectively scaling their programs by incorporating interstate commerce as soon as (politically) possible.

The Interstate Commerce Conversation

As the serious policy conversations about compliant interstate cannabis commerce begin, it is helpful to study how in our proverbial laboratories of democracy we can see that decreasing retail friction and shifting consumers from the illicit marketplace benefits crime reduction efforts and improves overall public safety. We should also note that retail cannabis sales have continued to grow in Colorado and Washington, even after the initial novelty and the surge of tourism waned, while legal sales have supplanted illicit sales. These early-adopting states have created models that are addressing consumer demand as national interest in cannabis for wellness and adult-use purposes are soaring and the cultural normalizing continues to occur on a global scale. Interest is high, consumer demand is real, and evidence shows that our drug reform policies should be crafted to bring every cannabis consumer transaction into the regulated supply chain in order to fulfill the demand while benefiting from increases in public safety. Interstate commerce could provide not only safer products but also a greater variety of quality and highly competitive offerings. For medical patients and wellness-oriented consumers, interstate commerce may be the only viable means of access for certain formulated cannabis products or cultivars, especially in smaller state markets. 

In addition to the above benefits, regulated interstate cannabis commerce system could provide a more robust and differentiated production and distribution network combined with the ability to rapidly scale retail sales and address insufficient cultivation capacity in new adult-use markets. Cannabis consumers are price sensitive and illicit market retail options continue to entice consumers in states with functional adult-use programs such as California (or Canada), where there is an insufficient amount of licensed retail options to address total consumer demand.  With the beginning of adult-use sales in Illinois and larger adult-use states yet to come, it is frankly a bit difficult to envision how total consumer demand will be able to be fulfilled in any near term by relying on licensed cannabis cultivated in-state alone.

The Safe Vaping Discussion

While moving to allow interstate commerce will best position licensed operators to compete with the prices available to consumers in the illicit sector, moving towards a borderless system of production and distribution will also increase safety and access for patients and consumers. Most prominent is the recent nationwide discussion on vaping and vaping-related issues, where tainted products and resultant injuries have been found in the unregulated, illicit sector (or in a very few instances from licensed but arguably under-regulated sources.) Notably, NCIA’s Policy Council established a Safe Vaping Task Force to work on these issues and has released a more comprehensive document advocating for the expansion of a regulatory approach for the safe manufacturing and distribution of cannabis products, whether vape cartridges or otherwise.

The issue of vaping extends to broader issues of product safety including educational campaigns, quality assurance, and testing programs, supply chain integrity, track and trace, and other reporting systems, and (when all else fails) a capable and sophisticated product safety recall system and these are all necessary components of a well-regulated marketplace. These consumer safety programs have already been carefully designed and stress-tested in Colorado and California and the insights from these systems and those in other states should be incorporated into the crafting of interstate cannabis policy (which will require significant harmonization of Certificates of Analysis and testing standards, packaging and labeling standards, etc., again all of which will benefit patients and consumers by offering greater predictability and reliability of their preferred products.)

Multi-State Coordination

In various forums, we have begun to see state regulators liaise with each other and we hope to see more coordination in the future and potentially an earnestness in harmonizing standards where statutorily possible. This multi-state coordination on product safety standards would be accelerated as part of the regulatory coordination efforts that are likely necessary for interstate commerce and, again, consumers and patients will benefit from safer cannabis and cannabis products, and we see NCIA as the critical player in this coming national conversation. In conclusion, moving to a system of regulated interstate cannabis commerce will have tangible benefits for the general public, for consumers and patients and I encourage forward-thinking members of the industry to participate and help manifest a system of interstate cannabis commerce with NCIA, its Allied Associations and other industry groups.


After studying Russian affairs and working as a political consultant, Sean Donahoe co-founded the California Cannabis Industry Association. He served as its Deputy Director through 2014 when he transitioned to consulting for investors and operators, communicating with public stakeholders, serving on local government committees, and advising industry trade groups. He holds an MSc in Government from the London School of Economics and is CEO of Sungrown Developments Inc., an advisory firm and holding company in Oakland, California.

Committee Blog: What Should You Do If Your Customer Won’t Pay You?

By Sam Fensterstock, AG Adjustments
Member of NCIA’s Banking & Financial Services Committee

When I first came into the market in 2016 almost every company told me that they don’t have collection issues, they either get paid COD or get paid “on time.” Well, as the recent reports about a dispensary stopping payments to vendors has hit the press, I thought it would be a perfect time to talk about an issue that has largely been ignored in the cannabis market: collections, and what you should do if you are not getting paid?  

Almost every company I have spoken to, whether they are a grower, manufacturer, or service provider are extending some type of credit to some of their customers. With more companies in the cannabis space now extending credit to their customers, delinquent payments are on the rise and the management of your new “accounts receivable” can have a major impact on your cash flow.  

Most of this credit extended today in the cannabis market is what we call “friendship credit,” credit that is extended to a customer who you have developed a personal relationship with and where no credit analysis was performed. Friendship credit may have worked in the past, but the rules are changing and as you may be experiencing first hand, many of these customers are not paying you on time and some are not paying you at all. If this is happening to you, what should you do?

The following is a common-sense approach to the problem of determining whether a customer has become a collection problem where you may need outside help. Customers that have a cash flow problem must choose which vendors they will continue to satisfy and which vendors they will not. If a company has insufficient cash on hand to pay all their vendors, some are not going to get paid on time. This can be a one-time problem, or it can be an endemic problem and if you don’t act promptly it may cost you. 

The Customer is More Than 30 Days Past Due 

Your customer always paid on a timely basis, you have transitioned them from paying you COD to credit terms and now they are 30 days past due. They answer your calls but promises for payments and clean up the past due balance are not met. Chances are you have a problem and depending on how old the debt gets, turning them over to a 3rd party collection agency may be the way to go and save you a customer. Yes, you read it correctly, save you a customer and get you paid, that is the goal of a collection agency.

The Customer is Not Returning Your Calls and Re-Ordering

Your customer is past due and ducking you. If they won’t talk to you after repeated attempts to reach them, their debt is 30-60 days past dues and getting older and they are not trying to re-order and pay down the old balance, a collection agency may be your only solution. Collection agencies have trained recovery professionals that focus on working with these types of accounts. A collection agency experiences this problem as a normal course of their daily activity and they are experts at getting your customer to the table because it’s what they do for a living. 

The Customer Has Stopped Buying 

If the customer has stopped buying and owes you money, even if it’s not past due you need to be on the alert. For whatever reason, if the account no longer needs you, they don’t have a reason to be prompt. If they go 60 days past due, you are probably going to need outside help to collect your money. 

You Receive Negative Information on the Customer from Other Suppliers

Your customer is past due, and you receive some negative information on them from other suppliers who are also selling to them. When a company gets into trouble financially, they start allocating their available cash, the key important vendors may not see a problem, but the secondary vendors will. For example, if the account is a dispensary they need to have flower and concentrates on the shelf and therefore those suppliers will get paid first. But if you manufacture infused THC/CDB sports drinks that do not sell as well you might not get paid on time if the dispensary has cash flow issues. If you have relationships with other suppliers leverage them to find out what is going on.

Final Thoughts 

If you are extending credit you will need to implement a collection policy that details how to manage and collect from a delinquent customer as well as what is your point of no return is where you need to pull the trigger and place the customer with a 3rd party collection agency. The warning signs listed above are usually evident during your internal collection efforts and the sooner you recognize them the better. Prompt action will save you money. If the account is behaving erratically, you should turn them over to a 3rd party collection agency as they trigger the 60-90 days past due signal because probably things are not going to get better, only worse.   


Sam Fensterstock is the SVP of Business Development at AG Adjustments (AGA), a 48 yr. old provider of 3rd party commercial collection services where he oversees sales, marketing and revenue.   Sam has spent his entire business career as an entrepreneur and senior executive in the commercial credit & collection space.  Sam been a founder and played a key role in the dynamic growth of several leading niche commercial credit risk management companies including F&D Reports, CreditRiskMonitor and PredictiveMetrics (sold to SunGard/FIS in 2011) and AGA.  Sam is widely considered a vendor expert in the order to cash and credit and collection process.   AGA is the only national collection agency focusing in the cannabis market Sam has been an active member of the NCIA’s Banking & Finance Committee since 2017.  Sam is the author of the NCIA published White Papers “The Future of the Accounts Receivable & Credit Function in the Emerging Cannabis Market” and “Implementing an Initial Trade Credit Policy for an Emerging Cannabis Related Business” as well has authored several articles on the topic of trade credit and collections in the cannabis market. 

Committee Blog: Ending The Ban On Interstate Commerce (Part 1)

By Gabriel Cross, CEO of Odyssey Distribution
Member of NCIA’s State Regulations Committee

Oversupply and shortages, high prices and lack of choice for patients and consumers, illicit markets, tainted products, and the inability to access banking and capital all plague the burgeoning cannabis industry. While cannabis advocates and industry leaders are working on each of these problems, there is one solution that would ease the burden on all of them. Allowing for interstate trade between states with legal cannabis markets would improve each of these issues while supporting the individual solutions to each that the industry has been working on. This is the first post in a series that explores the benefits and barriers to setting up a legal framework for interstate trade, even before wholesale legalization at the federal level.

Since the beginning of legal, adult-use cannabis, when Colorado and Washington passed the first ballot measure allowing for adult-use, the industry was guided by the Cole Memo, which laid out the parameters for the federal government staying out of the states’ cannabis experiments. Among other things, the Cole memo stated that the DEA could crackdown on cannabis moving from states with well-regulated systems to states that do not allow cannabis. This statement has been interpreted conservatively to mean that no cannabis should cross state lines for any reason, ever, based on the fact that at the federal level, cannabis is still a Schedule I drug under the Controlled Substances Act.

Today, there are 10 states which have legalized adult-use, another 19 which allow for medical use, and six more which allow the use of CBD products only. Many of these states share borders, and producer states could serve several nearby markets without ever entering a state that does not allow cannabis in any form. Furthermore, the Cole Memo, which was rescinded by Jeff Sessions in 2018, has not been replaced by any guidance whatsoever. This means that each U.S. Attorney’s office is free to set their own enforcement priorities around state-legal cannabis activities, and there is no official overriding policy at the DOJ on interstate trade between states with medical or adult use. Corresponding guidance from FinCEN, however, remains in effect and similarly discourages the transfer of cannabis between states. 

Cannabis markets vary widely from state to state with regard to the underlying market dynamics and challenges that they face. Some states produce too much while other states experience shortages. Meanwhile, new states pass legislation or have voter initiatives that allow medical or adult-use every year without any infrastructure in place to supply that state’s demand. In each new legal market, the vast majority of demand had long been met through illicit market supply, and generally from outside of the state’s boundaries.

The artificial boundaries around cannabis markets have far-reaching impacts for local economies, patient access, illicit market activity, and social equity. Later posts in this series will take a deep dive into each of these issues, and in this post, we will look at how this has impacted states, the industry, and consumers so far.

Lessons Learned:

  • Washington State chose to take the strictest possible reading of the Cole Memo, and insist that not only must cannabis not cross state lines but also sources of funding must come from within the state. Combined with their high capitalization requirement for licenses, the result was a disaster from an equity standpoint: only wealthy and well-connected individuals in the state (which are overwhelmingly white males) were able to even attempt a license. This decision was based substantially on the fact that interstate trade was not allowed.
  • In Oregon, which has an ideal growing climate and a long tradition of exporting cannabis (albeit in the illicit market), the artificial boundaries created by the ban on interstate trade lead to a massive oversupply for its small population, which crippled the industry and tanked many small businesses. Despite the fact that Oregonians consume more cannabis per capita than any state, their climate and culture have led to growing massive quantities of world-class cannabis that cannot reach patients and consumers, even in neighboring states that might have under-supply issues. The result is that hundreds of small, mom-and-pop shops and family farms have gone out of business, eradicating millions of dollars of local capital, and accelerating mass consolidation of the industry into the hands of a few foreign corporations. Meanwhile, in medical markets like Illinois and Michigan, patients have had sporadic access to quality cannabis-based medicines.
  • When Nevada originally launched, due to the influence of local liquor distributors, it was almost impossible to get products to market, and the state’s dispensaries sold out on the first day of sales. After ironing out some of the kinks, sales are going strong, but the practice of growing thirsty plants indoors in the desert is of dubious value when the same plant can be grown with a fraction of the inputs in northern California and southern Oregon.
  • California’s legal system is a perfect example of how over-regulation fuels illicit market activity. Because of the structure of their regulatory framework and high taxes, the state is served by only 800 licensed dispensaries, whose prices are double and triple those found on the illicit market for similar products. This has led to the emergence of thousands of “pop-up” or unlicensed dispensaries, selling untested products tax-free in a thriving illicit market. The booming illicit market in California has also led to massive wholesale markets of hardware, branded packaging, and flavoring and cutting agents (all technically legal) to supply the illegal operators with everything they need to look legitimate. This is a major contributing factor to the wide-spread vaping related illness cases popping up all over the country, as many illicit market operators purchase their supplies in downtown Los Angeles.
  • The ban on interstate trade promises to continue to create new and novel problems as well. If New York, the 4th most populous state in the union, legalized adult-use (which seems likely in the near future), and interstate trade were still banned, it would require a massive investment, on the order of billions of dollars, to create enough indoor and greenhouse grow facilities to supply the demand created by its 19 million inhabitants. The recent legalization of hemp under the last Farm Bill has created a number of legal dilemmas as well, as some individual states that do not recognize any difference between hemp and cannabis flower have seized products and arrested individuals taking hemp legally grown in one state to a market where it is legal to sell.

Some suggest that these issues will be sorted in local markets, and in each state individually this approach might seem to make sense. When you add these problems together, though, a much more elegant, efficient, and obvious solution emerges: let states that have always exported cannabis send it to states that have always imported it. A set of different and seemingly unconnected problems become each other’s solutions.

Historically, people across the country have consumed cannabis, and the vast majority of it was grown in a few locations that are particularly well-suited to the plant. It is highly likely that a fully-matured nationwide legal market (one which must account for not only interstate, but also international competition) will ultimately be best served by the same general market dynamics. The only question is: how long will we allow the artificial market boundaries around each state to decimate local capital, curb access for patients and consumers, encourage investments that are attractive short-term but disastrous long-term, and prop up the illegal markets that pose a public health risk?

Interstate trade between states that allow some form of legal cannabis would provide much-needed relief on a number of fronts for cannabis businesses, and could be structured in such a way to support social equity efforts. With a little guidance on enforcement and thoughtful programs and agreements between states, there is a path to legal interstate commerce even before cannabis is removed from the Controlled Substances Act. The state of Oregon has already passed legislation allowing for the export and import of cannabis products provided that the Federal Government allows it. This could be either through legislation such as the proposed Blumenauer/Widen State Cannabis Commerce Act, or though DOJ enforcement guidance (whether from the Attorney General or the relevant local U.S. Attorney’s). There are multiple paths that can lead to the end of banned interstate trade, and it seems increasingly inevitable that we will see legal cannabis trade across state borders in the near future. For most operators in the cannabis industry, and for all patients and consumers, this will be a good thing, and can’t come soon enough.


Gabriel Cross is a Founder and CEO at Odyssey Distribution, LLC, a distributor for locally-owned craft cannabis producers and processors in Oregon. Gabe worked in the sustainable building industry for a decade before starting Odyssey and brings his experience with sustainability and systems thinking to his work in the cannabis industry. Odyssey manages logistics, sales and marketing for boutique producers so they can focus on creating great craft cannabis products for the Oregon market.

Committee Blog: How NCIA’s Banking & Financial Services Committee Can Help You In 2020

by Tyler Beuerlein, CRO of Hypur
Chairman of NCIA’s Banking & Financial Services Committee

As we begin the new year, the NCIA Banking and Financial Service Committee is joining the trend of starting something new for 2020. We are launching a blog series, the very words that you’re reading now, to help the cannabis industry when it comes to banking and payments. Here, you’ll find new content every month. Our goal is to give you actionable information based on current markets so that your business can grow and thrive throughout the year.

In Missouri, the state has issued 192 retail licenses, and 80 licenses for cultivation. To serve the industry, there are numerous banks and credit unions who are actively working with cannabis businesses to offer transparent banking options. 

Utah will be issuing 14 retail licenses and 8 cultivation licenses, with businesses expected to start operating in March of this year. There is a financial institution in the state that is ready to bank the cannabis industry, helping your business with compliant financial services.

Finally, the committee has built relationships with additional financial institutions in California, giving even more options for cannabis businesses that need banking solutions. Whether your business is based in Missouri, Utah, California, or any other state with a legal cannabis market, NCIA’s Banking & Financial Services Committee can help provide information that may help you obtain banking services. Please get in touch with us if you need help, and we can make connections that could help.

Considering the changes to legislation in states across the country, as well as the impressive growth of the cannabis industry in recent years, we’d like to take this opportunity to welcome both newcomers and old-timers in this industry. Our community is vibrant and collaborative, with a focus on helping each other grow. 

Unfortunately, there are always operators who try to work around the rules instead of following them. As a result, it’s important that we remind all our members about the dangers of breaking the laws or rules regarding cannabis banking and payments. We want to make sure that everyone knows the dangers that can be associated with the few transaction methods that are available to the industry.

Debit and credit card payments for cannabis are not allowed by the branded card networks. What does this mean? VISA and MasterCard do not want anyone paying, or receiving payment, for cannabis on their rails. While not technically illegal, circumventing their rules can lead to some dire consequences, including getting blacklisted and unable to get a merchant account in the future, even when cannabis becomes federally legal.

Instead of trying to work outside the system, focus on compliance and sustainability. How can you ensure that your business thrives for years to come? Build a solution that is legal now and will continue to operate legally as the federal laws expand. Work with banking and payment partners who understand your business and help it grow. Ensure that you only build partnerships with reliable, trustworthy institutions that improve your brand’s viability and performance.

As always, remember that NCIA’s Banking & Finance Committee is here to help you. Our goals are to educate and support operators in this industry across the country. If you’re worried that your banking or financial services solutions might not be fully trustworthy or compliant, don’t stay silent. Make full use of this committee by utilizing all our resources and connections to help your business thrive. Because when your business does well, the association continues to grow and improve, too.


In his role as Hypur’s Chief Revenue Officer, Tyler leverages his extensive experience in building brands, managing key relationships and strategic partnerships. Tyler has been at the forefront of Hypur’s expansion efforts for over five years and touches Financial Institutions, Government Officials, Regulatory Bodies and the State Legal Cannabis industry.

As a result, he possesses an intricate knowledge of the Banking and Regulatory climate, key industry influencers, industry dynamics, and market history. He has also become a key contact for media outlets, analytics companies, industry consultants and investment firms searching for reliable, accurate sources of industry information.

Tyler’s contacts and relationships in the US State Legal cannabis industry are unparalleled.

As a result of his influential value, he was selected to be Chairman of the National Cannabis Industry Association Banking and Financial Services Committee. He is also a member of the Forbes Business Development Council, frequently publishing articles about the banking and payment environment in the cannabis industry. Tyler founded and managed a large beverage company prior to joining the Hypur team and was a professional athlete in the New York Mets Organization.

Committee Blog: Working With Your Local Government as a Cannabis Cultivator

by NCIA’s State Regulations Committee

The regulated cannabis industry is inextricably linked to politics, and all politics is local — so when trying to open and operate a cannabis business, you’re almost sure to need to work with local government in some way. 

To help our members understand how to start these relationships right, the NCIA State Regulations Committee hosted a webinar on how to approach local government earlier this year. That focused on identifying your relevant local authorities, how to introduce yourself, and how to properly navigate those relationships. 

Once you’ve figured out who to talk to and have gotten in touch with them, they’ll often have questions about the cannabis industry, and there is plenty of good information you can proactively share as well. To help NCIA members inform their local governments about the wide range of issues surrounding our industry, we’ll be diving even deeper with a series of blog posts.

We’ll be starting this series where the whole cannabis supply chain begins: cultivation. Future posts will touch on processing, retail, and more. Even though states categorize their licenses differently, with some issuing stand-alone cultivation licenses and others combining cultivation with processing (or sometimes issuing vertically integrated licenses, with retail too), we’ll be focusing in on the various operations individually.

ECONOMIC IMPACT

When elected officials hear about a new business wanting to open in their town or city, their first question is usually, “how many jobs will it bring?” Mayors, city and town councils, departments of economic development, and other government entities are often laser-focused on building up the local economy, so explaining how your business will help them towards that goal is integral to moving your project forward.

Lucky for them, cannabis cultivation is a very labor-intensive endeavor, and you’ll likely be hiring dozens of people to staff your facility. If you’re an experienced operator who knows exactly how many people you need to hire and in what roles, let your local government know! They’ll be interested to see the range of responsibilities and necessary experience, from entry-level trimmers to mid-career managers to botanists with a Ph.D. If you’re still figuring out your exact staffing plan, providing a range of possibilities will help them understand the scale of your project. Be sure to avoid pie-in-the-sky estimates that you’ll never be able to reach — in the long run, it’s always better to under-promise and over-deliver than to make it seem like you were pulling a bait-and-switch. Also do not forget to include all the contract jobs created by constructing or retrofitting your facility.

Beyond the sheer number of hires you’ll be making, it’s important to talk about the compensation and benefits that you’ll be providing to your employees. If you’re starting everyone above the state’s minimum wage — or better yet, starting everyone at a living wage (generally thought to be at least $15/hour) — highlight that! If you’re providing health insurance or other benefits to your hourly employees, let them know! Elected officials like to see companies doing better than the bare minimum, and love to see companies that do even more.

Your physical facility will also have an economic impact on the community that’s worth talking about. If you’re buying your building, you’ll be paying property taxes, and you can let your elected officials know just how much you’ll be contributing to the tax base. Mayors and councilors always love to see unused space being occupied, so if you’re making use of a vacant or neglected building, be sure to let them know. This goes double if you’ll be making improvements to the building that increase its value (and triple if you’re using a local construction company to make those improvements).

Finally, consider whether you will be providing any additional revenue to the local government. While some state cannabis laws do allow for local taxes, these typically apply to retail rather than cultivation. Massachusetts and some other states also make heavy use of “community host agreements,” or CHAs, where a business commits a percentage of its revenues to the local government for a limited period of time. If either of these applies to you, be sure to provide elected officials with the relevant parts of state law, and the specifics you’re willing to offer. If you plan to financially support any charities, provide details — and if you’d like some guidance on what local charities are doing the most good, just ask, since most officials would be happy to tell you some of their favorites.

PUBLIC SAFETY

Elected officials also care about public safety, but usually follow the lead of their police chief and fire chief, for whom safety is their one and only priority. It’s good to proactively highlight the ways your facility will improve public safety — if you’re installing outdoor security cameras or floodlights, those can protect your neighbors as well as yourself, and there have been multiple cases where cameras on a cannabis business have helped solve an unrelated crime

It’s important to remember that police and fire chiefs are spread thin and need to know a little about a wide variety of topics. Unless there are already cannabis businesses in their town, they probably haven’t read the state security requirements to open a facility, so providing an overview of the state law can help demonstrate how tightly regulated you will be. Knowing that the state already has rules for waste disposal, product storage, and controlled access areas can alleviate many of their initial concerns.

Once you’ve explained the security features of your building and run through the state requirements for cannabis businesses, you should address any lingering fears or questions that they may have. Two of the most common concerns are the safety of employees while transporting product or cash, and the risk of your building being targeted by burglars looking to steal product.

Regarding employee safety, explain how you will be shipping product to processors or dispensaries. Are you delivering it, are they picking it up, or are you using a third-party transporter? If you are transporting product yourself, explain both the state requirements and your own operating procedures, from GPS tracking to using two employees for each delivery.

You should also go into detail about your banking relationships. Many people outside the industry assume that it’s 100% cash, but if you’re part of the large majority of cannabis businesses with bank accounts, let your local officials know, especially the police chief. They will be much more comfortable if they know your customers will be wiring payments directly to your bank, rather than dropping off duffle bags full of cash at your facility.

Regarding burglary, be sure to re-emphasize your security measures, from cameras and fencing to access control and alarms. Explaining the cannabis life cycle may also be helpful — since plants are not useable products for most of their life, they’re poor targets for theft. This means that cultivation facilities are not prime targets for burglars, but in the rare cases that they are targeted, you can point to examples where cameras have led to burglars’ arrests.

COMMUNITY IMPACT

While economics and public safety are almost always the top two concerns of local governments, they may also be worried about other impacts on the community and how your business will affect residents’ quality of life. Common questions include whether your facility will emit any odor, and if it will increase traffic in the area.

Cannabis is famous for its strong odor, so it’s understandable that people would ask about it. Whether your state requires it or not, it’s advisable to use charcoal scrubbers or other odor mitigation technology to prevent your plants’ odor from escaping the building. Knowing that you’re taking steps to address this concern will help elected officials feel comfortable welcoming you into their community, especially if it’s in a densely populated area.

Traffic concerns may arise, especially if there are recent news stories about mile-long lines at dispensary grand openings. You can address this easily by explaining how cannabis cultivation facilities are not accessible to the public, and the main people coming to your building will be employees and inspectors, not customers.

When built and operated properly, cannabis cultivation facilities should be virtually indistinguishable from any other commercial warehouse. Unless you have very explicit signage (which we do not recommend), most people driving or walking by will not even know that you’re a cannabis business. 

GOING FURTHER

Even after you have addressed all of your local government’s concerns, there will probably be even more questions — and that’s okay! This is a great opportunity to keep the dialogue open. Be sure to stay up to date on state laws and regulations so that you can serve as a resource for local officials. Because they’re spread so thin, they will appreciate having someone like you as a go-to when they have questions about cannabis politics or the industry. 

If you’re able to offer tours of your facility, that’s a great way to build relationships with your local officials while educating them about your business and the cannabis industry as a whole. They may also appreciate invitations to events hosted by state cannabis regulators, or local industry conferences where they can get broader exposure to the cannabis world.

And of course, it’s important to be a good member of your community. Whether it’s participating in local projects, supporting local organizations, or organizing your own trash clean-ups or other events, staying active and visible will help the community know that they can count on you being a good neighbor.

Be sure to stay tuned for future installments in this series, where we will be addressing other cannabis license types. Our next blog will focus on processors.

Felony Provisions, Harvest Schedules, and ‘Hot Hemp’ – NCIA Responds to USDA Hemp Rules

by Vince Chandler, NCIA’s Social Media Manager

On October 31, 2019, the USDA released its Final Interim Rule governing the domestic production of hemp within the United States. Going into effect immediately upon its issue, the interim rule regulates industrial hemp after the 2018 Farm Bill removed its Schedule I listing under the Controlled Substances Act. While the IFR is in effect, there is a public comment period happening right now, allowing for early input as the federal agency begins to “test drive” the program. Sunsetting after two years, the interim rules will inform permanent oversight and regulatory infrastructure after a full crop cycle has occurred. 

National Cannabis Industry Association Director of Public Policy Andrew Kline formed a coalition of more than 100 leading hemp and CBD entrepreneurs, scientists, medical doctors, and FDA lawyers in May to provide comments and testimony to the FDA on their regulations and rulemaking for CBD. The committee produced 60 pages of formal comments to the FDA, as well as providing expert testimony. After the submission of the coalition’s comments, the NCIA Hemp Committee absorbed the effort to voice the cannabis industry’s position on federal regulation of low-THC cannabis.

On Wednesday, NCIA hosted a webinar with our Hemp Committee Chair Cindy Sovine and committee member Alex Buscher to discuss the cannabis industry’s official response to the USDA hemp rules. Concerns about definitions, the feasibility of harvest windows, and DEA oversight of testing laboratories all pose as potential hurdles in the program’s viability, and NCIA is committed to ensuring our members have all the resources they need to submit feedback to the USDA before the deadline.

It is important to note that, while the 2018 Farm Bill descheduled hemp with less than 0.3% THC, the federal agency has left it up to individual states to submit plans for regulations and oversight. Until a state has submitted their regulatory plan, and had it approved, the sale of hemp is not legal in that state. While states draft and submit their plans, NCIA is leading the quest for information on how federal rules will apply. 

The administrative procedure for the USDA requires that they consider any comments put forth by the public, but do not have to adopt any of them. All indications are that they are open to influence and input from those, like National Cannabis Industry Association, with institutional knowledge on the matter. 

Highlighted in the webinar as an action item deserving immediate attention and commentary is the USDA’s planned rule for “hot hemp.” The agricultural governing agency appears to have taken the position that they lack regulatory jurisdiction over cannabis plants that test above the 0.3% THC threshold, deferring instead to the Drug Enforcement Administration.

NCIA’s Hemp Committee recommends that, instead of handing oversight to the DEA, USDA should adopt particular procedures that will allow for the remediation of those hemp plants. This re-processing should render non-compliant plants compliant, thus allowing for their use rather than requiring the immediate mandatory disposal, per DEA regulations.

Remediation options could include:

  • Removal of THC through processing
  • Conversion of THC
  • Diversion to fiber market

Interstate commerce, harvest scheduling, and DEA testing laboratory registration need to be addressed, along with specifying definitions for ambiguous terminology. These issues can be changed through public comment at the USDA rules level. 

Requiring legislative procedure to change is the felony provision rules in the USDA Final Interim Rule. Currently, the Farm Bill’s statutory felony provision reads, “any person convicted of a felony relating to a controlled substance under State or Federal law, before, on, or after the date of enactment on this subtitle shall be ineligible…” 

The USDA could have interpreted this provision broadly, blanketing the ban to apply to anyone working in any capacity in the industry. Instead, the USDA has limited this provision in their licensure by stating that it will apply only to “key participants.” While NCIA wishes to see felony provisions removed as barriers of entry from working in the legitimate cannabis industry, our committee recognizes this liberal interpretation of the provision as a best-case scenario, until the Farm Bill is up for renewal and specific language can be amended or abandoned. 

Public commentary is open until December 30, 2019, and all NCIA Members are encouraged to submit their thoughts. For suggested language or guidance shaping your comment, we’ve made available our slide show from the webinar with samples of copy and more information on individual recommended steps. If you are interested in shaping NCIA policy recommendations for hemp, CBD, or many other cannabis sectors, inquire about joining our Policy Council.

 

Committee Blog: What The Recent Layoffs in the Cannabis Industry Mean

by NCIA’s Human Resources Committee

Many in our industry have heard about the recent layoffs announced by cannabis companies, including some of NCIA’s members, in the U.S. NCIA’s Human Resources Committee views the layoffs as an unfortunate but sometimes necessary part of business, and overall remain optimistic about the industry as a whole. 

On the face of it, the recent headlines regarding cannabis industry layoffs appear grim. One of California’s best-known cannabis brands announced a reduction of 20% of its labor force. Another grower is reported to have had a similarly sized cut. Listening to the news coverage, one might have the impression that the industry as a whole is going through a massive negative upheaval. This could not be further from the truth. 

At the same time, we have seen hiring trends in 2019 that are overwhelmingly positive. According to an article in Forbes earlier this year, the cannabis industry added almost 65,000 jobs in 2018, with a substantially greater amount expected for this year. Clearly, cannabis is a significant growth engine for employment across the U.S. Add in Illinois, Massachusetts, and other states legalizing cannabis for medical or adult-use, and the numbers continue to grow. The state of the cannabis industry is strong!

Since its founding nearly a decade ago, NCIA has dedicated itself to promoting the growth of a responsible and legitimate cannabis industry. During this time, the industry workforce has swelled to over 200,000 people, and new people are joining us daily from coast to coast. NCIA’s HR Committee, which is comprised of human resource practitioners devoted to bringing best practices to the cannabis industry, carefully monitors hiring trends and other people-related developments.  

NCIA’s Human Resources Committee regrets any job losses for their impact on the lives of employees and their families.  History has shown that layoffs often happen in high growth industries. These reductions in force occur when companies who have over-invested ahead of anticipated growth must adjust their labor counts to rapidly shifting business dynamics. While painful in the short term for employer and employee alike, this represents a chance for other companies to acquire top talent, and for that top talent to secure new and exciting opportunities. 

NCIA’s HR Committee is unwavering in its faith that the cannabis industry will continue to grow as an economic force in this country for many decades to come, and that these short-term changes will make the industry better, stronger and more resilient in the long run.  

There are many ways you can get involved and help. Attend NCIA’s national trade shows and regional networking events to get your foot in the door of our dynamic industry. Start a business. Educate yourself on the latest issues, and contact your congressperson. Whatever road you choose to take, we look forward to welcoming you as our partner on this amazing journey!

Be sure to check out these other resources from NCIA’s Human Resources Committee Members:

NCIA HR Committee Blog Posts

NCIA’s Cannabis Industry Voice Podcast Episodes: 

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