NCIA Deputy Director of Communications Bethany Moore checks in with what’s going on across the country with the National Cannabis Industry Association’s membership, board, allies, and staff. Join us every Friday here on Facebook for NCIA Today Live.
By Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
While it’s become commonplace to hear cannabis come up in the halls of Congress, and increasingly so in the White House, there’s one branch of government that has been quieter on the topic: the Supreme Court (SCOTUS). However, this week, conservative Justice Clarence Thomas changed that when the court actually declined to weigh in on a 280E case.
Towards the end of 2020, a Colorado medical cannabis dispensary decided to ask the U.S. Supreme Court to review a lower-court decision that allowed the IRS to obtain business records in order to apply the 280E provision of the tax code. (Fun fact: NCIA member Jim Thorburn, of the Thorburn Law Group, was actually the counsel on record for this appeal!) According to the filings, the IRS overstepped its authority and also violated the company’s Fourth Amendment privacy rights. Some of the questions the company took to the highest court in the land:
Again, while SCOTUS declined to consider this appeal, Justice Thomas took issue with the underlying state/federal discrepancy in the country’s cannabis laws and issued a searing statement. He specifically discussed a 2005 ruling by SCOTUS in a case called Gonzales v. Raich. In this ruling, the court narrowly determined that the federal government could enforce prohibition against cannabis cultivation that took place wholly within California based on its authority to regulate interstate commerce. Check out a few excerpts from Justice Thomas’ statement below:
Just to be clear, these statements don’t change the law of the land, nor do they indicate formal policy developments. They do, however, show that the constantly shifting public perception of cannabis is affecting the way we as a society think about marijuana, which will, at some point, translate into policy. It’s no small feat that one of the most conservative justices on the Supreme Court has weighed in so substantially on this topic. Continue the momentum and join the movement with NCIA!
By Morgan Fox, NCIA’s Director of Media Relations
As has been so often true in the history of cannabis policy reform (but is starting to change with your help), the biggest news and progress made this week is at the state level. After a long and arduous legislative session, Connecticut lawmakers approved an adult-use bill, which Gov. Lamont signed on Tuesday!
The new law makes adult possession of up to 1.5 ounces legal and will establish a regulated licensing system. Half of all licenses are reserved for social equity applicants, who will also be able to access training, technical assistance, and startup funding. Limited home cultivation will be permitted in stages (medical first, then adults), and limited social consumption will not just be allowed – it will be mandated in municipalities with more than 50,000 residents.
Let’s put this in a national perspective. If you do not include all the years of foundation-building, activism, and lobbying that go into changing cannabis laws, it took two years for voters to approve adult use in the first four legal states starting in 2012. At that time, passing such laws through elected representatives was unheard of. Now in 2021, four state legislatures have approved adult-use bills in the first six months of the year! We’ve come a long way in terms of state policy reform and momentum is only increasing, but we still have a long way to go.
Earlier this month, NCIA endorsed the Drug-Impaired Driving Education Act. This bill, introduced by Reps. Kathleen Rice (D-NY) and Troy Balderson (R-OH), would provide grants and resources to states and organizations to engage in evidence-based impaired driving education. NCIA supports this bill because impaired driving is a serious issue that is most effectively combatted through early and consistent educational outreach, which this legislation promotes to the exclusion of unscientific per se limits and unproven chemical testing technology.
In somewhat related news, a massive transit bill is now awaiting a vote in the House of Representatives after recently passing a key committee. This legislation contains a number of provisions related to impaired driving education, the most important cannabis-related item is a provision that would allow researchers to access and study cannabis products that are available to consumers in state-legal markets rather than depend on federally-approved sources. While the DEA has announced that it will begin granting research production licenses to applicants – many of whom have been waiting for years for approval – there is currently only one legal federal cannabis source, and researchers have consistently complained that it is practically useless due to poor quality and contamination.
Moving on to the SAFE Banking Act, Senate sponsors Jeff Merkley (D-OR) and Steve Daines sent a letter to Banking Committee Chairman Sherrod Brown (D-OH) and Senate leadership urging them to take up the bill for consideration as soon as possible. After overwhelmingly passing in the House in April with a bipartisan vote, the bill has been awaiting review in the upper chamber, with some Democrats wanting to wait until a more comprehensive bill is introduced there.
Advocates and congressional supporters are eagerly awaiting the introduction of that legislation from Senate Majority Leader Chuck Schumer, who has been working closely with Sens. Ron Wyden (D-OR) and Cory Booker (D-NJ) since announcing that this effort would be a priority early this year.
The Senate has quite a bit on its plate at the moment, but we expect things to keep ramping up over the coming weeks and months. Stay tuned!
by Beau Whitney, NCIA’s Chief Economist
Supply tightness in the labor market represents a significant risk to cannabis operators heading into the summer months. With the potential of wage inflation adding to the costs of businesses, many operators that are struggling to make ends meet due to the economic stresses associated with 280E now face higher labor costs. This labor tightness and higher costs could not have come at the worst time.
The recent U.S. Bureau and Labor Statistics jobs report for May, published on Friday, June 4, 2021, indicated that there were 559,000 jobs added in the U.S. economy. This amount was lower than what analysts had predicted, but still strong nonetheless.
The report also showed that the labor force participation rates held steady which is a good sign that people are not getting too frustrated with their job search. The BLS data also indicated that there are still 9.3 million workers unemployed. Even with these higher numbers of displaced workers, this level is roughly 3.6 million workers higher than it was pre-pandemic when unemployment was at record lows. Considering that 1.1 million workers are on temporary layoff status, a remaining 2.5 million delta is a significant improvement relative to the 18.0 million workers displaced in April of 2020.
While there are differing opinions on policy on how to support the unemployed, the key point here is that the labor force is significantly tighter than what most believe and this could become a major issue for the cannabis industry.
Ever since the great recession, there have basically been more workers than jobs. As a result, employers could pick and choose who to hire and offer them lower wages. This recent job report indicates that now there are more jobs than workers, so workers now have the upper hand when it comes to supplying their labor. This is resulting in wage inflation and labor shortages.
This should be a concern for cannabis operators. Labor is one of the highest costs for operators and if wages continue to rise, this will put a squeeze on already slim margins. Reduced labor availability is already being felt across the country and could become very acute as more labor is required to handle increased retail sales and as the outdoor cultivation industry heads into harvest season. Product manufacturers and retailers are already seeing spot shortages even in states where cannabis operators receive living wages such as in Oregon and Colorado.
In reaction to these labor shortages, some MSOs are offering incentives and sign-on bonuses in order to attract workers, even for positions not requiring highly skilled workers. Unfortunately, smaller businesses may not be able to afford these types of incentives. As a result, this will continue to create competitive advantages for MSOs and to generate opportunities that favor larger firms over smaller ones.
Higher costs are not the only concern for cannabis operators. The heavy burden associated with paying higher federal business taxes due to 280E is already driving smaller operators out of the market or forcing them into consolidation with larger, well-financed firms. Smaller entities already have higher costs. The additional risks associated with labor shortages and higher wages could force more operators who are on the edge, into consolidation as well.
Operators who cannot absorb the higher costs for labor, may need to find additional areas in which to cut costs. Unfortunately, this may involve doing more with less (fewer workers), bringing in automation, or reducing product offerings (lower inventory overhead). A common area of cost-cutting is also healthcare, but in an environment of high competition for a limited labor pool, reducing benefits may not be an option.
While many other programs at the federal level have helped struggling businesses outside of the cannabis space, federal tax reform could be a simple, yet elegant solution that would provide widespread relief to struggling cannabis operators and free up cash flow to help offset wage increases.
In the meantime, the anticipated growth in the overall market may decelerate slightly as the industry encounters headwinds as we head into the summer and fall.
NCIA is working with members of Congress to highlight how critically important sound policy is to cannabis operators across the country and how tax reform makes good economic sense. Bringing the voices of cannabis business owners to congress is a very powerful tool in the effort to reform cannabis laws. Now it is up to Congress to act.
by Gary Cohen, Cova Software
Cannabis dispensary owners must bear in mind that this industry operates under strict laws and regulations that set their business apart from conventional retail operations. State governments must balance public health and safety with the business needs of the regulated community, and that requires complete tracking of all marijuana products from seed to sale. Most states have already switched to METRC, the largest traceability system helping dispensaries from coast to coast stay compliant with the law. The goal of METRC is to easily retrace the steps from sale to seed and facilitate transparency in the legal cannabis industry. This post will help you understand better why METRC is required, how it benefits everyone, and how can you navigate the system while using the right technology to stay compliant.
Marijuana Enforcement Tracking Reporting Compliance (METRC) is a cloud-based, state-mandated platform used by 15 states in the U.S. It facilitates real-time tracking and tracing of cannabis plants and products from seed to sale. METRC was first adopted by Colorado and early reports in 2014 indicated that this regulatory monitoring technology allowed for accurate quality control and ensured that the safety of the end consumer was prioritized.
In all METRC states, cannabis stores and dispensaries must use the system either directly or integrate it with their POS. All data about your dispensary is safely stored in the cloud and is only accessible by you or the state regulatory authority. State regulatory authorities use data inconsistencies in METRC to detect any diversions from the mandated regulations and if they find any discrepancies, they could conduct an investigation and impose hefty fines.
To gain access to the METRC system, all employees working at your dispensary must get certified. The process involves training, studying the terminology and workflows, and then taking a 40 questions multiple-choice test. METRC uses RFID tags as unique identifiers to recognize and monitor all transactions, these are not reusable and must be purchased in batches or bulk by dispensaries.
Every dispensary must incorporate its own solution to work with METRC. One can navigate the system manually but it is a risky and time-consuming process, as it involves countless hours of data entry, auditing, and reconciling processes to deal with the errors that inevitably pop up. The most convenient way to implement METRC is to automate as much of the process as possible. Investing in a robust point-of-sale solution that integrates seamlessly with METRC will ensure complete compliance with state regulations.
METRC’s cloud-based software requires only an internet connection and computer or tablet to access and use it, and an advanced POS system can automate the whole process for you. METRC tracks all plants and products with Radio Identification Tags. The plant tag is used to track each plant from its immature phase through to the harvest, while package tags are available for harvest batches or packages of one kind of product. All these activities must be recorded by dispensaries and reported to state regulatory authorities on time.
METRC charges $0.45 per plant tag and $ 0.25 per package tag. The tags can be ordered directly from METRC’s online software system, and are custom-printed for each dispensary. These can not be returned once the printing process has begun, are non-refundable, and cannot be reintroduced into the supply chain. Recreational cannabis plant tags are blue while medical marijuana plant tags are yellow.
METRC is simply a reporting tool – an application that allows you to send data to the state to maintain compliance. In most states, reports about all activities must be submitted to METRC no later than midnight on the day they occurred. A cannabis-specific POS can facilitate reporting to METRC while providing a user-friendly interface. To get the best compliance solutions, look for a POS that offers 2-way integration. This ensures that reports are sent to METRC in real-time, manifest intake is automated, and inventory adjustments are automatically synced with the traceability system.
Manual reporting will require you to log in to your online METRC account at the end of every business day to enter all data from every single transaction and activity that occurred. This is a time-consuming option that can also result in errors, increasing the risk of compliance infractions, fines, or worse, loss of retail license. Automated reporting with a cannabis-specific POS solution will make your life easier as it integrates seamlessly with METRC and automatically sends all your inventory adjustments and sales transactions as they occur in real-time. Also, if there are ever any connectivity issues, all saved data automatically sync once you are back online.
METRC has standard operating procedures in all states, and dispensaries don’t have a choice but to comply with them. But dispensary owners do have the option of selecting the right POS system that can help their employees navigate the METRC system more efficiently. Download your free copy of ‘A Complete Guide to METRC Compliance for Marijuana Dispensaries’ by Cova, to learn in-depth about the different levels of POS integrations with METRC, how to work best with the system, and state-specific METRC differences.
Gary Cohen is the CEO of Cova Software, the fastest growing technology brand in the cannabis industry. Cohen’s focus has been driving the company’s overall strategy, including its vision, go-to-market plan, and strategic development. Since joining the cannabis industry in 2016 and launching Cova commercially in 4q17, Cohen has led Cova to dominate the enterprise sector for dispensary Point of Sale, while forging client relationships with hundreds of single-store retailers across North America.
In solutioning the POS platform, Cohen & the Cova team have met with over 1,900 operators and leveraged expert knowledge to provide retailers the support they need to get a license, pass inspection, launch a store, and improve operations. Cohen leads seminars on retail technology, compliance, business operations, and cannabis banking laws at the industry’s largest events, including the NCIA and MJBizCon. As Cova has become the predominate thought leader for cannabis retail tech, Cohen has established himself as a leading voice educating cannabis entrepreneurs as they build their own successful brands.
by Trevor Morones, Darwin Mallard, Liz Geisleman
NCIA’s Cannabis Manufacturing Committee
Read on for insight and guidance for the vitally important topic of preventing, eliminating, or reducing microbial growth in cannabis edibles and packaging.
It all starts with the HACCP (Hazard Analysis Critical Control Point) Principles. Gather your team to share the five preliminary steps of HACCP and develop a plan (figure 1). This management system was launched by Pillsbury along with NASA and the U.S. Army for food safety in space exploration in the 1960’s. Quality, safety and efficacy is obtainable and sustainable with the HACCP discipline.
The objective is to PREVENT packaging from being a failure point and inhibit microbial growth in edible products. We know moisture (water activity), temperature, pH, and oxygen levels are primary microbial growth drivers.
HACCP is an asset, not an expense. Food is medicine for some, and cannabis products are medicine for many. Resin cannabis products (RCP) must be safe, consistent, and reliable products continuously. To generate those results, learn the HACCP mindset. Practice being an advocate with HACCP discipline displaying the actions written in the programs. It’s a system for cannabis safety that encourages operations to have Emergency and Business Continuity plans before disruptive events occur, e.g., natural disasters, pandemics, etc.
Creating such a plan is important because exposure to microbes may result in allergic symptoms such as sneezing, coughing, wheezing, nasal congestion, and watery or itchy eyes. Consumers using cannabis products as medicine, such as cancer patients on chemotherapy, are even more susceptible to harm caused by microbes. Thus, it is critical to ensure your products do not have microbial growth.
This is not only a health concern, but the financial impacts can be detrimental. How much did the February 2021 Canadian infused gummy recall cost? More than 330,000 packages of THC infused gummies, worth approximately 8.2 million Canadian dollars, were lost. Overhead costs go above and beyond. The global cannabis industry must learn from industry events such as this.
Effective HACCP management system ensures control. Empower your team through education and training on discipline of HACCP. Take the infused gummy recall from February 2021 as an example where cross-contamination, improper employee hygiene, and package permeability were failure points that led to loss of control. Lack of control during transport of the initially sterile packaging also contributes to contamination. Personal clothing worn by team members or visitors are also known sources of pathogenic fungus.
Best practice is to address preventive controls and reducing/mitigating risks. For example, consider installing two-way humidistatic control devices in packaging, such as desiccant packs, to maintain water activity (Aw) in acceptable ranges to mitigate microbial growth. Reducing moisture prevents powdery mildew caused by Golovinomyces Cichoracearum (figure 2).
A great resource to mitigate risks can be found in the ASTM D37; Standard Guide for Cleaning and Disinfection at a Cannabis Cultivation Center; Aw ASTM Standards for Cannabis Flower: D8196 – Standard Practice for Determining Water Activity in Cannabis Flower; and D8197 – Standard Specification for Maintaining Acceptable Water Activity Range for Dry Cannabis Flower.
Sanitary environments are critical from seed to sale.
Use the principles of HACCP to guide and maintain the integrity of your work. Each principle builds on the next to create a solid foundation to build and operate a safe and consistent management system. Establish storage conditions in your control and transport; determine the temperature and humidity for each product type (gummies do not tolerate heat, and certain ingredients are sensitive to humidity which could change the potency). This includes evaluating the stability of each of the ingredients when in final product form (how long do they remain potent).
Depending on the ingredients used, i.e., the formulation, gummies can take on or reject water. Most typically let out the water, then that water has nowhere to go (trapped in the packaging), and the product molds. This is why commercially produced gummies are coated in wax, literally to trap the water inside the product. Inadequate gummy formulations lead to water permeability; change in cannabinoid content is the least of the concerns.
General chapter 659 on Packaging and Storage requirements published by the USP (United States Pharmacopeia and the National Formulary, USP–NF) is a great resource. Though not all cannabis products may be for the medical market, using the standards of excellence from the USP is the best way to minimize product failure and help ensure consumer safety. Packaging 659 states that packaging materials must not interact physically or chemically with a packaged article in a manner that causes its safety, identity, strength, quality, or purity to fail to conform to established requirements.
Empower your cross-functional team to apply and implement HACCP through your organization. In doing so, you will have the discipline and tools to mitigate risks and prevent costly downtime. Your consumers benefit by having safer, consistent, and quality products. Finally, collect the data and share the story. We all need to drive improvement and produce safe consistent products for our consumers. HACCP systems are a tried-and-true tool to achieve this.
Please note that prerequisite programs such as current Good Manufacturing Practices (cGMPs) are an essential foundation for the development and implementation of successful HACCP plans. This article is intended to level up your current manufacturing processes and mitigate your exposure to potential recall or unsafe products in the marketplace.
For resources on how to establish an effective HACCP system and other quality management related tools, consider adopting the best practices defined in ASTM D8250 – Standard Practice for Applying a Hazard Analysis Critical Control Points (HACCP) System for Cannabis Consumable Products and/or following the guidelines provided in ASTM D8222 – Standard Guide for Establishing a Quality Management System (QMS) for Consumer Use Cannabis/Hemp Products and ASTM D8229 Standard Guide for Corrective Action and Preventive Action (CAPA) for the Cannabis Industry.
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Last week, a long-awaited and much-anticipated piece of cannabis legislation was finally unveiled. On Friday, H.R. 3617, known as the Marijuana Opportunity, Reinvestment, and Expungement Act, or the MORE Act, was reintroduced by House Judiciary Committee Chairman Jerry Nadler (D-NY). You’ll remember that back in December 2020, the House of Representatives made history when they passed the MORE Act by a vote of 228-164. Let’s take a look at the bill and break it down:
H.R. 3617, the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act
House Judiciary Committee Chairman Jerry Nadler (D-NY) is the lead sponsor, along with Reps. Lee (D-CA), Blumenauer (D-OR), Jackson Lee (D-TX), Jeffries (D-NY), and Velazquez (D-NY).
Just like the last session, the bill has been referred to a number of committees: In addition to Judiciary, it was also passed on to the Committees on Energy and Commerce, Agriculture, Education and Labor, Ways and Means, Small Business, Natural Resources, Oversight and Reform, and Transportation and Infrastructure.
The MORE Act would remove cannabis from the federal Controlled Substances Act and attempt to undo the damage caused by racially and economically disproportionate enforcement of prohibition. It would also eliminate the conflict between federal law and states with regulated cannabis systems, and would require the expungement of past federal cannabis convictions. The bill would establish a Cannabis Justice Office to administer a program to reinvest resources in the communities that have been most heavily impacted by prohibition, funded by a graduated tax on state-legal cannabis commerce. It would also prevent discrimination based on cannabis consumption during immigration proceedings, and permit doctors within the Veterans Affairs system to recommend medical cannabis to patients in accordance with applicable state laws.
As I mentioned previously, during the 116th Congress, the MORE Act passed the House but was not taken up by the Senate. Now, during the 117th Congress, the calculus has changed a bit – on both the House and Senate sides. On the House side, the chamber is more Republican than the last time the bill was passed – meaning that advocates will have to work hard to ensure no more votes are lost and that support increases. On the Senate side, Democrats now maintain the majority by the skin of their teeth, but all legislation effectively needs 60 votes to pass – a difficult threshold. It’s also important to note that the MORE Act has not been introduced in the upper chamber as all eyes focus on Leader Schumer (D-NY) and Sens. Booker (D-NJ) and Wyden’s (D-OR) upcoming comprehensive bill.
When the MORE Act passed out of the House back in December 2020, it contained a small but impactful section that was included at the last minute. This contentious provision related to discrimination against victims of cannabis prohibition in the permitting process. A section that pertained to applications for a federal cannabis permit stated that an application may be rejected and a permit denied if the Secretary of Treasury finds that the legal person (including in the case of a corporation, any officer, director, or principal shareholder) is “by reason of previous or current legal proceedings involving a felony violation of any other provision of Federal or State criminal law relating to cannabis or cannabis products, not likely to maintain operations in compliance with this chapter,” which would be a major blow to the intent of the legislation to undo the harms caused by prohibition. NCIA brought this provision and our concerns to the bill sponsors’ attention, resulting in them publicly committing on the House Floor to revisit and improve this section. That language was not included in the 117th Congress’ recently reintroduced version.
Also of note, the MORE Act includes tax language. When the bill was first introduced in 2019, it contained a tax section that set up a flat 5% sales tax on cannabis products at the federal level. That was later amended to be a graduated tax, beginning at 5% and increasing up to 8% in subsequent years post-legalization. The soon-to-be-reintroduced MORE Act has the same graduated tax levels.
The bill has a long path ahead: as I pointed out, there are multiple committees of jurisdiction that will want to weigh in on this important legislation – I’d venture to say that both the Ways and Means (tax writing) and the Energy and Commerce Committees will have substantive edits. Another consideration is one I’ve mentioned in passing, and that’s the impending introduction of new, comprehensive cannabis reform legislation that will (hopefully) soon be unveiled in the Senate. It’s also important to note that the MORE Act is missing one critical thing: regulations, and we at NCIA believe that those can make all the difference when looking at what’s next for this legislation.
We applaud Chairman Nadler and the other cosponsors of this legislation for tackling this topic, and congratulate them on the bill’s reintroduction! We look forward to continuing to work with their offices to improve and build support for this critical piece of legislation. Stay tuned on our blog, our NCIA weekly newsletter, and NCIA Connect to find out the latest on MORE!
By Morgan Fox, NCIA’s Director of Media Relations
The cannabis world is still eagerly awaiting the introduction of Senate Majority Leader Chuck Schumer’s comprehensive descheduling legislation, but that doesn’t mean things haven’t been moving on the policy front in recent weeks!
First up, the DEA announced that it was finally moving forward with approving applications to cultivate cannabis for research purposes, which would effectively end the federal government’s stranglehold on research production. The agency spent years fending off lawsuits from applicants, who correctly asserted that not only was the monopoly limiting research, but the cannabis being grown at the single licensed facility at the University of Mississippi was basically unusable for research purposes anyway. This announcement comes several years after the DEA publicly stated that it would begin the licensing process. Better late than never.
Of course, we don’t think the DEA should be involved in cannabis research whatsoever, seeing as how they are a law enforcement organization and not, you know, scientists.
Next, Sen. Ron Wyden, who is also working closely with Majority Leader Schumer on descheduling along with Sen. Cory Booker, introduced S. 1698 last week. While text of this bill is currently not publicly available, the name suggests that this legislation would direct the FDA to allow hemp-derived CBD, made legal under the 2018 Farm Bill, to be used as a dietary supplement or in food. Some perceive this bill as necessary to get some regulatory clarity from the FDA, which has been dragging its feet and missed several deadlines for CBD regulations. Many in the industry blame this lack of regulation for larger retailers staying out of the CBD market, which has led to massive supply gluts of the substance and has been hypothesized to be a leading cause for the recent boom in Delta 8 THC production.
And earlier this month, Rep. David Joyce, an Ohio Republican who co-chairs the Congressional Cannabis Caucus, introduced a narrowly tailored bill to remove cannabis from the schedule of controlled substances. The bill assigns regulatory responsibilities to the FDA and the Alcohol and Tobacco Tax and Trade Bureau and gives them a one-year deadline to come up with a regulatory structure similar to alcohol. It also contains provisions similar to the protections that exist in the House-approved SAFE Banking Act, calls for studies on how cannabis impacts pain and driving, and improves access for veterans. Notably, this bill does not contain any social equity or restorative justice language.
While the chances of such legislation passing in the Democrat-controlled House are slim, it could serve as a doorway to get fence-sitting Republicans into the debate. It could also be a tool to identify those members of the GOP who are steadfastly opposed to any legalization bill and out of touch with their constituents, many of whom would directly benefit from cannabis policy reforms and who are increasingly in support of ending federal prohibition.
We’re also getting word that the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act is getting reintroduced in the House this week (and may have already been at the time of this publication). This legislation made history last December when it became the first descheduling bill to receive a floor vote – and pass – in either chamber of Congress. We are hopeful that there will be some revisions from the previous bill, including the removal of a provision that would allow federal licensors to deny applications for cannabis business licenses based on prior state or federal felony convictions, and the inclusion of a more sensible and robust regulatory framework.
We are less than halfway through the calendar year, and it is shaping up to be a momentous one for cannabis advocacy! Stay tuned for more updates from Capitol Hill.
P.S. On the state side, Alabama became the latest state to approve an effective medical cannabis law. Yes, Alabama. That brings the count of medical states to 36, after unfortunately losing Mississippi to a shameful court decision. So far in 2021, four states have approved adult-use or medical cannabis legislation, and more are expected to do so in the coming weeks and months.
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
If you’ve been following along with federal cannabis policy closely, you know that the SAFE Banking Act has passed the House, comprehensive reform will be revealed soon, and that there have been a few other bills that have been introduced. Today, we’re going to take a look at the most recently introduced cannabis bill:
Name: H.R. 2932, the Veterans Cannabis Analysis, Research, and Effectiveness (CARE) Act
Lead Sponsor(s): Reps. Mariannette Miller-Meeks (R-IA) and Nancy Mace (R-SC)
Status: Referred to the House Committee on Veterans’ Affairs on April 30, 202
What does it do?
This bill directs the Secretary of Veterans Affairs to conduct research on the use of medical cannabis to treat veterans suffering from Post-Traumatic Stress Disorder. In addition to allowing for research on PTSD, the bill also states that the department look into the efficacy of cannabis for chronic pain and “other conditions the Secretary determines appropriate.” The legislation also specifies that the studies must involve plants and extracts, at least three varieties of cannabis that contain various amounts of THC and CBD and include “varying methods of cannabis delivery, including topical application, combustable and non-combustable inhalation, and ingestion.” Notably, this new bill was introduced by two freshman GOP-Congresswomen with strong ties to the military community: Miller-Meeks is a veteran and Mace was the first female graduate of The Citadel.
While this bill is the most recent cannabis and veteran-related legislation to be introduced in Congress, it certainly isn’t the only (or last) one! Just a day before, a similar bipartisan, bicameral bill, known as the VA Medical Cannabis Research Act, was introduced by Reps. Lou Correa (D-CA) and Peter Meijer (R-MI) and Sens. Jon Tester (D-MT) and Dan Sullivan (R-AK). That bill would require the VA to perform clinical research on the safety and efficacy of medical cannabis in treating veterans’ post-traumatic stress disorder and chronic pain. It would also require the VA to provide Congress with a report dictating its research plan and provide progress updates while conducting the study.
In February, Sens. Feinstein (D-CA), Schatz (D-HI), and Grassley (R-IA) introduced the Cannabidiol and Marijuana Research Expansion Act, which would encourage valid scientific and clinical research on marihuana and its compounds, expand sources of research-grade marihuana, and promote the commercial production of FDA-approved drugs derived from CBD or other marihuana compounds.
Congressman Steube also has his Veterans Cannabis Use for Safe Healing Act, which is aimed at ensuring that military veterans aren’t penalized for using medical cannabis in compliance with state law. The legislation also stipulates that Department of Veterans Affairs (VA) doctors are allowed to discuss the risks and benefits of marijuana with their patients.
With all of these bills, one thing is clear: additional research and knowledge on cannabis as a safe and effective medicine for our veteran community is much needed. NCIA will continue to monitor these bills and advocate for legislation that would remove cannabis from the Controlled Substances Act entirely, ameliorating many of these issues. Catch our Government Relations team over on NCIA Connect to ask us any policy-related questions — see you there!
Brad Douglass, Ph.D., EAS Consulting Group Independent Consultant
The Agricultural Improvement Act of 2018 (the “2018 Farm Bill”) helped to further define the pathway by which “hemp-derived” ingredients can be legally incorporated into food. Since then, hemp-ingredient companies have materialized selling purified cannabinoids that are found naturally-occurring in hemp. Despite the young market, these companies are facing difficult times as the buyers for these ingredients are few and manufacturers mostly compete on price. The GRAS path offers a route out of this conundrum.
What is GRAS?
The Generally Recognized as Safe (GRAS) for food-use pathway was established by the 1958 Food Additives Amendment to the Federal Food, Drug, and Cosmetic Act (FD&C Act). It delineated how substances that are GRAS for their defined conditions of use in food are different from food additives.
Others have previously delved into why firms might consider pursuing GRAS notifications and/or New Dietary Ingredient Notifications (NDIN) independent of hemp and hemp-derived ingredients so I will refrain from wholesale repetition. Two key points on specificity are nonetheless worth repeating: 1) a substance is deemed GRAS for a specific use under specific conditions and 2) a GRAS notification is specific to the company filing the notification.
Why GRAS?
There are a number of practical reasons why firms that produce cannabinoids would seek to pursue the GRAS pathway. Here are five:
Market Expansion
Currently, firms that produce purified hemp cannabinoids are mostly selling their wares to businesses operating in state-regulated delta-9 tetrahydrocannabinol (THC) markets or to operations that may not be in full-compliance with dietary supplement regulations. Almost all firms that produce food products, including beverages, and most dietary supplement manufacturers, will not use ingredients that do not have a history of use in food or that cannot be legally marketed.
For ingredients such as purified hemp cannabinoids that do not have a history of use as articles used for food, the only way to open-up the food, beverage, and dietary supplement markets is via the GRAS/NDIN pathways.
Safety Demonstration
An integral part of any GRAS dossier is the basic demonstration of acceptable risk (cf. safety) for the named substance and impurities. This includes any byproducts that may be introduced by the manufacturing process. Whether one is interested in pursuing a GRAS Notification for submission to FDA or for a self-affirmed GRAS conclusion, the process involves an evaluation of safety for the conditions of use (e.g. serving size, no-observed adverse event level, etc.).
Beyond the ethical necessity of understanding the hazards of a product meant for human consumption, pursuing GRAS helps protect a firm from product liability in the event that harm is created. But more importantly, GRAS helps guard against product liability by seeking to prevent the potential hazard in the first place. That is always good for business.
Avoiding Drug Preemption
FDA has described in numerous forums, including the Administration’s own website, why it has concluded that cannabidiol (CBD) cannot be used as an ingredient in food or dietary supplements. The key is section 201(ff)(3)(B) of the FD&C Act. This section disqualifies an ingredient from use in food or dietary supplement products if the ingredient is 1) an active ingredient in an approved drug or 2) if substantial clinical investigation of the substance as a drug has been conducted AND made public.
While the situation remains unclear for CBD, the only way to avoid a similar murky situation for other cannabinoids (e.g. cannabigerol, CBG) is for those ingredients to be marketed as a food or dietary supplement prior to the public disclosure of clinical trials directed at the development of that substance as a drug.
It is FDA’s position that “legal” marketing entails more than simple inclusion of the substance in marketed products — the substance must have been the subject of GRAS, food-additive, or NDIN pathways, if required, to be legally marketed. To that point, FDA is highly unlikely to conclude that legal marketing includes the marketing of products in state-regulated cannabis systems while THC remains federally illegal.
Side-Stepping Price Wars
The nascent hemp-derived ingredients market is experiencing significant downward price pressure. The reasons are simple. There is currently more supply than demand (see #1 above) and all commercial offerings are essentially generic.
The GRAS pathway is a mechanism out of this me-too trap. A GRAS cannabinoid would be a premium ingredient by virtue of GRAS status alone. Premium ingredients command premium prices. And the types of sophisticated customers that firms like to do business with do not mind paying premium prices for compliance.
Regulatory Intelligence
While we wait on FDA to draft regulations for manufactured hemp-derived products, it is difficult for businesses to make decisions about what products to pursue. Some firms may not care about internal FDA thinking for hemp-related issues like delta-8 THC or proposed New York State in-process hemp material THC limits of 3%, because they are going to seek to exploit the here-and-now.
For forward-looking firms, engaging with FDA through GRAS or other regulated ingredient pathways can help illuminate what lay around the bend. Effectively navigating bends in a fast-paced, regulated marketplace can be the difference between knowing when to brake… and going broke.
How GRAS?
There are a few ways to go about this, but simply asking the question within your company and with your legal and regulatory counsel will help generate more of a groundswell. There are a few hemp- and cannabinoid-specific intricacies that must be navigated in practice, including FDA’s own policies on hemp. But there is no reason why this cannot be done.
EAS Independent Consultant, Brad Douglass, Ph.D., evaluates FDA and FTC compliance of dietary supplement materials including review and audit of dietary supplement labels and labeling. He is experienced in multiple technical, quality, and formulation roles in the dietary supplement and cannabis industries which lends perspective not only regulatory requirements but also the realities of real-world business. Brad’s previous positions include VP of Regulatory Affairs and Director of Advanced Botanical Strategy at the Werc Shop in Los Angeles. He has a doctorate in Organic/Medicinal Chemistry from USC. EAS Consulting Group, a member of the Certified Group of companies, is a global leader in regulatory solutions for industries regulated by FDA, USDA, and other federal and state agencies. Our network of over 150 independent advisors and consultants enables EAS to provide comprehensive consulting, training and auditing services, ensuring proactive regulatory compliance for food, dietary supplements, pharmaceuticals, medical devices, cosmetics, tobacco, hemp and CBD. easconsultinggroup.com
If you represent a firm that creates hemp-derived cannabinoids, are a regulator that has responsibility over products that incorporate non-THC cannabinoids, or are just an interested reader that has been intrigued by this blog post, do not hesitate to reach out to me at bdouglass@easconsultinggroup.com.
By Mell Green, CBD Oracle
Medical cannabis hasn’t always had a smooth go in the United States. Thankfully, as time has slowly started to change and viewpoints have shifted, cannabis legalization is finally gaining traction state-wide. While this is an incredible feat for so many different reasons, many states see long-term benefits of cannabis legalization much further reaching than anyone could have imagined.
Today, we’re talking about how cannabis legalization in Minnesota may actually help further equality and break down barriers that have long been deeply rooted. Let’s get started.
Quickly, it’s essential to understand the tumultuous history behind marijuana and just how far we’ve come as a society. However, seeing this rocky past also helps illuminate how much further we still have to go.
The cannabis plant has existed for millennia on planet Earth. Its therapeutic benefits have supported civilizations in spiritual, religious, and medicinal ceremonies across the globe. As this idea spread to Western societies, the plant was, at first, welcomed with open arms. At the start of the 20th century, all of this changed entirely in the United States.
During the Mexican Revolution from 1910-1920, many Mexican citizens fled their war-torn home country in search of a safer, more promising future. With this, the U.S. saw an influx of Mexican immigrants.
Throughout Mexico, enjoying cannabis for its recreational effects wasn’t a new idea. So, when citizens began migrating North, they also brought more normalized recreational cannabis use. At first, for those in the U.S. who already adored cannabis, this was incredibly exciting. But, for many in positions of power, class, and wealth, this type of cannabis use wasn’t going to fly. Thus came the Reefer Madness film and decades-long racially charged cannabis persecutions.
It took way too long, but the United States finally started getting on board with cannabis decriminalization and legalization back in the 80s and 90s. With this, the exposure to cannabis science became more extensive, and it was easier to see that the plant did (and still does) have some serious medicinal benefit. Seeing these facts caused a lot of opinions to change, resulting in an almost domino-like effect of cannabis legalization across the country.
Now, 36 states have legalized medical cannabis, allowing more people than ever access to the precious plant they love. But has this legalization impacted the people most disproportionately punished? Not really.
Still today, we see Black men arrested for cannabis crimes at disproportionately high rates, even though cannabis is legal in most states across the U.S. If anything, these legal changes have made the divide all the more evident, allowing the country to see just how horrific the cannabis industry can be for people of color. At the same time, it simultaneously celebrates white American consumers. This may help boost PR for big business, but it doesn’t help local (black-owned or otherwise) businesses on the ground. Legally or economically.
So, what can we do to change this? How can cannabis legalization help to further the progress we’ve made?
I know, it sounds like we’re a bit cynical, but it’s crucial to bring up these divides before discussing how we can move further. The country often loves to praise all the beauty that the cannabis industry brings, forgetting the intense harm it has caused so many communities.
Let’s talk about Minnesota, for example. In May, it looks as though the state is going to vote to pass adult-use cannabis use. If this happens, here’s what could potentially occur in terms of furthering equality — but, at the end of the day, this change is up to you.
Realistically, the legalization of cannabis should help reduce the number of victimless crimes in the area, helping the community feel more at ease. With this, you would also expect a lowered number of consistent police presence in areas where cannabis use was a previous “problem.” Often, when communities of color experience increased and frequent police presence, this does not provide a sense of safety. Typically, it provides the opposite. Thus, legalizing cannabis in places like Minnesota may be able to create an environment that not only feels safer but feels more accepting of all residents. Feeling safe is great for business, big and small – but especially small. Reduction of victimless crimes and less police presence could really boost the state economy, and additionally enhance everyone’s sense of community and unity.
Furthering equality through the legalization of cannabis can be done, but the work goes much deeper than just on a legal level. As we’ve seen, just because the law says one thing, that doesn’t mean it applies to all groups of people. So, once legalization happens in Minnesota — or your state — the next steps are in your hands.
With this, you’ll also understand how legalization is not an end-all-be-all solution. If we want to erase cannabis’s racially charged stigma, the answer is holistic: it starts with a community.
Mell Green is a content creator who believes that cannabis can help anyone achieve a life-enhancing experience. Her participation in the advocacy of the plant for the last several years has not only allowed her to create solid relationships with the world’s leading cannabis companies, but it has also helped her to educate and spread awareness on the power of alternative medicine.
CBD Oracle is a California-based online magazine dedicated to cannabis and CBD education. The company has made it its mission to provide specialized, expert advice to those who need it, publishing detailed, informative, and entertaining articles, guides, and reviews, all backed by the latest scientific studies and research.
By Morgan Fox, NCIA’s Director of Media Relations
On April 19, the House of Representatives approved legislation once again that would provide legal protections for financial service providers to work with cannabis businesses that are in compliance with state laws. The Secure and Fair Enforcement (SAFE) Banking Act, or H.R. 1996, was reintroduced in March by a bipartisan group of sponsors and had 177 total cosponsors by the time of the vote.
The legislation was approved by a vote of 321-101 and included 106 Republicans voting in favor of the measure, a small majority that represents a growing trend of increasing conservative support since the last time this bill was approved in the House in 2019. No Democrats voted against the bill. This is the fourth time that the House has approved the language of the SAFE Banking Act, initially as the first standalone cannabis policy reform bill ever passed by either chamber of Congress two years ago and two more times last year as part of pandemic relief packages that were not approved in the Senate.
In the time that elapsed between the last vote on the SAFE Banking Act and this one, a number of factors have added momentum and boosted the pressure on federal lawmakers to more seriously consider cannabis policy reform generally and bills like the SAFE Banking Act.
First, cannabis businesses were nearly unanimously declared essential in states with regulated markets during the pandemic, adding to the legitimacy of the industry in the eyes of many while providing uninterrupted healthcare, jobs, and tax revenue in a very challenging economic and public health environment. However, despite increased sales over the last year, the operational costs required to keep employees and customers safe have taken their toll, compounded by the added costs and other challenges associated with limited access to banking services or traditional loans.
These obstacles were felt even more keenly by cannabis businesses because they could not avail themselves of the federal stimulus packages approved by Congress, such as PPP or funds available through the Small Business Administration. Helping to ease the worsening financial burdens facing the cannabis industry during such a difficult time was a major reason for the inclusion of SAFE Banking language in the House-approved aid bills. Recently, standalone legislation has also been reintroduced by Small Business Committee Chair Nydia Velazquez to allow direct and indirect cannabis businesses to be able to access SBA-backed loans and other assistance programs.
Unfortunately, the inclusion of cannabis language in House stimulus packages was used as a political attack tool in the leadup to the election by some lawmakers, likely leading to a postponement of a House vote on the MORE Act, which would remove cannabis from the schedule of controlled substances and help repair the damage done by prohibition. Those attacks significantly died down in November, however, when five states approved adult-use or medical cannabis ballot initiatives by heavy margins, including the red states of Mississippi, Montana, and South Dakota. These victories paved the way for the historic passage of the MORE Act in the lower chamber in December. Three additional state legislatures have passed adult-use laws since then, including the first Southern state of Virginia.
This combination of political will, the feasibility of passing cannabis policy reform measures both comprehensive and incremental, and the introduction of eight new regulated cannabis markets in just a few short months has lawmakers of all stripes taking a much closer look at this issue than ever before. Even staunchly opposed legislators are being forced to reexamine their positions on bills that would directly benefit their constituents and businesses in their states, particularly in light of the urgent need for jobs and taxes as the pandemic response begins to pivot toward economic recovery. This is on top of record public support nationally for legalization. It is becoming increasingly clear to lawmakers that standing in the way of reform is a losing proposition.
With the passage of the SAFE Banking Act, it is likely that the House will move its attention to amending and approving the MORE Act for a second time, as well as considering several other pieces of cannabis-related legislation. The fate of the SAFE Banking Act now lies with the Senate. Senate Majority Leader Chuck Schumer said recently that he would prefer to wait for further consideration of that or other incremental reforms until after the introduction of his much-anticipated comprehensive descheduling bill in the coming weeks. We are confident that debate and progress on these bills is not mutually exclusive, and moving both pieces of legislation through the upper chamber simultaneously is both possible and likely, especially given the broad bipartisan support that the SAFE Banking Act enjoys.
by Madeline Grant, NCIA’s Government Relations Manager
The Secure and Fair Enforcement (SAFE) Act, or H.R. 1996, passed the U.S House of Representatives with a final recorded vote of 321-101. This is the first floor action on a cannabis reform bill this Congress. This is not the first time we’ve seen movement on this bipartisan piece of legislation that would protect banks that service state-legal marijuana businesses from being penalized by federal regulators. The bill was reintroduced in March by Reps. Ed Perlmutter (D-CO), Steve Stivers (R-OH), Nydia Velazquez (D-NY), and Warren Davidson (R-OH), and had 177 total cosponsors by the time of the vote. The bill was taken up under a process known as suspension of the rules, which requires a 2/3rd supermajority to pass and does not allow for amendments. This is the fourth time that the House has approved the language of the SAFE Banking Act, initially as the first standalone cannabis policy reform bill ever passed by either chamber of Congress in 2019 and two more times last year as part of pandemic relief packages that were not approved in the Senate.
The SAFE Banking Act would protect financial institutions from federal prosecution for providing banking and other services to cannabis businesses that are in compliance with state law, as well as help address serious public health and safety concerns caused by operating in predominantly cash-only environments. The legislation would improve the operational viability of small businesses by helping them reduce costs associated with lack of access to banking and increasing options for traditional lending that many small businesses in other fields rely upon. It would also mandate a study on diversity in the cannabis industry.The SAFE Banking Act seeks to harmonize federal and state law by prohibiting federal banking regulators from: threatening or limited a depository institutions access to the Deposit Insurance Fund, discouraging, prohibiting, or penalizing depository institutions from dealing with the cannabis industry, taking any action against a loan made to a covered business and forcing a depository institution to halt providing any kind of banking services.
Legislation to provide safe harbor for financial institutions that choose to service the cannabis industry was first introduced in 2013 and was called the “Marijuana Businesses Access to Banking Act.” When the bill died in Congress, it had 32 cosponsors and no Senate companion legislation. The bill was reintroduced in 2015 with the same name and 39 cosponsors and a Senate companion with 11 cosponsors.
In 2017, the bill was reintroduced and renamed the Secure and Fair Enforcement (SAFE) Banking Act. By the end of that session, the bill had 95 cosponsors and the Senate companion bill had 20 cosponsors.
On March 7, SAFE Banking was introduced in the House by Rep. Ed Perlmutter (D-CO) and was referred to the Judiciary and Financial Services Committees. On March 28, 2019, the Financial Services Committee voted 45 to 15 to advance the bill to the full House. The bill had broad bipartisan support with 153 cosponsors, over a third of the entire House, at the time of the committee vote (a major jump from 2017). On April 1, Senator Jeff Merkley (D-OR) introduced a companion bill to the Senate and the bill was referred to the Senate Banking, Housing, and Urban Affairs Committee. On June 6, the House bill moved out of committee and was placed on the Union calendar for a vote. The bill then passed the House by 321-103.
Congress spent 2020 legislating relief legislation for Americans as the coronavirus took a toll across our nation. SAFE Banking language was also included in two coronavirus relief packages that the House approved, but unfortunately, did not make it through the Senate.
One thing is abundantly clear, states are continuing to legalize cannabis and the federal government must mitigate the state and federal conflict that legal cannabis businesses are facing. Access to banking is not only essential for any business to function, but a necessary measure for public safety. Laws making cannabis legal for adults have been passed in 18 states as well as the District of Columbia and the territories of CNMI and Guam, and 36 states, as well as several territories, have comprehensive medical cannabis laws. As the House of Representatives, again, has passed SAFE Banking, we will turn our focus to the Senate and keep up the momentum. Make sure when you have a few minutes call your senators and urge them to support the SAFE Banking Act, S. 910. You can look up your senators’ information HERE.
by Carol Welch & Jim Gerencser
NCIA’s Risk Management & Insurance Committee
Cannabis was legalized for medical use in California in 1996. Since then, 47 states, the District of Columbia, and three territories (Puerto Rico, Guam, and CNMI) have legalized some form of cannabis, leaving only three states with no legal use. Thirty-six states have an effective medical use law in place. The main reason insurance companies haven’t had to consider providing coverage for patients is because federally cannabis is still listed as a Schedule 1 drug. Even though the likelihood of cannabis being legalized nationally seems bound to happen within the next few years, insurance companies should start planning to incorporate new cannabis policies into their plans now.
Here are five great reasons to cover medical cannabis:
SAVES MONEY
Science has proven that cannabis helps over 60% of epilepsy patients decrease the frequency and severity of seizures. Cannabis products should cost less than traditional epilepsy medications, especially when taking into account the added prescriptions often needed to combat the side effects of currently available prescription drugs.
Compared to the traditional cost of cancer treatment, patients opting to skip conventional treatments for cannabis could save their insurance companies thousands in initial cancer treatment, and potentially will have less recurrence and costly maintenance prescriptions.
Insurance companies are paying billions in healthcare costs to include doctor visits, lab tests, hospital admissions and prescriptions for conditions that cannabis has shown to improve dramatically. Chronic pain, depression and PTSD are all treatable with cannabis, and cannabis is much less dangerous than the opioids that are commonly prescribed in chronic pain cases.
SAVES LIVES
There are no known deaths reported from cannabis consumption alone. According to the CDC, there were 70,630 deaths due to drug overdose in 2019. In addition, there are estimates of over 1.5 million hospitalizations per year from adverse drug reactions that don’t cause death but are still costly to many people. Insurance companies can avoid some of the negative PR, potential litigation and upset related to deaths caused by pharmaceuticals, while providing patients with a solution that works for many conditions.
Research is increasingly showing that certain strains and compounds within the cannabis plant can have a significant positive effect on several conditions. For instance, breast cancer responds very well to FECO (full extract cannabis oil), with lab tests showing how cannabis causes cancer cell death. More study is still needed, and that is currently being conducted in Israel where there are fewer legal barriers to research.
REDUCES MEDICARE SPENDING
Data from all prescriptions filled by Medicare Part D enrollees from 2010-2013 showed a significant decrease in prescriptions being filled for symptoms for which cannabis could serve as an alternative treatment. Overall reduction in Medicare spending in states that implemented medical marijuana laws were estimated to be $165.2 million per year (2013). This one difference alone could mean billions in savings for insurance companies in the coming years.
IMPROVES SATISFACTION RATINGS
Let’s face it, insurance is a competitive business. Several large health insurers cover most of the country and will likely be the last to jump on board to cover medical cannabis. But for the smaller, regional or state-specific insurers out there, adding cannabis to the coverage lineup in legal states can provide a competitive advantage with employers and group plans.
Medical cannabis is listed as an eligible expense in many Canadian companies’ HSAs and is listed as an eligible medical expense by the Canada Revenue Agency. Since our northern neighbors are starting to cover it, hopefully that will encourage U.S. insurers to do the same.
IT’S THE RIGHT THING TO DO
Cancer is the #2 leading cause of death in the United States and can cost several thousand dollars for treatment. Using cannabis as a complementary treatment to traditional cancer therapies could decrease the cost of treating cancer to the patient, to the insurance companies and in the end to all of the people across the United States that contribute to Medicare and Medicaid.
If you would like to take action, contact your legislators to push for the federal legalization of cannabis or sign this petition calling on all U.S. insurers to step up and cover medical marijuana for their patients. Here’s a link to the Care2 petition: Health Insurance Companies Should Cover Medical Marijuana Now.
By Lissa Lawatsch, CLS Holdings
Currently, in the cannabis industry, we find ourselves in a unique position. We are at an important crossroads of policy changes, advocacy efforts, and business opportunities. Within the dynamics of cannabis legalization, certain people seized new market openings, while others scramble to get a foothold in the business.
As legal cannabis continues to normalize, we must ask ourselves whether the industry affords everyone equal opportunities. While certain U.S. states have established social equity programs within their cannabis laws, many people don’t feel it is enough to correct the current imbalances.
Entrepreneurs and professionals alike are asking essential questions about our responsibility to minorities in cannabis. This movement is an excellent opportunity for cannabis businesses to help shape the industry’s future in a way we can be proud of.
The imbalances of equality in cannabis can be traced back to the War on Drugs. Since the War on Drugs was enacted in 1971 by President Nixon, it has had detrimental impacts on minority communities.
Increased drug arrests in minority populations are not the result of increased drug use. The nonprofit Brookings Institution tells us, “All along, one consistent target for the nation’s cannabis laws [in the War on Drugs] were communities of color. Despite cannabis usage rates between whites and non-whites being similar, Black Americans were arrested for cannabis offenses at a rate of nearly 4:1, compared to whites.”
For many, it is difficult to comprehend how impactful these cannabis convictions have been on minorities. Many families have suffered for a generation due to the head of household going to prison for cannabis crimes. In these unfortunate situations, there is no opportunity to spread the intergenerational wealth enjoyed by most families.
From the outside looking in, it is easy to assume the cannabis industry offers equal opportunities. However, if you peer just beneath the surface, you will find several elements at play that keep minorities from starting cannabis businesses. Due to these factors, only 1 in 5 cannabis businesses today is owned by minorities.
In nearly all cannabis markets in the U.S. states, strict laws prevent people with drug convictions from applying for business licenses. Yet, we have already established that far more minorities than whites get arrested for cannabis. This fact immediately creates a lopsided pool of applicants that favors white people as the winners of cannabis business licenses.
Another factor that has led to imbalances in the cannabis industry is that white people are better off financially than minorities. This can be a real handicap, as cannabis businesses are costly to start. To illustrate, MJBizDaily gives us the following cannabis business startup costs:
As can be seen, it takes serious capital to finance a new cannabis business. Yet, many minorities do not have access to this sort of funding. This fact is partially attributable to the damage done in minority communities by the War on Drugs.
The early pioneers of legal cannabis did not anticipate the social inequalities that would arise in the industry. However, as places like Washington and Colorado have had functioning industries for over five years, we can now take a more granular perspective on the market.
As imbalances in social equity are now recognized across the industry, individual U.S. states are enacting legislation to help “level the playing field” for minorities. The states taking meaningful steps for social equity in cannabis include New Jersey, Virginia, California, Illinois, Massachusetts, Michigan, Maryland, Ohio, and Pennsylvania.
The breadth and scope of social equity programs in cannabis vary from state to state. To illustrate, California has established an initiative that provides financial support and training to minority cannabis business owners. Also, Michigan, Illinois, and Massachusetts have put controls on the application process to give minorities better chances to win licenses.
While state-mandated social equity programs are a big step forward in cannabis, there is still a lot of work to do. To this end, modern cannabis professionals have taken it upon themselves to start dialogues about social equity. Even more, these people have branched out to join nonprofit groups and business organizations which promote social change in cannabis.
Some noteworthy groups include:
Last Prisoner Project is a particularly impactful nonprofit that seeks to overturn unjust cannabis convictions. Their team is composed of lawyers and legal experts – the organization also enjoys support from such cannabis icons as Jim Belushi and Steve DeAngelo. For their part, Women Grow spreads the message of equality in cannabis by empowering females. They are focused on connecting different women in the cannabis space to create powerful alliances.
To truly affect change in the social fabric of cannabis, businesses must also take proactive measures within their operations. By promoting racial sensitivity within your business, you help plant the seeds of change in your employees and customers.
To help your employee team better appreciate people from other backgrounds, we recommend enrolling them in diversity training. According to Cornell University, “An organization is only as good as its culture — and abiding that culture is not only a role for HR, it’s every manager’s and employee’s responsibility.” Diversity training is a great way to promote equality within your company culture. Specific training programs also educate your HR department on non-discriminatory hiring practices.
In the few short years that we have had legal cannabis, the industry has taken some fantastic strides. While it seems that the fight for legalization has finally swung in the right direction, there is still a good deal of work to do concerning social equity.
It is going to take a concerted effort to equalize opportunities for minorities in the cannabis industry. This process starts with addressing unjust cannabis convictions on a societal scale, and cannabis business HR departments must embrace these changes.
Lissa Lawatsch currently serves as the General Manager of CLS’ Nevada retail subsidiary, Oasis Cannabis Dispensary. A Colorado native and graduate of Metropolitan State University of Denver, Ms. Lawatsch has served the Las Vegas market for 18 years. With 20 years of VP-level experience in the banking and finance sector, Ms. Lawatsch synthesized her business acumen with her passion for cannabis to effectively launch and manage several brands and retailers in the Nevada market for the last 5 years.
by Deborah Johnson, MCA Accounting Solutions & James Whatmore, MAB Investments
NCIA’s Banking & Finance Committee
Part 1 of a 3-part series
So, you discovered a pain point in the cannabis industry while brushing your teeth. You go on to craft a business plan and begin to execute on a minimal viable product to prove your hypothesis and test the market interest in your product. To date, you have funded this by volunteering your time and convincing some other contacts to contribute their time as well. You still have your full-time job, but it’s time to create a formal entity and grow this thing. How are you going to fund this? Well, there are some options and some of them have greater odds depending on your demographic. Are you considered ‘touching the plant” or not? Are you male or female? Are you a person of color or not? Do you have a track record of building businesses and raising funds?
Unfortunately, the data shows that it’s much more difficult to raise funds from angel and VC investors if you are a female or person of color. The following statistic is actually based on the traditional market, so level up the challenge if you are in cannabis:
“Venture dollars invested in sole female founders in 2020 represented 2.4 percent of overall venture funding… the percentage of U.S. venture dollars that went to sole female founders in 2020 dropped dramatically by stage. At the seed stage, 7 percent of VC dollars went to startups with only female founders. At the early stage, that figure was 4 percent, and at the late stage, a mere 1 percent.” – Crunchbase News.
Fortunately, the cannabis investment industry has approached this issue with several new funds and structures. We will touch on that later in this series.
Does your idea involve ‘touching the plant’? Currently, cannabis is illegal at the federal level. This comes with a whole host of challenges and opportunities. With federal illegality comes the opportunity for a startup to solve a problem before the more established, traditional market entities are willing to enter the industry. If you build it well enough, you are likely to be acquired once the market opens up. But you will have to deal with lack of access or restricted access to banking and processing, the IRS and 280E, the certainty of audits, and working within the boundaries of your state’s regulatory structure.
Now you have an idea, so, how to fund? Well, the first thing anyone considering investing in you wants to know is, what is your investment in yourself? Do you have savings, credit cards, personal real estate? For the earliest stages, this is often the first step. This is the “three peeps and a PowerPoint stage” — ideas and iteration come fast. There is no real cost for you to walk away. It is on your dime. You are living off of your day job and every resource you can apply for This shows commitment and the effort will be a key to demonstrating value in the future. Be scrappy.
You will also need to establish a banking relationship. If you are touching the plant this can be quite the struggle. Federal banks have to comply with the KYC – or Know Your Customer – rules and most are unwilling to take on the extra tasks and time it takes to manage a cannabis account and file Suspicious Activity Reports (SARS). Be ready to navigate the business world in cash – which includes security and safety and paying your taxes. Many local-based credit unions are rising up to the challenge, but that often involves extra, costly fees. And even if you are ancillary, if you choose a “green” enough name you are exposing yourself to having your account closed. This goes for processing too. It really behooves you to be as honest and clear about what you are doing and establish a relationship with your banker. NCIA has successfully advocated for the SAFE (Secure and Fair Enforcement) Banking Act (S. 1200, H.R. 2215) which provides a safe harbor to financial institutions doing business with state-legal cannabis providers. It sits in the Senate after having passed the House twice now, although now a new House version will still need to be approved.
As your concept solidifies, its demands of capital increase, with personal, social, business, and financial needs starting to grow past what you can provide alone. You need help. If you have a buddy willing to put an LLC together for you, that’s bootstrapping. If she wants something in return, you are at friends and family time. This is a good stage to build your early financial network and can really help with those next steps. This is a small round of insiders and is as much about personal capital as financial capital. A friend and family round is a direct contact on your part, and those relationships you made in the boot-strapping are good places to start. These early champions will build your social capital as they talk positively about you. Being a small group also creates scarcity. These subtle behaviors will help your valuation when it comes time for that. A good friend and family round will get you off to a right start with the resources for securing an accountant and other professional services to determine the right way to structure your company.
For these early funding stages, bootstrapping and friends and family funding demonstrate your validity as an investable partner for later rounds. No matter your hurdles, starting your fund journey on the right path will pay off down the road.
In our next blog, we will discuss funding options such as debt, angels, and venture capitalists, and where to find them.
by Morgan Fox, NCIA’s Director of Media Relations
It has been quite a busy month in Washington when it comes to cannabis, but two of the more recent developments have garnered quite a bit of attention in the last couple of weeks and deserve a closer look.
First, a bipartisan group of lawmakers reintroduced the Secure and Fair Enforcement (SAFE) Banking Act in the U.S. Senate. This legislation, which was introduced by Sens. Jeff Merkley (D-OR) and Steve Daines (R-MT) along with 27 original cosponsors (up to 30 as of this writing), would protect banks and other financial institutions from federal prosecution simply for providing services to cannabis businesses that are operating in compliance with state laws.
This legislation was reintroduced in the House earlier this month to expected fanfare, understandable given that it has already passed in that chamber and continues to enjoy overwhelming support. In fact, it was the first-ever standalone cannabis policy reform legislation to ever be brought to a floor vote – and pass – in that chamber, and was approved twice more in pandemic relief legislation that unfortunately was not approved by the Senate.
This last fact has caused advocates to more carefully scrutinize the prospects of Senate passage. After this bill flew through the House late in 2019, its movement through the Senate quickly came into question after the Senate Banking Committee voiced concerns about the bill. There was also not much indication of priority by Senate leadership to call cannabis bills for committee hearings, which became even more stark with the onset of COVID-19 when almost every other issue took an immediate back seat. Concerns about Senate support were further compounded by the unfair and politically motivated attacks by some Republicans against Democrats for their inclusion of SAFE Banking language in coronavirus relief packages.
However, a new year brings new opportunities. With the contentious 2020 elections in the rearview mirror, and a renewed focus on economic recovery, supporting small businesses, and public safety, we need to use a different calculus when examining the chances of SAFE Banking in the Senate, and that is giving us plenty of reasons to be hopeful.
Let’s look at the numbers: there are currently 36 states with comprehensive medical or adult-use cannabis laws and either existing or soon-to-be-implemented regulated cannabis markets, all of which would directly benefit from this legislation. That means there are 72 senators whose constituents are being put in harm’s way or face limited business growth opportunities thanks to lack of access to financial services in the cannabis industry, including 25 Republicans (six of whom are already sponsors plus one GOP member from a non-regulated state). With just a few more Republican senators on board, this bill would theoretically be able to beat a filibuster, provided there was unanimous Democratic support.
Does this kind of representation guarantee all 72 of those lawmakers will support cannabis banking reform? Of course not. Legislators on both sides of the aisle frequently do not support legislation that is in their constituents’ best interests. However, it does greatly increase the chances of passage and provides additional incentives for hesitant senators.
In addition, Republican lawmakers have been more openly supportive of incremental reforms like the SAFE Banking Act than they have been of more comprehensive descheduling legislation that NCIA is working to pass, such as the MORE Act. In fact, some observers are confident that there was enough bipartisan support in the Senate to pass SAFE Banking in the last Congress, were it not for the pandemic and the obstruction of cannabis policy reforms by then-Senate Majority Leader Mitch McConnell.
The new landscape in the upper chamber has given us a lot of reasons to be optimistic about SAFE Banking this year. Democratic control of the Senate, tie-breaker voting power in the hands of pro-legalization Vice President Kamala Harris, the prioritization of cannabis policy reform by Senate Majority Leader Chuck Schumer and other members of Senate leadership, more Republican original cosponsors, and the increasing support of voters in conservative and swing states have given this legislation the best chances of being approved in the Senate since its first introduction.
The other federal cannabis story making headlines was the suspension, reassignment, and dismissal of a number of employees in the White House that was supposedly based at least in part on past cannabis consumption, despite recent guidance from the Office of Personnel Management which advised federal employers not to view past cannabis use as an automatic disqualifier for otherwise qualified job candidates. While the White House was quick to defend itself and point to other factors involved in individual cases, this move clearly sent the wrong message to employers across the country and called into question the Biden Administration’s stated support for at least marginal cannabis reforms.
Does this mean that Pres. Biden will veto comprehensive cannabis policy reform or other related legislation when it reaches his desk? Extremely doubtful. However, this unfortunate incident is indicative of the continuing stigma that cannabis consumers face, and an ongoing disconnect between public opinion, policy, and leadership.
This isn’t just a government employment issue, either; it is alive and (un)well in the private sector. Even in states where cannabis is legal for adults, many employers continue to enact strict anti-cannabis policies, limit their hiring pools, and punish qualified workers for off-duty cannabis consumption. This despite ample evidence that cannabis is not associated with decreases in productivity or increases in workplace injuries.
There has been some progress in recent years on this front. Recent court cases have finally begun siding with medical cannabis patients who were wrongfully terminated for using the medicine that works best for them, after years of ruling in favor of employers. More and more states are instituting employee protections, at least for patients. Yet as more states consider “banning the box” — a policy which prevents prospective employers from asking about past cannabis convictions – or institute laws against pre-employment drug screening as a condition of job offers, discrimination against cannabis consumers and people who work in the industry remains a major problem of not only policy, but culture. Ultimately, employers will need to get over the stigma and false assumptions they have about cannabis and develop better internal policies to match the growing reality of legal and accepted cannabis in the United States.
One thing is certain: as we get closer to ending prohibition, the complexity and nuance of this issue are sure to grow. Stay tuned for more updates as reform efforts continue to heat up in our nation’s capital!
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
It’s hard to believe that somehow it’s March again, but all the while, the NCIA team in D.C. has been hard at work lobbying and advocating on behalf of you and your business. Things are really beginning to warm up and spring into action, so keep reading below for a quick update on where things are at with SAFE Banking, comprehensive reform, appropriations, and more!
Bill reintroductions in both chambers have been off to a slow start. Between a new session, most people still working remotely, a delayed organizing resolution in the Senate, and a somewhat contentious COVID relief package that’s finally passed, members of Congress and their staff have been incredibly busy. But, now that that’s all behind us, I’d suggest preparing for many cannabis bills to be introduced soon.
Specifically, you can expect the reintroduction of the SAFE Banking Act to happen in both the House of Representatives and the Senate within the next couple of weeks. When the bill was introduced in the House during the 116th Congress, it had over 100 cosponsors. In the Senate, it was introduced with more than 20 — that’s more than a fifth of the entire chamber! The bill later went on to be passed by the entire House of Representatives in September 2019 by a vote of 321-103.
You’ll remember that the SAFE Banking Act addresses urgent public safety concerns by allowing tightly regulated marijuana businesses the ability to access the banking system and make our communities safer. The bill also provides protections from money laundering laws for any proceeds derived from these state-legal marijuana businesses. The bill also includes the Financial Institution Customer Protection Act and protections for hemp and hemp-derived CBD-related businesses, which sometimes still struggle in accessing financial services despite the legalization of hemp in the 2018 Farm Bill.
Don’t expect any big changes, however — the bill this Congress includes minor technical changes to the safe harbor language, strengthened hemp provisions, and other technical updates.
While SAFE Banking’s timeline is clear, the same can’t completely be said for more comprehensive reform. When I say comprehensive reform, I’m talking specifically about bills that would remove marijuana from the Controlled Substances Act like the MORE Act and the upcoming Schumer-Booker-Wyden bill.
In the House, we are continuing to work with various committees and members to determine the best path forward for the MORE Act and what changes should be made. I wouldn’t be surprised if that bill gets reintroduced sometime this spring, but the process is truly still in flux, so I also wouldn’t be surprised if it was postponed awhile. This will be determined by the lead sponsors’ offices and also by the congressional calendar and how various bills/issues move through the legislative process.
In the Senate, we’re excited to be working with Leader Schumer (D-NY) and Sens. Booker (D-NJ) and Wyden (D-OR) on their new cannabis bill. That bill will draw heavily on provisions from the MORE Act, but will also include expanded language on taxation and smart regulations. Now that the COVID relief bill has passed into law, I think we can expect to see their bill be introduced sometime in the near future.
It’s spring, which means it’s appropriations season here in D.C.! These bills are legislation that “appropriates,” or sets aside, federal funds to be divided between specific federal government departments, agencies, and programs. For a refresh on the history of appropriations, click here, or, if you’re interested in how these provisions relate to cannabis, click here.
While the appropriations amendment that protects medical cannabis businesses, patients, and programs has been in law since 2014, we’ve had difficulty expanding those provisions and passing new cannabis-related amendments due to the formerly-Republican controlled Senate. However, now that Democrats control both houses of Congress, we’re excited to go back to the drawing board and get creative with the appropriations process to help provide some certainty and relief to the cannabis industry.
We’ll be looking at amendments pertaining to adult-use cannabis programs, banking, veterans access, allowing Washington, D.C. to finally implement a functioning 21+ cannabis program — and that’s just scratching the surface!
All of this is to say: things are really springing into action in D.C.! Prepare for many cannabis bills to begin getting reintroduced, and remember that the appropriations process takes months, so stay tuned via our blog, newsletter, NCIA Connect, and the new NCIA Mobile App to remain in the loop and get involved!
Tune in LIVE on Facebook every Friday afternoon, or catch our now-weekly NCIA Today video updates to hear what’s new in cannabis policy reform and here at NCIA.
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
You may have seen this week that there were a number of Senate confirmation hearings, and cannabis was a topic of discussion in some! But what are confirmation hearings, and what happened in them this week?
In Article II, Section 2, Clause 2 of the Constitution is the Appointments Clause, which empowers the President to nominate and, with the advice and consent of the Senate, appoint public officials. In layman’s terms, advice and consent essentially means confirmation.
As of publication, cannabis was brought up before two nominees this week: Attorney General nominee Merrick Garland, and Deputy Secretary of Treasury nominee, Adewale Adeyamo.
On Monday, President Biden’s nominee for Attorney General, Merrick Garland, appeared before the Senate Judiciary Committee. Before this, Garland’s position on cannabis was relatively unknown — he had ruled in a 2012 federal lawsuit case over DEA’s denial of a marijuana rescheduling petition and was one of three judges in the U.S. Court of Appeals for the District of Columbia Circuit panel that upheld the denial.
However, Garland’s position on cannabis became more clear this week — at least in how he views the Department of Justice’s role in enforcement and arrest disparities. While before the Senate Judiciary Committee on Monday, Garland was asked about marijuana arrest disparities by notorious cannabis champion Sen. Cory Booker (D-NJ). Sen. Booker asked:
“One big thing driving arrests in our country is marijuana arrests. We had in 2019 more marijuana arrests for possession then all violent crime arrests combined. When you break out that data and segregate along racial lines it’s shocking that an African-American has no difference in usage or selling than someone who is white in America, but their likelihood of being arrested for doing things that two of the last four presidents admitted to doing is three to four times higher than somebody white. Is that evidence that within the system there is implicit racial bias, yes or no?”
Garland responded: “It is definitely evidence of disparate treatment within the system, which I think does arise out of implicit bias. Unconscious bias may be, sometimes conscious bias.”
As Sen. Booker continued to question Garland about bias in the criminal justice system, Garland proactively brought marijuana back up, saying:
“The marijuana example is a perfect example. Here is a nonviolent crime that does not require us to incarcerate people and we are incarcerating at significantly different rates in different communities. That is wrong and it’s the kind of problem that will then follow a person for the rest of their lives. It will make it impossible to get for — to get a job and will lead to a downward economic spiral.”
Garland later continued:
“We can focus our attention on violent crimes and other crimes that put great danger in our society and not allocate our resources to something like marijuana possession. We can look at our charging policies and stop charging the highest possible offense with the highest possible sentence.”
But that wasn’t the only time the likely-soon-to-be Attorney General talked about cannabis. Freshman Senator Jon Ossoff (D-GA) asked Garland about equal justice, and highlighted the fact that “Black Americans continue to endure profiling, harassment, brutality, discrimination in policing and prosecution, sentencing, and incarceration.” While responding as to how his Justice Department would combat this, Garland said:
“One important way I think is to focus on the crimes that really matter, to bring our charging and arresting on violent crime and others that deeply affect our society. And not have such an overemphasis on marijuana possession, for example, which has disproportionately affected communities of color and damaged them far after the original arrest because of the inability to get jobs.”
During the “lightning round” of questions, Sen. Booker brought cannabis up again — this time, about enforcement and the now-rescinded Cole Memo. The Senator asked Garland, “Do you think the guidance in the Cole Memorandum should be reinstated, that the Justice Department respects states’ decisions?” Garland responded:
“I do remember it and I have read it. This is the question or prioritization about resources and prosecutorial discretion. It does not seem to me a useful use of limited resources that we have to be pursuing prosecutions in states that have legalized and are regulating the use of marijuana either medically or otherwise. I don’t think that is a useful use.”
This was, without a doubt, the most “cannabis positive” response from an Attorney General nominee in history! But the Judiciary Committee wasn’t the only one curious about cannabis this week!
Next, we move to the Senate Finance Committee, where Deputy Secretary of the Treasury nominee Adewale Adeyamo was being questioned Tuesday. During this hearing, Sen. Catherine Cortez Masto (D-NV) asked, “Do you believe Treasury should seek to update FinCEN’s 2014 guidance on the Bank Secrecy Act’s expectations for financial institutions that provide services to cannabis related industries, and if so, what changes do you recommend?” Adeyamo responded:
“Senator, I look forward, if confirmed, to talking to my colleagues at Treasury about this important issue and thinking through what changes may be needed and doing this in a way that’s consistent with the agency and the President’s guidance. In doing that I look forward to consulting with you and members of this Committee on our path forward.”
To be blunt, this is a really big deal! These questions show that the upper chamber of Congress is taking cannabis policy seriously, and expects the topic to be taken up by various agencies over the next four years. You can continue to count on the NCIA team to keep you updated, advocate on your behalf, and work with Congress and the Biden Administration to create a flourishing, responsible, diverse, and equitable cannabis industry.
Host Bethany Moore, NCIA’s Deputy Director of Communications and host of NCIA’s weekly Podcast ‘NCIA’s Cannabis Industry Voice‘ brings you an in-depth look at what is happening across the country in federal cannabis policy reform and with NCIA.
From the top, Bethany discusses the “cautious optimism” bouncing around the D.C. Government Relations office, as the 117th Congress begins to get to work with GR Director, Mike Correia.
Check out how your member of Congress rated on our Congressional Scorecard, on our website.
We check in with Mike Lumoto, Committee Organizer for NCIA’s Diversity, Equity, Inclusion Committee on the incredible growth they saw in 2020 and the plans taking off in the new year.
Don’t forget to download the new NCIA Mobile App and never miss the latest cannabis news.
by Tara Coomans, CEO of Avaans Public Relations
Member of NCIA’s Marketing and Advertising Committee
As a country, the U.S. is experiencing what can best be described as the “age of distrust.” While public distrust in institutions has been escalating for at least a decade, according to the annual Edelman Trust Barometer which has tracked trust in media, governments, businesses, and nonprofits since 2000. Social unrest and a global pandemic have escalated this distrust. Never has the public eyed institutions or businesses with such suspicion.
Meanwhile, in our industry, the vaping crisis of summer 2019 hit our industry below the belt, aided by some bad actors knowingly flooding the illicit market with products that couldn’t meet stringent state testing. That crisis created a crisis of confidence in the overall cannabis industry-leading it into a bleak period which was only partially buoyed by the declaration that dispensaries were considered “essential businesses” during the COVID-19 pandemic, pro-cannabis outcomes in both voting booths and Congress, many thanks to NCIA’s national and local efforts. By supporting NCIA, you’re signaling industry commitment and that you value growing trust within the industry.
Now, against the national backdrop of distrust and a COVID-19 vaccine that offers a glimmer of hope, it’s time to evaluate ourselves and our industry’s actions. Never has it been more crucial for all brands, but particularly our industry, to lean into actions and communications which consistently and powerfully earn the trust of investors and consumers. As an industry, we’re on an important precipice, what we do next will either ensure our credibility or tarnish it for years to come.
For CEOs, CMO’s, and experts in our industry, the time is now to act and communicate from a place of authentically aligned communications. This alignment will require hyper levels of empathy and a constant pulse on the state of affairs affecting your customers. Consumer behavior is in flux now.
The COVID-19 pandemic has changed consumers and now is the time for brands to align. According to the Edelman Barometer special report, Brands Amidst Crisis:
Because consumer behavior is in flux, it’s never been more important to ensure internal and external values and communications align. Ironically, ensuring alignment supports the flexibility needed to respond quickly to changing behaviors or unexpected upheaval.
Aligned communications means we act internally and externally in a consistent and emotionally intelligent manner that earns trust. It’s not just good for our industry, trust in brands has very real bottom-line implications including increased sales, increased investor opportunities, and reduced customer acquisition costs. In fact, according to Edelman Trust Barometer, high trust consumers have 75% more brand loyalty.
Outstanding packaging and even quality products are the minimum expectations for today’s brands. But even those choices come under scrutiny from consumers if they don’t mirror consumer expectations and lifestyle. Therefore, earning trust starts at the very beginning. The earliest choices are powerful signals to consumers about brand values.
It isn’t enough to simply sponsor a campaign or align with a social movement. While those choices can be powerful quivers in your trust arsenal, it feels and sounds hollow when the brand is suddenly thrusting itself into a conversation without looking at itself first. Consumers are increasingly aware of “trust washing.”
92% of employees expect their employer’s CEO to speak up for issues ranging from income inequality to diversity and training for future jobs. An aligned trust-based strategy starts on the inside. Take a solid look at the ethos and ethics within your own company.
What are your company’s values?
What do you stand for?
How do you signal trust internally and how do you reward it?
Does your internal communication stand for your values?
The reason this internal step is critical is no matter what, your brand ethos is distilled into consumer interactions and communication, whether those communications are with dispensary workers or directly to the consumer, the experience will always stay with the brand. Imagine a dispensary worker making recommendations to a new-to-cannabis buyer, naturally, the dispensary worker has a huge amount of influence on the consumer’s impression of a new brand. And new-to-cannabis buyers are most likely to be loyal to their first brand, assuming the product meets expectations.
Personal experience is the number one way to build trust with consumers. 59% of customers say personal experience matters the most.
What consumer interactions signal trust?
How do you manage poor reviews?
How do you handle customer inquiries?
How does your owned media reflect not only your brand values but those of your customers?
Personal experience is absolutely about product experience and brand interactions. Brand interactions at events will take on more importance in cannabis. Consumers will want to engage in an experiential way with cannabis brands and it won’t be at cannabis events exclusively, consumers will expect to see cannabis brands in all the same places they see alcohol brands, even if sales and sampling aren’t available, which means experiences will need to be multi-sensory and strongly personal. Choose your experiences carefully based on your brand audience and ethos.
Earned media is second only to personal experience incredible trust-building. During the COVID-19 pandemic, trust in publications increased by 7%. Brands should look for opportunities in earned media that reflect their values. Branded content is another area where brands can use the credibility of publications.
Experts are still considered credible sources (52%) and they far surpass celebrities (35%) and influencers (36%). As you consider brand strategies in 2021, take a careful look at who you’re leveraging and what role they play. Choose your experts carefully and ensure they are fully vetted. NCIA’s Marketing and Advertising Committee is developing an “experts directory” of carefully vetted industry professionals, this will be a key resource not only to event organizers, but CEOs and CMOs looking for credible, authentic experts.
Our industry has so much to offer consumers, we provide very real opportunities for consumers to enhance their lives. We have been active on numerous social justice fronts from the very beginning. We may come from a historical place of rebellion, but often, even that rebellion came from a place of empathy and not just income. Consumers today are responding to companies who double down on trust and an aligned brand value system. There’s every reason to think the cannabis industry can do this better than anyone. Together, let’s lean into our values and seed trust not just in our companies, but in our industry.
*All statistics come from Edelman Trust Barometer 2020, unless otherwise noted.
Tara Coomans is the CEO of Avaans Media (formerly known as Primo PR), which has been working with hemp and THC brands and services since 2015 from startup through IPO. Founded in 2008, Avaans Media brings a digitally forward and purpose-driven perspective to public relations. Avaans Media is based in Los Angeles with clients and team members distributed around the country including Washington D.C., New York and Denver.
Coomans is on NCIA’s Marketing & Advertising (MAC) committee and leads the MAC Experts Directory subcommittee for 2021. Coomans is a frequent writer and speaker on public relations, marketing, and social media topics.
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Last week, I wrote about what to expect during the 117th Congress. This week, I want to highlight the incoming Biden Administration, and the various agencies and Cabinet officials that could affect cannabis policy going forward over the next four years.
The tradition of the Cabinet dates back to the beginnings of the Presidency itself. Established in Article II, Section 2, of the Constitution, the Cabinet’s role is to advise the President on any subject he may require relating to the duties of each member’s respective office. The Cabinet includes the Vice President and the heads of 15 executive departments — the Secretaries of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, Interior, Labor, State, Transportation, Treasury, and Veterans Affairs, as well as the Attorney General.
In February 2014, the Treasury Department issued guidance to clarify Bank Secrecy Act (BSA) expectations for financial institutions seeking to provide services to marijuana-related businesses. However, over the last seven years, the policy landscape surrounding cannabis has changed dramatically — at the time this guidance was issued, only Colorado and Washington had legalized adult-use cannabis. Now, there are 15 states plus the District of Columbia that allow for the adult-use of cannabis and 36 states with medical cannabis laws.
Incoming President Biden has nominated former Federal Reserve Chairwoman Janet Yellen for the post of Treasury Secretary. Though her position on cannabis is relatively unknown, it’s definitely possible that this guidance could be updated or expanded. Additionally, if the SAFE Banking Act is passed by Congress, the Treasury Department would then be in charge of ensuring that the implementation of that legislation goes smoothly.
Here’s the big one everyone in cannabis will be watching: the Department of Justice. President Biden has selected Merrick Garland as his nominee for Attorney General, and everyone seems to be wondering the same thing: could there be a new “Garland Memo” ala the Cole Memo?
If you’ll remember, during the Obama Administration in 2013, the Department of Justice issued the Cole Memo, which outlined enforcement priorities for the Department as states were beginning to set their own cannabis policies. Under the Trump Administration, that memo was rescinded in January 2018 by then-Attorney General, Jeff Sessions.
It’s certainly possible that a Garland DoJ could unveil a new cannabis-related memo. Outside of enforcement priorities, the Department could also direct other agencies to reevaluate their policies around cannabis and housing, immigration, and the armed forces.
In 2018, the Small Business Administration (SBA) came out with a notice to all employees and lenders that updated their policies surrounding marijuana businesses. They stated, “Because federal law prohibits the distribution and sale of marijuana, financial transactions involving a marijuana-related business would generally involve funds derived from illegal activity. Therefore, businesses that derive revenue from marijuana-related activities or that support the end-use of marijuana may be ineligible for SBA financial assistance.” They then went on to outline the ineligibility of direct and indirect marijuana businesses, as well as hemp-related businesses (this was pre-2018 Farm Bill) to participate in SBA programs.
This could all change under a Biden Administration, however. The President-elect has tapped Isabel Guzman as Small Business Administrator — she currently serves as the director of California’s Office of the Small Business Advocate. While her position on marijuana is unknown, I’m incredibly hopeful for reform under Guzman — her familiarity with small businesses in California means she is surely well informed on the struggles the cannabis industry faces.
These are just a few of the agencies that I’m watching, but there are many others to keep an eye on: the Veterans Administration, Health and Human Services, and FDA, just to name a few. And, as always, NCIA will be working to advance positive reforms within the executive branch at every opportunity.
Make sure you’re subscribed to NCIA’s CannaBusiness Leader to stay up to date on the latest and find me over on NCIA Connect with any questions or feedback!
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
We’re barely halfway through January, and it already feels like so much has happened in 2021! We at NCIA anxiously watched along with the rest of the country to see who would be victorious in the Georgia Senate races and, subsequently, which party would control the U.S. Senate. Both of the Democrats, Rev. Raphael Warnock and Jon Ossoff defeated their Republican opponents and won their races —- ensuring that the Senate will be split 50-50 with Vice President-elect Harris being the tiebreaker.
The 117th Congress has barely begun, but after Inauguration Day on January 20th, things will really take off here in the nation’s capital. Keep reading to see my answers to FAQ’s for the new Congress:
During the 116th Congress, the SAFE Banking Act (H.R. 1595/S. 1200) became the first cannabis-related bill to be passed by a chamber of Congress. In September of 2019, SAFE came to the House Floor under a suspension of the rules and passed by a whopping 321-103. While the bill had a hearing in the Senate Banking Committee back in the summer of 2019, it never received a markup or moved further than that. In addition to the bill itself, the SAFE Banking Act was also included in not one, but two COVID-19 relief packages passed by the House, colloquially known as HEROES I & II.
This session, the SAFE Banking Act will be back, and with even better chances to pass! The bill will be reintroduced in both the House and Senate in the next 1-2 months and we expect little to no changes to the text. Additionally, we’re also continuing to work with our Hill champions on this issue to see if we can get the language included in the next COVID-19 relief package — something that both President-elect Biden and Democratic leadership has said is pretty much priority number one.
In the meantime, keep an eye out for reintroduction and for how many cosponsors the bill has when it’s dropped — when the 116th Congress ended, SAFE had already passed the House as but also had 33 Senate cosponsors — that’s one-third of the entire chamber!
Cannabis policy ended the year on a high note (no pun intended!) when the Marijuana Opportunity, Reinvestment, and Expungement Act (H.R. 3884), commonly known as the MORE Act, passed out of the House of Representatives by a vote of 228-164.
As I mentioned earlier, all eyes were on the Georgia Senate races as we strategized over what could be possible for the 117th Congress depending on the outcome. With the results in, we now have a better idea about what’s possible with comprehensive reform, but there’s still a lot of unknowns.
We know that the MORE Act will be reintroduced sometime in the coming months in both the House and Senate. In the Senate, the lead sponsor was Kamala Harris, who is now Vice President-elect, which means another Senator will have to pick up the torch. I can’t share with you who it’s going to be just yet, but trust me when I say they will be a wonderful lead and are a true champion for cannabis reform!
A reintroduced MORE Act will likely have a good number of edits and changes, but the underlying intent of the bill will be the same: to remove cannabis from the Controlled Substances Act and help repair the harms the war on drugs has done — specifically to communities of color.
We also know that comprehensive reform, in general, has a better chance of advancing given that Democrats now control the Senate. Sen. Schumer (D-NY) was quoted in October as saying if he’s reinstalled as Majority Leader he “will put this bill in play,” and “I think we’ll have a good chance to pass it”, talking about his own bill, the Marijuana Freedom and Opportunity Act (S. 1552).
All of that being said, legalization, or the passage of comprehensive reform is far from a done deal. Legislation requires 60 votes for passage in the Senate, and we have a lot of hard work to do to get to that level of support in the upper chamber. In the House, Democrats have an even slimmer majority now than during the 116th Congress, so we also have to make sure we don’t lose support there.
You’ve been involved in cannabis for a long time if you remember when the appropriations process was the only way to get Congress to talk about this issue. But now, with Democrats controlling both chambers, you may be hearing more about these amendments again.
Appropriations bills are legislation in Congress that “appropriates,” or sets aside, federal funds to be divided between specific federal government departments, agencies, and programs. Read more about this process and why it matters for cannabis here.
Over the last few years, the House has continued to pass marijuana-related amendments but were unable to get through the Senate due to Republican control and a “gentleman’s agreement” between the Chair and Ranking Member of the Senate Appropriations Committee. But now, all of that will change.
In the past, appropriations amendments have been introduced that touch on a multitude of issues: research, veterans, medical and adult-use cannabis, hemp, banking… the list goes on! In this session, expect to see cannabis-related amendments included in the final budget. Just remember that budget bills must be passed annually, so anything that comes into law this way must be renewed again next year!
If you’re following cannabis policy at the federal level, definitely keep your eyes on what’s happening in various congressional committees. Given who controls both chambers, all of the committees will now be chaired by Democrats, which means you’re going to see a lot of cannabis-related bills come up for hearings and markups. Some I’ll be keeping my eye on, including both chambers’ appropriations, financial services, tax, and judiciary committees.
The opportunities for reforming our outdated cannabis laws have never been brighter than they are right now as we begin the 117th Congress. Bills are going to begin dropping left and right — and that’s because there’s a ton of excitement, enthusiasm, and optimism about what we can accomplish over the next two years.
Want to learn more about what’s possible? Make sure your company is an active member of NCIA and register for our next members-only webinar with our government relations team on Wednesday, January 27, or, if you can’t make it, hop on over to NCIA Connect to chat with us and learn more about what we’re working on in D.C.!
In these last few days of the year, I’m as eager as anyone to put it all behind us in the rearview mirror, but I’m also so grateful of what our members have made possible in 2020.
As we close out NCIA’s 10th year as the cannabis industry’s largest and most respected trade association, I’m just in awe of all the progress that has been made for the cannabis industry in spite of so many challenges.
When state governments were first grappling with the response to the pandemic, most deemed cannabis businesses as “essential,” allowing our industry to stay open to serve patients and adult consumers. Just a few years ago, this level of recognition as a vital sector of the economy would have been unthinkable — even to me!
What’s more, legal cannabis sales broke records throughout the months of this pandemic. It should be no surprise that #CannabisIsEssential to getting through a global pandemic.
Although our lobbying operation went virtual this year, NCIA was able to move the ball further than ever in Congress. The House of Representatives ended the year by passing the groundbreaking MORE Act, marking the first time either chamber of Congress has approved legislation to legalize cannabis since its prohibition over 80 years ago.
Public support for sensible marijuana policy and the legal cannabis industry stands at its all-time high. During the most divisive election in modern U.S. history, voters from across the political spectrum support ending prohibition and putting cannabis behind a regulated counter. In fact, adult-use cannabis initiatives garnered more votes than President-Elect Biden in every state where both appeared on the ballot — including the two he decisively won (New Jersey and Arizona).
The hundreds of forward-thinking businesses that support our advocacy and education efforts have made this incredible progress possible, in spite of an otherwise dismal year.
It’s been almost ten months since we have been able to host in-person events but NCIA has continued to keep our community connected and informed through our Industry Essentials educational webinar series, Cannabis Caucus (cyber) events, and the Cannabis Business Cyber Summit.
NCIA also launched a second weekly podcast offering, The Cannabis Diversity Report, and celebrated more than 200 episodes of The Cannabis Industry Voice podcast (also top 50 U.S. Business News charts for Apple Podcasts), plus monthly live video updates with NCIA Today.
During this temporary break from face-to-face networking, we’ve created several digital sponsorship opportunities for savvy cannabis businesses to elevate their brand while also supporting the work we are doing to advance the industry.
Amidst our national reckoning over systemic racism and police brutality, NCIA launched our Equity Scholarship program which now provides membership benefits to over 100 equity operators. Thanks to the financial support of a growing number of businesses that have stepped up to support social equity in cannabis, this important program will continue to be a priority in 2021 and beyond.
2020 was also a great year to be a member of NCIA. As the only full-service trade association in the cannabis industry, we take pride in providing our members with the resources they need to gain a competitive advantage over the industry’s free-riders and isolated operators.
Over the past year, we’ve expanded our membership benefits with the launch of our exclusive online community, NCIA Connect, as well as significant member-only discounts on Simplifya’s compliance platform.
I take pride that NCIA is the only association in cannabis providing our members with this kind of direct ROI in addition to professional political representation in our nation’s halls of power.
Our members are building the next great American industry. It’s an honor representing them through the thick and thin. Progress takes time but the work we are doing to build support for that industry in the halls of Congress and among the voting public is paying off.
On behalf of the whole team at NCIA, I wish you a happy holiday season and new year! I hope you’re enjoying it safely with those you love.
We have even more in store for 2021 as we continue to support our members through advocacy, education, and community, so stay tuned.
With gratitude,
Aaron Smith
Co-founder & CEO
P.S. If you are not yet a member of NCIA but somehow read all the way to this point, please take just a couple of minutes more to join today. NCIA membership is a simple investment in the future of your business and our industry.
P.P.S If you are a member, reach out and say hello. I’d love to hear about your plans for 2021 and find out how NCIA can help your business succeed.
Join NCIA Deputy Director of Communications Bethany Moore and our Government Relations Director Mike Correia for a quick discussion about last week’s historic passage of the MORE Act.
by Madeline Grant, NCIA’s Government Relations Manager
On Friday, December 4, the House of Representatives made history by voting to approve H.R. 3884, the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act. The MORE Act would remove marijuana from the federal Controlled Substances Act and work to repair the social and personal harms caused by federal marijuana enforcement. This is the first time since marijuana was made federally illegal that either chamber of Congress has held a floor vote on- or approved- a bill to make the substance legal again. The final vote count of 228-164 fell mostly along party lines, with five Republicans crossing the aisle to support, and six Democrats voting to oppose.
This monumental victory shows just how far Congress has come over the years. Although this vote more closely aligns the House of Representatives with the majority of voters who overwhelmingly support cannabis legalization, the Senate is a different story.
As we have seen over and over again, the Senate Republicans continue to obstruct cannabis reform measures. The House passed the SAFE Banking Act in September 2019 and included the SAFE Banking language in two COVID-19 relief packages, however, there has been little activity on these topics in the Senate. Republican Senators have repeatedly spoken out in opposition of bringing up cannabis policy amidst the pandemic, stating that it’s not the time or place. But as I mentioned before, it’s also important to note that the House has passed not one, but two COVID relief packages in the last 6+ months that the Senate (namely, Leader McConnell) has refused to take up. That being said, despite a global pandemic, support for cannabis reform remains strong, a recent Gallup poll showed a record 68% of Americans support making cannabis legal. On Election Day, voters in Arizona, Montana, and New Jersey approved measures to regulate cannabis for adults, while Mississippians overwhelmingly approved a medical cannabis referendum, and voters in South Dakota passed both adult-use and medical initiatives. The vote and passage of the MORE Act on the House show that House leadership is listening.
The MORE Act, sponsored by the House Judiciary Committee Chairman Jerry Nadler (D-NY) and 120 cosponsors, would not only mitigate the federal-state conflict by removing cannabis from the Controlled Substances Act, but it would also require the expungement of past federal cannabis convictions. The bill would also establish a Cannabis Justice Office to administer a program to reinvest resources in the communities that have been most heavily impacted by prohibition, funded by a tax on state-legal cannabis commerce. It would also allow the Small Business Administration to provide loans and grants to cannabis-related businesses and support state and local equity licensing programs, permit doctors within the Veterans Affairs to recommend medical cannabis to patients in accordance with applicable state laws, and prevent discrimination based on cannabis consumption during immigration proceedings.
When the House version of the MORE Act was originally introduced in 2019, it was referred to eight Committees (with the Judiciary Committee being primary). Each Committee had provisions of the bill that fell under its jurisdiction and had authority to hold hearings and or amend specific jurisdictional provisions. Two Committees (Energy and Commerce and Ways and Means) were expected to be very active on language affecting regulations and taxes. The Energy and Commerce Committee even held a legislative hearing on MORE in January, and were expected to hold more… and then COVID hit… and priorities changed.
Before the Floor vote, the main sponsor of MORE, Judiciary Chairman Jerry Nadler, offered a “manager’s amendment.” The majority of the language was taken straight from H.R. 1120/S. 420: the Marijuana Revenue and Regulation Act. It included a graduated tax, and language on federal permitting and bonding. During debate, Congressional leaders gave assurances to include the cannabis industry advocates in future discussions and listen to cannabis industry concerns. Although passage of the MORE Act is historic, no legislation is perfect and NCIA staff will continue working with congressional champions to improve MORE and eventually get it passed into law.
Now, as we near the end of the 116th Congress, the NCIA team will continue to work and strategize various ways forward in Washington, D.C– on SAFE Banking, the MORE Act, and beyond. As we see more and more legislative victories each Congress, it is important to relish in our success and continue to propel the momentum forward (we could all use a moment to celebrate after 2020!). The MORE Act vote, being the most comprehensive cannabis bill on Capitol Hill, gives us the momentum to accomplish more in the next congressional session. Thank you to each and everyone one of you who took the time to call your Representative. Stay tuned for the 117th Congress!
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