Navigating the Confusing, Crowded World of Cannabis Payments
When you’re a cannabis retail operator looking for electronic cannabis payment solutions you’re faced with a baffling array of options and it’s hard to pick out the ones you can trust and the ones that you should avoid at all costs. Every potential vendor is going to tell you that their solution is the best (trust me!) so you need to understand the basic landscape of cannabis payment solutions in order to know what questions to ask. There’s a lot of solid vendors out there that only want to help the industry but there are, sadly, those out there that prey upon a lack of familiarity with the crowded, confusing payments landscape to push solutions that are at best unsustainable and at worst fraudulent.
ACH transactions are a way for a person or a business to do direct bank money transfers.
These transactions are conducted on a computer network run by NACHA, the National Clearinghouse Association. Since these don’t run over the networks run by the credit card companies like Visa or Mastercard – known as “payment rails” – these transactions don’t violate their rules. While NACHA hasn’t officially made a statement either way about cannabis, their actions suggest they don’t have an issue processing these transactions over their network.
The downside with many ACH solutions is that they aren’t necessarily convenient for the buyer. Because a customer or patient can’t just pull out a bank card they are often required to download an app and provide banking details like account and routing numbers. This isn’t necessarily an issue from the second purchase forward, but this can be a bit of a pain for a customer or patient trying to use an app for the first time if they’re not expecting to have to go through an account onboarding process that might take several minutes. The upside to this is that there are platforms that allow the buyer to upload funds via ACH to an eWallet, which, after the initial transaction, will enable them to make instant purchases. Platforms also allow the buyer to automatically replenish their eWallet via ACH, allowing them to always have funds to make purchases. These purchases can also be combined with a store’s loyalty points program.
Questions to ask about ACH solutions:
What does a customer or patient need to do to use the solution?
How long does it normally take for the funds to transfer, allowing a user to make purchases?
Are there any contactless platforms that allow a buyer to purchase the product for delivery or curbside pickup?
Do you need additional hardware to display a single-use QR code specific to the transaction?
Cashless ATMs and PIN Debit solutions are among the most common electronic payment methods that allow customers to directly use cards.
To discuss the issues that go along with any card-based solution we need to take a step back and talk about how payments are processed. As previously mentioned, every credit card company has a set of rails used by merchants to process a sale over their network. Each transaction is sent as a packet of information that broadly contains the following information: name of business, location of business, any additional merchant information, and merchant category code (MCC).
Every transaction has to be associated with a four digit MCC used by the merchants to indicate the nature of the business and the transaction. The code that’s traditionally been used by cashless ATMs and PIN Debit solutions is 5912, reserved for pharmacies and “cannabis (where legal to do so)”. This is what’s used in Canada where credit cards are an option but it’s not an acceptable option in the US because the major credit card networks have clarified that their rails cannot be used for the purchase of marijuana. They do so by prohibiting activities associated with “controlled substances, or recreational/street drugs” (VISA) or even more broadly “any Transaction that is illegal” (Mastercard) in their operating agreements.
It’s important to note that you can’t just randomly choose an alternative MCC because miscoding constitutes fraud. You may remember a few years ago that California-based delivery company Eaze was prosecuted in 2019 for using MCC codes associated with things like “carbonated drinks, green tea, face creams and other products” in an attempt to obscure the fact that the network was being used for the direct purchase of marijuana.
It should be noted however that there are a few ATM networks out there that aren’t directly owned by the big credit card companies like NYCE, Allpoint, Star, and Moneypass. These companies have been relatively quiet regarding the use of their networks for the purchase of marijuana products, so there is an argument to be made that if card transactions are sent over those rails they’re not violating any operating rules, but anecdotally we’ve heard that some of these networks aren’t necessarily cannabis friendly and, as private companies, they’re able to change their mind (for or against) whenever they wish.
Questions to ask about Cashless ATMs and PIN Debit solutions:
What MCC code is the payment processor using?
What network is being used to process the transaction?
Credit cards are notoriously off-limits to cannabis because of the very public positions taken by the major card networks but that doesn’t stop companies from popping up offering credit card processing for cannabis purchases. Let’s clarify here at the outset – there is no way to directly purchase marijuana with a credit card in the United States with a credit card from American Express, Visa, Mastercard, or Discover.
So, with necessity being the mother of invention, some companies are trying out a new strategy to get credit card processing into dispensaries legally. Among them are solutions that take advantage of another MCC code: 6051. This code is associated with the purchase of “liquid and cryptocurrency assets” and some enterprising payment providers are using it to set up a structure where a customer isn’t “technically” buying marijuana. Instead they are “buying” what’s called a “stablecoin”, a form of cryptocurrency whose value is pegged 1:1 to the US dollar.
Questions to ask about cryptocurrency or stablecoin solutions:
What MCC code is the payment processor using?
What stablecoin is being leveraged?
How is the stablecoin preserving its value?
What will the offramping of funds from a crypto wallet to my DDA account look like to my bank?
Cannabis retail operators are faced with serious business and legal considerations when determining the payment processing solution provided to patients and customers. What solution will be the easiest for the customer? Is the solution compliant?
The cannabis industry’s evolving legal and regulatory landscape is challenging, especially with bad actors seeking to implement non compliant make-shift payment solutions intended to capitalize off of cannabis businesses seeking efficient and effective cannabis payment solutions. It is essential that you do your due diligence on cannabis payment solutions presented to your business to confirm that it will not cause an issue for you, the business and its patterns and customers. We hope that this article outlines considerations that will allow you to protect your business and its patients and customers.
Navigating the New Normal: A Regulator’s Outlook on Federal Momentum | 10.26.23 | Policy Matters
Welcome to the second edition of our new Policy Matters series, dedicated to unraveling the intricate world of regulatory and policy dynamics within the cannabis industry. In the previous edition of Policy Matters, we had the privilege of hosting Will Tilburg from the Maryland Cannabis Administration, who shared his perspectives into the strategic aspects of designing a thriving cannabis market while meeting regulatory standards. This month, we continue our exploration into the world of cannabis policy, focusing on the potential implications of federal cannabis reform and recommended preparations for various stakeholders, including regulators, industry players, and the public.
In this #IndustryEssentials webinar series, we aim to provide Main Street cannabis operators valuable insights from regulators, industry experts, and advocates to keep you informed about the latest developments and challenges in the ever-evolving cannabis landscape. This article provides a comprehensive summary of the discussions, speaker highlights, and key takeaways from the event, continue reading and view the full recording below.
John Hudak: A Transition from Academia to Public Service
Our guest speaker for October’s edition of “Policy Matters”, John Hudak, serves as the Director of the Office of Cannabis Policy in Maine, a role he took on after serving as a senior fellow at the Brookings Institution. His background is an interesting blend of academic expertise and hands-on experience in state government and he touched on how this transition reflects his strong commitment to public service and his desire to implement real-world policies.
Hudak emphasized the challenges of engaging with industry stakeholders and regulators, even from a state perspective. He highlighted the importance of good public policy that not only benefits the cannabis industry but also safeguards the well-being of the people of Maine. His insights underscored the need for a balanced approach in crafting cannabis policies that are in the best interest of all stakeholders.
The Significance of Cannabis Rescheduling
The recent rescheduling recommendations of cannabis was discussed as great momentum in the right direction on the path to federal cannabis reform. While it wasn’t expected to lead to full descheduling, rescheduling still represents a positive step forward. This shift in classification may offer some much-needed tax relief for an industry that has faced considerable financial challenges, especially for smaller businesses.
The change in cannabis classification may also prompt a reevaluation of state-level business deductions, aligning them more closely with federal tax codes. Additionally, it was noted that the optics of President Biden initiating the rescheduling process were noteworthy, given his history on drug policy. However, it was emphasized that federal legalization should only occur when the government is well-prepared to manage the potential repercussions to avoid any undesirable outcomes.
Congressional Challenges to Federal Cannabis Reform
Michelle Rutter Friberg, NCIA’s Director of Government Relations, joined the discussion this month, shedding light on the challenges related to congressional action or inaction in the context of federal cannabis reform. She raised concerns that Congress might view its work as done if rescheduling takes place and that the historical difficulty in reaching a consensus on various issues within Congress poses a potential threat to further federal cannabis reform.
Years of congressional inaction have led to market consolidation, impacting small businesses and creating disparities within the industry. These insights highlighted the inherently political nature of the current reform process. Michelle also mentioned President Biden’s campaign promise to reform cannabis policies, which continues to influence the ongoing debate.
Balancing Politics and Cannabis Policy
Khurshid Khoja, NCIA’s Policy Co-Chair & Co-Host of Policy Matters, contributed his perspective to the discussion, recognizing that rescheduling is indeed a positive step as it acknowledges the medical uses of cannabis. He emphasized that the cannabis industry would welcome any form of tax relief that may come with rescheduling. The speakers collectively explored the fears and expectations related to rescheduling and its potential impact on the industry. They also discussed the importance of cautious regulation and research-backed medical claims while stressing the importance of protecting small businesses and ensuring they are not left behind during the reform process.
John Hudak shared further insights into the importance of collaboration between federal and state regulators with the challenges of shared jurisdiction between federal and state authorities being highlighted, particularly concerning public health and safety. Hudak emphasized the need for guidance or regulations from the Food and Drug Administration (FDA) to provide clarity for both regulators and the industry. The benefits of standardization in labeling and packaging across states were also discussed, with an emphasis on reducing burdens for small cannabis businesses.
Hudak’s approach to preparing Maine for federal legalization differs from how other states might approach it. Rather than rushing to issue new rules or guidance based on assumptions, he emphasized the importance of crafting contingency plans. Such plans would allow states to be ready for various scenarios post-federal legalization, rather than being caught flat-footed. He explained that they are considering unknown, known, and nearly guaranteed aspects of federal legalization to ensure they are well-prepared.
Hudak cited the importance of labeling standards, as these are among the regulatory aspects that are likely to be implemented. Drawing from past experiences with federal reforms, such as the Affordable Care Act and HIPAA, he illustrated the significance of state preparation and the impact it has on successful implementation.
Audience Question and Opportunities for Industry Engagement
An audience question by Tucker Holland (principal of Blooming Member Entourage Cannabis, an Oregon infused product manufacturer) raised the necessity of federal descheduling leading to federal re-regulation. The question emphasized that states already regulate their individual markets, and there was interest in exploring a pathway where federal responsibility might be pushed to the states.
In response, the speakers discussed the complexities of the issue and the need for effective collaboration between state and federal regulators. While the specifics of such collaboration remain a work in progress, the role of state regulators remains pivotal in shaping the future of cannabis regulation.
Conclusion
In conclusion, the insights shared during this Policy Matters webinar shed light on the complexities and challenges associated with federal cannabis reform. From the significance of rescheduling to the impact of taxation and market consolidation, the conversations between the panelists highlighted the need for cautious and well-informed policies. The discussions also underscored the importance of industry engagement and active participation in shaping federal regulations. This is a pivotal moment for the cannabis industry, and it is clear that industry stakeholders have a role to play in influencing the path forward.
The journey towards federal cannabis reform is an ongoing process, and it’s imperative that industry stakeholders, advocates, and regulators work together to navigate the challenges and opportunities that lie ahead. With your commitment to informed and balanced policies, we can continue to move forward, fostering an environment that benefits all members of the cannabis community. Join NCIA today to be a part of this influential movement.
Watch the Full Discussion on YouTube
If you’re eager to dive deeper into this insightful conversation, we encourage you to watch the full webinar on NCIA’s official YouTube channel. This video provides an opportunity to absorb every detail, gain a comprehensive understanding of the issues discussed, and explore the valuable insights offered by our panel of experts.
The Path Forward
As the cannabis industry continues to evolve and adapt, staying informed and engaged remains crucial. Opportunities like the NCIA’s committee applications, industry events, and educational sessions provide avenues for individuals and businesses to get involved and make their voices heard.
Last month, we had the opportunity to gain valuable insights from Will Tilburg of the Maryland Cannabis Administration, shedding light on the challenges and successes of of launching an adult-use cannabis market in record time. This month, we’ve explored the critical topic of preparing for federal cannabis reform, its potential implications for various industry stakeholders and the nuanced aspects surrounding it.
Stay tuned for future editions of Policy Matters, where we’ll continue to tackle the most pertinent issues in the cannabis industry, providing you with valuable insights and fostering dialogue on the policies that shape the future of cannabis in the United States. Your voice in the development of common sense policy matters, and together, we can make a difference.
Welcome to the National Cannabis Industry Association’s (NCIA) insightful webinar recording, “Committee Insights: Where Risk Assessment Integrity Meets Policy.” Hosted by NCIA’s Cannabis Manufacturing Committee and originally broadcast on Tuesday, October 24th, 2023, this session provided a deep dive into the complex but critical intersection of cannabis industry risk assessment and policy development. This blog post will highlight key discussions and insights from the panel, offering a condensed overview of the critical issues explored during the webinar, continue reading and view the full recording below.
Comprehensive Risk Assessment for Vape Product Manufacturers
The panelists underscored the importance of thorough risk assessments for vape product manufacturers, especially in the highly regulated cannabis and hemp sectors. The conversation centered on essential areas of concern, including the potential for fraud, liability, and the significance of ingredient selection, particularly terpenes. Material of construction and employee safety were also key factors that were addressed.
Hardware Risks and Due Diligence
The webinar uncovered the risks associated with hardware components and vendors. It shed light on the due diligence required when introducing new vape products, which includes vetting hardware suppliers and partners. Addressing concerns related to shrinkage and theft was another significant aspect of risk management. Additionally, the panel stressed the importance of setting safety guidelines based on industry standards such as ASTM.
Safety Standards and Ingredient Considerations
The discussion dived into the implications of safety standards, especially ASTM, and their role in determining acceptable safety levels within the industry. The panel emphasized the importance of ingredient considerations, particularly in preventing E-cigarette or Vaping Product Use-Associated Lung Injury (EVALI). Risk assessment for ingredients was a major focus, as it plays a critical role in product safety and integrity.
Implications of Fraud and Counterfeit Products
A crucial point discussed was the far-reaching implications of fraud, counterfeit products, and negligence within the cannabis and hemp industry. The panelists delved into the legal considerations when unknowingly selling dangerous products. They also highlighted the industry’s ongoing struggle with counterfeiting and the need for robust prevention measures to protect consumers.
Regulatory Challenges and Industry Growth
The webinar touched upon the challenges of navigating regulatory environments for both regulators and operators. The panelists emphasized the need for striking a balance between regulation and innovation to ensure the industry’s growth while maintaining product safety. The conversation also addressed the evolving landscape of marketing and advertising regulations, emphasizing the need for clear guidance in these areas.
Essential Insights from Industry Experts
Learn more about our distinguished panel of NCIA member experts including hardware & product manufacturers, toxicologists, legal professionals and regulators each of which brought their unique perspective and insights to our comprehensive exploration.
This is the third of five in a multi-part series of #IndustryEssentials webinars. You can watch Parts I & II plus register Part IV & V at the links below.
Episode I – Committee Insights: Mapping the Vape Landscape: Where are We and Where Do We Go from Here?” – [Watch Here]
Episode II – Committee Insights: Cannabis Vaping – Avoid Being an Easy Target – [Watch Here]
Episode IV: Committee Insights: Cannabis Vaping – Beyond the Pen – [Date & Time TBD]
Episode V: Committee Insights: Dabinar Special Edition – Dabbing 101 – [Date & Time TBD]
For access to our full webinar recording archive, featuring 100+ episodes from five separate recurring series, head here.
Join NCIA and Be Part of Future Speaking Opportunities
If you’re eager to share your expertise and insights with our dynamic cannabis community, we encourage you to consider becoming a member of the National Cannabis Industry Association (NCIA). Our member-led committees, such as the Cannabis Manufacturing Committee, offer numerous opportunities to participate in our webinars and events as a speaker. By joining NCIA, you’ll be well-positioned to become a part of our expert panelists in the future. Don’t miss the chance to contribute to meaningful discussions that help shape the cannabis industry.
Learn more about NCIA membership and the benefits it offers here.
Explore Sponsorship Opportunities
For those interested in sponsoring future webinars and events to reach a broad and engaged audience within the cannabis industry, we invite you to fill out our sponsorship inquiry form. Our team will be happy to provide you with more details on how you can collaborate with NCIA to promote your brand and engage with our community.
Your involvement with NCIA opens doors to a wealth of opportunities in the ever-evolving cannabis industry. We look forward to having you as part of our vibrant community!
A Valuable Resource for Industry Professionals
NCIA’s “Committee Insights” series serves as a comprehensive resource for cannabis and hemp industry professionals and this episode offers valuable insights into the critical role of risk assessment and policy development in shaping the future of cannabis operations. By exploring our full recording, you’ll gain invaluable insights and stay informed about the latest developments in the ever-evolving cannabis industry.
Stay Connected with NCIA
Thank you for being a part of our dynamic cannabis community. NCIA’s #IndustryEssentials webinar series is our premier digital educational platform, offering timely and essential insights precisely when you need them. This session is part of our Committee Insights series, produced in collaboration with our member-led committees. Sign up today to receive more industry insights and updates to stay ahead in the evolving cannabis and hemp sectors.
Policy Matters: Navigating the New Normal – A Regulator’s Outlook on Federal Momentum
Join us for the October edition of our new illuminating “Policy Matters” webinar series! In this dynamic session, we’ll dive into the intricacies of cannabis policy from two critical angles. For this month’s episode, we’re shifting the spotlight to the thriving adult-use cannabis marketplace in Maine, featuring our special guest, John Hudak, the Director of the Office of Cannabis Policy at the Maine Department of Administrative and Financial Services.
Discover the unique dynamics of Maine’s cannabis industry, from its regulatory framework to market trends and the challenges faced by industry stakeholders. Gain valuable insights into managing a successful adult-use market while adhering to rigorous regulatory standards. Then, we’ll explore the policy implications of descheduling or rescheduling cannabis, a topic that gained momentum following President Biden’s directive to review its federal classification.
Join our hosts, NCIA Policy Co-Chairs Khurshid Khoja and Michael Cooper and guest speakers, NCIA’s Director of Government Relations Michelle Rutter Friberg and John Hudak, Ph.D, the Director of the Maine Office of Cannabis Policy, as they discuss the potential shifts in cannabis policy, what the process may look like, and what to expect in the coming months.
Needless to say, with multiple federal agencies involved, an election year nearing, and Congress in disarray, this is a complex topic – but policy matters. Stay informed, stay ahead, and be part of the conversation that’s shaping the future of cannabis policy.
Tune in and empower yourself with the knowledge to thrive in this dynamic industry! Reserve your spot today and join us as we continue to unravel the complexities of cannabis policy and regulation.
Panelists:
John Hudak
Director | Maine Office of Cannabis Policy
Committee Insights: Where Risk Assessment Integrity Meets Policy
Join us for Episode 3 of the vape-focused #IndustryEssentials webinar series, brought to you by NCIA’s Cannabis Manufacturing Committee. In this informative session, we will delve into the critical intersection of Risk Assessment Integrity and Policy within the cannabis and hemp industries.
As the cannabis and hemp sectors continue to experience rapid growth, ensuring product safety and integrity is paramount. This webinar will provide industry professionals, policymakers, and stakeholders with the knowledge and insights needed to navigate the complex landscape of risk assessment, compliance, and policy development.
Learning Objectives
• Ingredient Risk Assessment Exploration
• Discuss the Balance of Regulations vs. Innovation
• Gain Insights on Due Diligence for New Products
• Impact of Counterfeiting and Effectiveness of Track & Trace on Authenticity
• Overview of the Global Cannabinoid Containing Product Landscape
• Explore Evolving Advertising and Marketing Regulations
• Precautions for Cross-State Shipping and Product Integrity
• Discover Strategies for Youth Prevention and Emerging Technologies
Panelists:
Gillian Schauer
Executive Director
Cannabis Regulator’s Association
Raza Lawrence
Counsel
Zuber Lawler Group
Shawna Vreeke
Head of Research
True Terpenes
Josh Borodin
Head of Product
GREENTANK
James Granger
Chief Political Officer
Cliintel Capital
Contributing Authors:Stephanie Bozzuto, Cannabis Connect Insurance, Acrisure Partner | Merril Gilbert, Trace Trust | Shay Aaron Gilmore, The Law Office of Shay Aaron Gilmore | Matthew Johnson, AssuredPartners
Navigating the labyrinth of insurance coverage can be daunting for any business owner, especially within the emerging cannabis industry. Questions like “What coverage do I need?” and “How do I ensure my policy covers my exposures?” are common and crucial. The National Cannabis Industry Association’s Risk Management & Insurance Committee is here to guide cannabis business operators in protecting both personal and business assets.
Below are ten key insights and considerations to guide you when purchasing your next insurance policy. Whether you have a policy in place or are exploring multiple policies, it’s crucial to ensure they align with your intended coverage.
Understanding Policy Forms, Endorsements, and Exclusions
Policy forms, endorsements, and exclusions are pivotal during a claim. For instance, some policies sold to cannabis companies in the US have outright ‘cannabis business exclusions’. It’s crucial to read and understand these documents to avoid jeopardizing your business.
Compliance with Protective Safeguards
To ensure theft coverage response in a loss, understand and comply with the protective safeguards on your property insurance policy. For example, non-compliance with a Central Station Alarm Warranty can exclude coverage after a robbery.
Landlord Insurance Requirements
Understand the insurance coverage required by your landlord before signing any contract. If a triple net lease is required, you, as the lessee, will need to insure not only your business but also the building, which can be costly.
Local Insurance Requirements
Each city, state, and county permitting cannabis will have its own insurance requirements, often including general liability, product liability, commercial auto insurance, and workers’ compensation.
Some states have created specific requirements not present in other states (looking at you, Michigan!). Consult with an attorney to fully understand and meet these requirements.
Facility Maintenance
Maintain and update your facilities, especially if they are older than 20 years, to avoid limited property coverage and being forced to buy an “actual cash value” policy versus “replacement cost.” Updates to your HVAC, plumbing, roofing, and electrical systems are well worth the investment.
High-Risk Area Considerations
If your facility is in a high brush area, be prepared for limited property insurance options and a list of exclusions due to tighter wildfire insurance availability. Your insurer may offer expanded coverage if you’re willing to invest in wildfire defense systems.
Evaluating Insurance Companies
Know the financial strength of your insurance company before purchasing. Consider whether the company is admitted or non-admitted and research their reputation and claims experience.
Claims Experience
Inquire about the carrier’s claims handling experience, conditions of coverage, and the duration it takes to receive a payout from a covered loss. If your broker doesn’t have claims experience with a given carrier, feel free to ask someone on the NCIA’s Risk Management & Insurance Committee.
Legal Concepts and Types of Insurance
Understand the legal concepts involved in property and liability insurance and familiarize yourself with the different types of property insurance policies available on the market. For instance – are you purchasing an admitted or a non-admitted insurance policy? Are you on an ‘all risk’ or a ‘named perils’ coverage form?
Grasping Liability Insurance Distinctions
Liability insurance is crucial, acting as “third-party” coverage, contrasting with “first-party” coverage like property insurance, which protects against damage to one’s own assets.
Duty to Defend vs. Duty to Indemnify
Understanding the difference between the duty to defend and the duty to indemnify is vital. The former is broader, obligating the insurer to defend the insured in lawsuits, even if allegations are baseless. The latter only kicks in if the insured is found legally liable for damages.
Defense Inside/Outside the Limits
One should also inquire about defense inside versus defense outside the limits of a liability policy. A policy with ‘defense outside’ considers all legal costs separate from the total liability coverage, while legal fees will erode the total liability limit for a ‘defense inside’ policy.
Insurable Interest
An insured must have a direct financial interest in the preservation of the property and be exposed to monetary loss as an immediate and proximate result of its destruction. The interest must not be contingent or expectant. Interest in anything not founded on an actual right to the property is uninsurable.
Scope and Importance in Cannabis Industry
The scope of liability insurance, covering legal costs and payouts, is essential, especially in the cannabis industry, where legal landscapes and associated risks are continuously evolving. Adequate coverage is paramount to mitigate potential financial losses due to unique legal challenges and risks, such as product liability claims.
Conclusion
The world of business insurance, especially in the cannabis sector, can be quite complex. However, with the insights provided here, you can navigate your policy purchasing process with confidence and ensure your business is fortified against potential risks. By understanding policy forms, adhering to safeguards, and adapting to local regulations, you can lay a resilient foundation for your business’s growth and success.
The proactive approach advocated by the National Cannabis Industry Association’s Risk Management committee emphasizes the importance of informed decision-making. By evaluating an insurer’s claims experience, comprehending legal nuances, and staying attuned to industry developments, you can empower your business with robust protection, ensuring a resilient foundation for growth and success.
Committee Insights: Cannabis Vaping – Avoid Being an Easy Target
NCIA’s #IndustryEssentials webinar series is our premier digital educational series featuring a variety of interactive programs allowing us to provide you timely, engaging and essential education when you need it most. The NCIA Committee Insights series showcases content produced in partnership with one of our 14 member-led committees.
Join us for Episode 2 of the vape-related #IndustryEssentials webinar series, presented by NCIA’s Cannabis Manufacturing Committee. In this highly informative session, we’ll delve deep into the world of cannabis manufacturing risk management, focusing on essential tips and strategies to help manufacturers avoid and effectively manage risks associated with the production of cannabinoid-containing products.
The 2019 EVALI outbreak stirred up the cannabis vape industry making some businesses an easy target in the court of public opinion. However, vaping continues to be a popular form of consumption among GenZ users, creating a demand for companies to design safer products and expand their due diligence testing during the product development phase. NCIA’s second vaping webinar of 2023 will sit down with industry experts to discuss what their companies are doing to avoid being an easy target, prevent another EVALI-like crisis, and how to navigate an industry in the absence of regulations.
Learning Objectives:
• Risk assessment and due diligence protocols to determine consumer exposure limits.
• Best practices and manufacturing standards during product development
• Youth prevention strategies
• Insights gained from emissions testing of vape products
Don’t miss this opportunity to stay ahead in the ever-evolving cannabis industry. Register now and join us for an engaging discussion on cannabis manufacturing risk management.
Service Solutions | 9.20.23 | Seed to Sprout – Defining an Engaging Employee Experience for Retention & Performance
In this thought-provoking #IndustryEssentials webinar, we delve into a crucial topic for cannabis businesses: “Defining an Engaging Employee Experience for Retention & Performance”
In the ever-evolving landscape of the cannabis industry, businesses face unique challenges, including high turnover rates and low employee engagement. These issues can have a significant impact on a company’s bottom line. Did you know that replacing an entry-level worker can cost up to 50% of their salary, while for high-level workers, this figure can skyrocket to 400%?
In this webinar, we explore how prioritizing the employee experience is not only a strategy to maintain your workforce but also a means to provide a quality work-life balance for your staff. Our expert speakers discuss the value of the employee experience, immediate strategies for improvement, top trends to incorporate into your strategy, and how to develop a framework for success.
Whether you’re a seasoned cannabis industry professional or just beginning your journey, this webinar provides valuable insights that can transform your approach to employee engagement. NCIA’s #IndustryEssentials webinar series is your premier source for timely, engaging, and essential education when you need it most.
Stay connected with NCIA for more insightful webinars and industry updates. Subscribe, like, and hit the notification bell to never miss our valuable content. Join us in redefining the employee experience and boosting your business’s success. Watch the full webinar now and take the first step towards a more engaged and productive workforce.
Member Blog: Management Science Associates, Inc. Leads Research Initiatives Alongside Vireo Health
Contributing Authors: Geoff Atkinson, Senior Data Analyst, Management Science Associates, Inc. | Madeline Grant, Business Development Manager, Management Science Associates, Inc. | Paloma Lehfeldt, Director of Medical Education, Vireo Health
One of the promising uses for medical cannabis is treating chronic pain, potentially reducing or replacing prescription opioids and thus reducing the number of overdoses and deaths. Due to the legal status of cannabis and its schedule 1 status on the Controlled Substance Act, there has not been a significant amount of clinical research into its efficacy as a replacement or adjunct therapy for opioids, or its optimal dosing. Unfortunately, due to the lack of research and data there remains uncertainty for patients’ access to pain management and relief through cannabis. The limited research and data availability create uncertainties around patients’ access to cannabis for pain relief. Considering this, Management Science Associates, Inc. (MSA) has taken the initiative to collaborate with cannabis operators such as Vireo Health, aiming to investigate the impact of cannabis consumption on patient health outcomes by utilizing real-world healthcare data. This empirical data is crucial for enhancing our understanding of the complexities surrounding cannabis usage.
MSA and Vireo Health Study
MSA partnered with Vireo Health of Minnesota to complete a first of its kind study for Minnesotan medical patients in the state’s programs. We focused on several hundred customers from eight Vireo dispensaries across Minnesota. Using MSA’s patented de-identification software the data reflected that customers of eight dispensaries in Minnesota reduced their legal opioid usage by an average of 30%. A comprehensive analysis illustrated that these customers, on average, consumed 115 mg of morphine equivalent (MME) per month to their initial cannabis purchase. During the period of cannabis consumption, this figure decreased to 80 MME/month, representing a significant 30% reduction. Notably, opioid prescriptions reverted to higher levels after customers completed their final cannabis purchase. While individual circumstances may necessitate specific medication usage, aggregating data over larger cohort allows for capturing overarching trends.
Once we established, in this particular data set, cannabis may aid in reducing opioid use, we examined additional contributing factors in more detail to determine which patients had the most success. Using MSA’s patented de-identification technology, an individual’s cannabis purchases was matched with their prescription records while maintaining the confidentiality of personal health information. Understanding the connection between cannabis purchasing trends and medical outcomes could be very valuable in making informed decisions about dosing and connecting customers to the products that most effectively meet their particular needs. With the limited clinical research in particular randomized control trials in the United States, there is not nearly as much of this kind of information available for cannabis as there is for more traditional pharmaceuticals. Studies like this are crucial to gather credible data for medical patients to purchase and consume the correct products and dosage.
Continued Results of the MSA and Vireo Health Study
One initial observation is that the impact of cannabis on opioid prescriptions is different for different age groups. Individuals under the age of 45 experienced a 47% decrease in opioid prescriptions, while the 45–64 age group saw an average drop of 35%. Those over the age of 65, who tended to have the highest amount of opioid prescriptions across all three time periods, saw no significant decrease during the time they were purchasing cannabis. There were small differences between men and women. Women used more prescription opioids overall but saw a slightly greater percentage decrease when they began purchasing cannabis.
These differences may be related to different demographic groups preferring different forms of cannabis. The table below shows several forms where there were significant differences in percentage of total cannabis spending by age or by gender. For example, younger customers spent more on vape cartridges, and males tended to spend more on flower.
Interestingly, there appears to be no substantial correlation between the total amount of THC purchased and the successful decrease in opioid prescriptions. There was high variation between individuals, but the group of patients who succeeded in reducing their opioid prescriptions purchased an average of 418 mg of THC per month. Those who showed no decrease in opioid prescriptions purchased an average of 563 mg of THC per month. However, those who successfully reduced their opioids did show a preference for products with a high ratio of THC:CBD, spending over 70% of their cannabis budget on products with a ratio of 19:1 or higher.
We also examined the connection between different forms of cannabis and patients’ decrease in opioid prescriptions. One interesting way to divide patients is whether they focused on buying one form of cannabis or sampled many different products to find something that would benefit them. Patients who spent over 60% of their total cannabis budget on one form saw an average decrease of 16% in their opioid prescriptions. Patients who were less focused on one form saw an average decrease of 44%. A conflating factor in this analysis is that customers who purchased many different forms of cannabis also tend to have longer periods of cannabis usage. Customers who tried one or two forms of cannabis averaged 136 days between their first and last purchase. Customers who tried three or four forms of cannabis averaged 342 days. Customers who tried five or more forms of cannabis averaged 833 days.
Another way to study the efficacy of particular forms of cannabis is to group patients by their preferred form. For example, customers who spent the majority of their cannabis budget on capsules saw a 63% reduction in opioids while those who preferred tablets saw a 34% decrease. Customers who purchased mostly vape products (the most popular form in these particular dispensaries) saw a 28% decrease, but less rebound towards earlier levels after they stopped purchasing cannabis. Some of these analyses are less statistically significant because of the relatively small number of customers in each group.
Next Steps
While these preliminary findings are intriguing, they underscore the necessity for further research. MSA will continue to look at cannabis customers across multiple states, where different types of products may be available, which might either reinforce our findings, or illuminate some interesting differences between customers in different markets. Looking at more total customers would increase the significance of the findings relating to customers’ preferred forms of cannabis, which would be very helpful in pointing future customers towards the products most likely to help them. MSA will continue to work with cannabis companies, healthcare professionals, advocates, and policymakers across the United States to conduct studies and continue to share reliable data with the cannabis industry.
If you are interested in learning more or getting involved with MSA by being a prominent leader in medical cannabis research, we’d love to hear from you. You can reach out to Madeline Grant at mgrant@msa.com to schedule an introductory call.
HHS Recommends Rescheduling: Now What? | 9.14.23 | Fireside Chats with NCIA’s Government Relations Team
NCIA’s #IndustryEssentials webinar series is our premier digital educational platform featuring a variety of interactive programs allowing us to provide you timely, engaging and essential education when you need it most. The Fireside Chat series of NCIA’s #IndustryEssentials webinars are an opportunity for industry professionals to hear from our government relations team and guests about the latest developments in federal policy LIVE.
For more than fifty years, the federal government has maintained that cannabis is a Schedule I drug, meaning that it has a high potential for abuse and no accepted medical value.
That recently changed when the Department of Health and Human Services (HHS) recommended to the Drug Enforcement Administration (DEA) that cannabis be placed in Schedule III, meaning that it has moderate to low abuse potential, a currently accepted medical use, and a low potential for psychological dependence.
There’s no doubt this move was an historic one– but what does it mean? What’s next? How will it impact your business? Join NCIA’s Aaron Smith and Michelle Rutter Friberg as they unpack all these questions surrounding cannabis rescheduling impact and more!
Fireside Chats with NCIA’s Government Relations Team: HHS Recommends Rescheduling; Now What?
NCIA’s #IndustryEssentials webinar series is our premier digital educational platform featuring a variety of interactive programs allowing us to provide you timely, engaging and essential education when you need it most. The Fireside Chat series of NCIA’s #IndustryEssentials webinars are an opportunity for industry professionals to hear from our government relations team and guests about the latest developments in federal policy LIVE.
For more than fifty years, the federal government has maintained that cannabis is a Schedule I drug, meaning that it has a high potential for abuse and no accepted medical value.
That recently changed when the Department of Health and Human Services (HHS) recommended to the Drug Enforcement Administration (DEA) that cannabis be placed in Schedule III, meaning that it has moderate to low abuse potential, a currently accepted medical use, and a low potential for psychological dependence.
There’s no doubt this move was an historic one– but what does it mean? What’s next? How will it impact your business?
Join NCIA’s Aaron Smith and Michelle Rutter Friberg as they unpack all these questions and more! Register today and don’t miss your chance to hear from two of the foremost government relations experts in the cannabis industry.
Panelists:
Aaron Smith
Chief Executive Officer
National Cannabis Industry Association
Michelle Rutter Friberg
Director of Government Relations
National Cannabis Industry Association
Member Blog: Securing Your Cannabis Venture – Mastering Inspections with Comprehensive Cannabis Insurance
The cannabis industry continues to blaze a trail of growth and innovation, opening numerous opportunities for entrepreneurs and investors. However, this thriving landscape also exposes businesses to unique risks that demand proactive risk management solutions. Insurance plays a pivotal role in safeguarding cannabis ventures from potential losses, making it an essential aspect of responsible business operations. In this blog post, I will explore the critical role of inspections, the challenges they present, and how partnering with a reliable cannabis insurance broker can protect your business interests while mastering the art of inspections.
Understanding the Need for Inspections
The cannabis industry operates under stringent regulations, and inspections are an indispensable component of ensuring compliance. These routine evaluations, carried out by regulatory bodies or insurance carriers, are designed to assess product quality, safety standards, and adherence to legal requirements. While inspections are vital for maintaining high standards within the industry, they also expose businesses to potential vulnerabilities, particularly theft.
The Perils of Theft: Unraveling Insider Threats
As the cannabis industry expands, so does the risk of theft. A concerning issue arises from potential “inside jobs,” where employees or third-party trusted individuals gather sensitive information on-site, posing a significant threat to the operation’s stability. This situation often leads to confusion and concern for clients regarding third-party insurance inspectors who sometimes come on site without communication or vetting.
Clients frequently encounter uncertainty when dealing with these inspectors. They tend to reach out to operators to schedule appointments without confirming the inspector’s affiliation with the insurance carrier or broker. This results in delayed responses, as these calls are often mistaken for telemarketing and disregarded. Unfortunately, this miscommunication can lead to compliance issues with the insurance carrier.
To address this problem, transparent communication between the insurance broker, inspection company, and operator is essential. For example, many clients now ask me to verify the identity of those contacting them before scheduling appointments. I highly recommend this practice to protect clients’ sensitive information.
In this evolving landscape, ensuring security and effective communication is paramount. By taking proactive steps, we can enhance the industry’s growth while safeguarding its integrity.
Transparent Expectations: Building a Solid Foundation
Open and direct communication, coupled with well-defined expectations, serve as the cornerstone for effective inspections within the cannabis industry. My commitment lies in bridging the gap between clients and inspectors, enabling them to familiarize themselves with one another and streamline the scheduling process. A comprehensive comprehension of the inspection procedure, its aims, and the specific areas subject to scrutiny is imperative for businesses. Simultaneously, transparency on the part of insurance carriers regarding inspection protocols and their protective role is crucial for your business’s security.
Embracing a collaborative approach to inspections fosters a strong alliance between businesses and insurers. This synergy guarantees a seamless process that ultimately benefits all stakeholders involved.
Guarding Behind-the-Scenes Details: Protecting Business Operations
In the fiercely competitive cannabis landscape, certain aspects of business operations must be protected with utmost confidentiality. These behind-the-scenes details include proprietary cultivation techniques, security measures, and intricate supply chain arrangements. Recognizing the sensitivity of this information, leading cannabis insurance brokers take extraordinary measures to safeguard such details.
The integrity of inspection processes begins before any inspector sets foot on your cannabis business premises. Reputable cannabis insurance carriers undertake rigorous vetting of third-party inspection companies to verify their credentials and expertise. This stringent evaluation ensures that inspectors adhere to the highest standards and are committed to protecting your business. In cases where an inspector contacts you directly, it is essential to politely reschedule the inspection and promptly inform your insurance broker.
Aligning Real-Time Risks with Comprehensive Insurance Coverage
Beyond regulatory compliance, inspections serve another vital purpose: assessing real-time risks and aligning them with the insurance coverage outlined in your policy. This strategic alignment ensures that your cannabis business is adequately protected against potential losses. Collaborating with your insurance broker to comprehend the risks inspectors evaluate and their significance empowers you to optimize your risk management strategies. By proactively addressing any coverage gaps, your cannabis insurance policy becomes a reliable safety net, allowing you to navigate the dynamic cannabis industry with confidence.
Addressing Unique Industry Challenges: Tailored Cannabis Insurance Solutions
The cannabis industry operates in a state of constant flux, with evolving regulations and market dynamics presenting ever-changing challenges. These unique complexities demand specialized insurance solutions that cater to the specific needs of cannabis businesses. Leading cannabis insurance providers possess an in-depth understanding of industry intricacies, enabling them to craft policies that safeguard against cannabis-specific risks. From crop damage and product recalls to theft issues, these tailored insurance solutions provide comprehensive coverage, assuring businesses of their resilience in the face of adversity.
Overall, inspections and comprehensive cannabis insurance play instrumental roles in securing your cannabis venture against potential risks and losses. Transparent communication and clear expectations before, during and after inspections build trust and foster collaboration between all stakeholders.
Guarding behind-the-scenes details is of utmost importance, and trusted cannabis brokers go the extra mile to protect your business operations from potential breaches. Vetting inspectors diligently ensures the security of the inspection process, preventing unauthorized access to sensitive information.
By aligning real-time risks with comprehensive insurance coverage, cannabis entrepreneurs gain invaluable peace of mind and the ability to navigate the industry confidently. As you embark on your journey in the dynamic cannabis sector, choose a reputable cannabis insurance broker who understands the intricacies of the industry and can offer tailored solutions to safeguard your business interests.
Remember, mastering inspections and harnessing the power of comprehensive cannabis insurance will be your business’s most potent shield in an ever-changing and promising landscape. Embrace the future of the cannabis industry with confidence, knowing that your venture is secured and protected every step of the way.
Member Blog: How to Avoid the 4 Most Common Payroll Mistakes
To achieve your goals in business, your payroll system must be flawless. It is an aspect in which you must strive for perfection whenever possible. Avoiding payroll mistakes in the cannabis industry is especially crucial due to the highly regulated nature of the industry. Compliance with payroll regulations is essential to avoid legal repercussions and penalties from governing agencies. Additionally, accurate and timely payroll ensures proper compensation for employees, and maintaining precise payroll records promotes transparency and accountability, building trust with employees and stakeholders in an industry where transparency is vital.
It is better to be safe by managing your payroll as thoroughly as possible, if not you would be sorry you didn’t. Most people have most likely made these mistakes and have had minor consequences accompanying them. If these mistakes persist, the business owner often pays dearly for them. These common payroll mistakes have cost some their business.
Having Multiple Records for a Certain Payroll
It pays to have all your payroll information in a single database. This enhances security and ensures that you know where to look for your payroll information. If this has been your practice and your business uses tools like HCM software that helps you manage your employees and other business information, then this shouldn’t be much of a problem.
All you’ll have to do is use that same software to manage and process payroll information. If your business documents are disorganized, be sure to have them all in one place.
Not Updating Needed Information
Ensure that you are not complacent by relying on automated software to do everything. The system is not aware that your employee would be changing addresses therefore such info should be entered manually.
That error could lead to mistakes in filling that employee’s taxes as the bills might arrive at the wrong address. As much as simplifying a process is great, you still need to play your path in getting things done.
It would help you to set timely reminders in the system that should help you avoid the mistake of not keeping up with the latest information.
Weak Security System
Confidential information should remain so. To avoid your system being compromised, you should be using a payroll processing system with strong cybersecurity.
This has got to be the costliest mistake common to payroll processing. Every information concerning your business that is not available on your website and to your customers, is most likely not public information. Private information about your business should remain private.
Information in payroll systems is as sensitive as can be. There’s almost every piece of information you need to know about a person, and as such strict rules should apply to keeping them safe. A weak security measure means a weak business and a weak business means trouble.
Inaccurate or Delayed Tax Payments
In calculating taxes absolute precaution is required. If you are not a tax accountant you are probably not so proficient in this calculation. Your tax accountant (if your business has one) should learn how to adequately use the system to avoid delay or inaccuracy.
Bear in mind that inaccurate tax payment makes your business a tax defaulter. Your business as a taxpayer has the duty of tax calculations assigned to an accountant. Note that taxes ought to be paid within the required time bracket. The systems are programmed to make the tax payments when due.
The human capital management system does not only process payroll information but can also tell when employees qualify for federal or state tax credits.
In Conclusion
To maintain payroll accuracy and timeliness in the cannabis industry, it is crucial to avoid payroll mistakes. By opting for a third-party payroll provider like Tesseon you can benefit from our expertise and ensure that your payroll is consistently accurate and delivered on time, regardless of any industry-specific challenges. The Cannabis industry is both very young and extremely regulated, it is imperative that businesses stay vigilant and proactive to avoid costly mistakes.
Member Blog: The SAFE Banking Act Is Delayed. Again.
Here’s what cannabis businesses can do to make the most out of the current financial landscape.
Companies in the cannabis industry looking to start a relationship with federal banks and credit cards are going to have to wait a little longer. Despite bipartisan support, the Secure and Fair Enforcement (SAFE) Banking Act has stalled in the Senate; caught in minor disagreements, it has missed the opportunity for a vote during the summer session, leaving cannabis-related companies caught in financial limbo. Unfortunately, this isn’t new news: the first version of this bill was introduced to congress 10 years ago.
Politically, the main selling point is that the bill would boost the safety of the cash-heavy industry: Politicians point to an increased number of break-ins at dispensaries as a justification for allowing federal financial institutions to provide services such as bank accounts and credit card transactions to cannabis companies.
An easy political sell, the public safety angle – spelled out in the acronym SAFE – is usually the first (and only) benefit mentioned in the news. Yes, SAFE would allow dispensaries to shift away from cash transactions by permitting credit card companies to service businesses that produce, manufacture, distribute and sell cannabis, despite the fact it is a schedule 1 controlled substance.
But beyond preventing robberies, the bill would start to level the economic playing field for this growing industry that already faces an extremely high rate of federal taxation, on top of other disadvantages, such as higher transaction and banking costs that lead to pricing pressure – and make it tougher to compete with the illicit market.
Because of cannabis’ schedule 1 status, nationwide banks are not allowed to provide any services whatsoever to cannabis-related businesses. Even though the businesses are legal at the state level, national banks operate under a federal charter that prohibits such relationships – not just with dispensaries, anyone who does business with the cannabis industry – web designers, lawyers, marketers, etc.
(I learned that the hard way when, in the early days of working as a virtual CFO for cannabis companies, I had all of my Bank of America accounts – personal and business – frozen and shut down abruptly.)
Since federal banks cannot provide small business loans or even issue checking or savings accounts, cannabis-related businesses are limited to small banks (i.e. credit unions, state banks). They face higher borrowing costs, and receive lower interest rates, cutting them off from many of the privileges other industries enjoy. Best financial practices – like securing a line of credit or keeping operating cash in an interest-bearing account – may seem out of reach.
For cannabis-related companies that had been impatient to take advantage of this new legislation, the news is frustrating to say the least.
But there are lots of ways retailers can work within the current financial landscape. Here’s what I recommend.
Seek an interest-bearing account – The smaller banks and credit unions servicing the cannabis industry typically do not offer these clients interest-bearing products. However, it is possible to find interest-bearing accounts for operating cash, for example through the fintech company Safe Harbor Financial, with rates starting around 1.5%.
Secure a line of credit – With loans hard to come by, cannabis companies often feel as though they have to access capital from private investors, forcing them to give up equity. But seeking non-dilutive funding is possible – and recommended – once you’ve established your target operating cash balance of 10-30% of annual revenue.
Many cannabis friendly banks will offer unsecured lines of credit at rates of base rate +4% – but generally only in limited license states.
Note: although rates can be competitive in some cases, the amounts tend to be lower. However, since these facilities are often based on an amount per tax ID, multiple entities could each carry their own line of credit and increase total borrowing capacity.
Facilitate compliant debit sales – We know cash-only can drive down retail sales and increase risk of theft or employee mismanagement. With credit cards unavailable, two popular, but non-compliant, solutions have been cashless ATMs and Mastercard and Visa debit cards. While cashless ATMs experienced a crackdown last December, the latest news suggests that Mastercard is also cutting off this popular work-around.
Rather than get caught up in the headlines, adopt compliant pin-based debit cards, through products such as Aeropay. Unlike traditional debit card transactions, customers will have a fee, and they’ll also have to set up a specific app to gain access, but as all other cashless options appear to be erased, the benefits outweigh the costs, especially for regulars.
Just make sure you’ve got a point of sale (POS) system with flexibility in terms of their API (application programming interface) – for example Flowhub – so that you can integrate the pin-based debit card payment method.
Don’t pay monthly banking fees – While most banking institutions charge account fees to cannabis businesses, with a little research you can find some that waive those fees, for example Main Street Bank and Safe Harbor Financial.
Keep deposits safe – Although the dust has settled since the collapse of Silicon Valley Bank, cannabis businesses should still keep an eye on managing their banking risk. Since programs like CDARS and ICS are not available to the industry, we recommend cannabis operators keep deposits at multiple banks to keep the highest possible FDIC insured balance.
Despite these financial obstacles and policy roadblocks, the cannabis industry continues to grow, year after year. Accessible banking products are out there – and as we wait for more federal legislative progress, it can be well worth the investment to do a little research to find out which ones best meet your businesses’ needs.
Member Blog: 5 Types of Business Insurance You Should Consider
As the cannabis industry continues to rapidly expand and evolve, entrepreneurs need to be proactive in safeguarding their businesses from potential risks. Insurance is crucial for any business, and the cannabis sector is no exception. In this article, we will explore five important types of business insurance specifically tailored to the needs of cannabis entrepreneurs. By understanding these essential policies, cannabis industry professionals can make informed decisions to protect their investments and future-proof their ventures.
General Liability Insurance
General liability insurance covers the cost of any injury or damage caused by your business. This includes injuries on your premises and injuries to someone while using your products or services. It also covers you if someone is injured while on your property, even if they’re not part of an organized event or program (like a birthday party). General liability insurance will also cover the cost of any lawsuits filed against you for negligence or breach of contract arising out of the above scenarios.
Professional Liability Insurance (Also Known As Errors And Omissions)
Professional liability insurance, also known as errors and omissions insurance, protects you from lawsuits if a client feels you have made an error in your work. This can be anything from a client claiming that you didn’t perform according to the contract terms or did not fulfill their expectations.
This coverage differs from general liability protection in that it only covers claims against professional services like accounting or legal services. If you own a business where your products or services could physically injure customers, you also need general liability coverage (more on this later).
The good news is that most businesses need both types of policies: professional liability for the expertise required for running their business and general liability for protecting themselves against bodily injury incurred by customers using their products/services.
Business Interruption Insurance
A business interruption policy provides coverage for losses that result from the sudden, unforeseen loss of use or operation of your business. For example, if you’re forced to close your doors because a fire destroyed your building, this policy will pay back some of the revenue you lost during that period. Business interruption insurance can be purchased as part of a multi-line or a stand-alone policy.
Workers’ Compensation
The next type of insurance to consider is workers’ compensation insurance. This form of insurance covers the cost of medical expenses and lost wages for an employee who has been injured on the job. In all states, workers’ compensation policies are required by law, but you may want to add additional coverage for your business if there is a high risk of injury among your employees. Your premiums will be higher if you have a larger number of workers or more dangerous jobs than others in your area, so it makes sense to review this kind of coverage before purchasing it.
Employment Practices Liability (EPL) Insurance
Employment Practices Liability (EPL) insurance can be a lifesaver for small businesses, especially when there are multiple employees.
EPL insurance protects your business from sexual harassment, discrimination, and wrongful termination claims. It also provides coverage for defending these types of claims against you.
If you’re doing business in certain industries, EPL policies are often required by law or rely on government contracts to run your business. A few examples include healthcare providers, educational institutions, restaurants, and hotels—though it varies by state, so check with your insurance agent before purchasing a policy.
Conclusion
The bottom line is that you should consider your business insurance needs carefully and ensure adequate coverage. If you’re unsure about what type of insurance to get or how much coverage is enough for your business, please speak with an agent or broker who can help guide you through these decisions.
With recreational marijuana legalized in 23 states, Washington D.C. and Guam, the public continues to broadly favor legalization for medical and recreational purposes. Why then, is it still a challenge for the cannabis industry to access financial services? The short answer: cannabis banking is risky for financial institutions (FIs), and bankers are committed to avoiding unnecessary risk. Historically, FIs have worked to keep funds associated with illegal activity out of their banks and credit unions, so FIs are sensitive to conflicting state and federal cannabis laws. For example, many FIs are regulated by federal agencies, but marijuana is a Schedule I controlled substance.
Navigating the Challenges
However, there are many banks and credit unions that have taken this risk for a variety of reasons, including creating new sources of income, a desire to serve the unbanked in their communities, and supporting the social equity initiatives in the cannabis industry. These FIs are usually discreet about their cannabis banking programs, and it’s often hard to identify them through your typical approach: prowling websites, Google searches or even trade shows (although this has improved over the past 12 to 18 months).
Fortunately, the best approach is also a well-trusted option: word of mouth. Contact lawyers, accountants and bookkeepers in your area. If they represent or work with other local marijuana related businesses (MRBs), they may know who they are banking with or know someone who does. You should also consider contacting the FIs directly, even if you don’t know if they are working with MRBs. You might be surprised to find that they do, and if they don’t, they might redirect you to another FI in the area. Finally, organizations like the PBC Conference team, provide resources to aid your search, including a Cannabis Banking Directory published annually.
Focus your search on credit unions, community banks, and regional banks. We are entering a new phase of cannabis banking with some FIs offering more than just a place to park your cash. A growing number now offer loans, payroll services, business insurance, etc., so take time to see what’s available, compare multiple FIs’ programs, and find the best match for your cannabis-related business’ (CRB) needs.
Be Prepared
Every action taken by an FI, regardless of their location or asset size, is closely scrutinized by state and federal banking regulators, and law enforcement agencies. They want to make sure that banks and credit unions are only working with legitimate and legal state CRBs. Therefore, you can expect an FI to require a combination of the following:
Driver’s license or other acceptable state-issued identification for all account holders
Information on all beneficial owners of the company, not just those who own a percentage of the company above a certain percentage threshold (such as 20%)
Tax returns for the previous year for both the company and the beneficial owners
Financial information such as profit and loss accounts and capitalization tables
A copy of any required state licenses
Operational data such as projected annual sales and number of patients/customers
Corporate formation documents such as articles of incorporation and business plans
Sales transaction data (store reports or invoices) for the past thirty days
Behind the scenes of cannabis banking, FIs must do a lot to ensure that they are onboarding only legitimate CRBs; from collecting and analyzing market transactions to conducting reporting. This means that FIs often have additional staff to fulfill their compliance duties and they invest in software to automate some of their monitoring. FIs invest heavily in banking cannabis and account fees help offset those expenses. This means you can expect to pay account setup fees and monthly account maintenance fees to help cover these costs. Prices have come down in recent years. The days of paying $5,000 per month for an easy deposit account are long gone, but the fees will remain high as long as a lot of oversight and reporting falls on FIs.
Embrace the Journey
FIs are far savvier about detecting MRB activity among their existing customer/member accounts. At this point, it’s not a question of “if” your FI will find out you’re an MRB, but when. Few things are more disruptive to a business than getting a letter from your FI informing you that your account will be closed in thirty days. Don’t put yourself in that position. Additionally, you may be missing out on vital financial and business services by staying “under the radar” and not having a transparent relationship with a bank or credit union. Start looking for a cannabis-friendly bank or credit union today!
The cannabis industry has seen success and achievement in recent years. However, with this success comes a challenge: counterfeiting. Counterfeit cannabis products pose serious risks to consumers and can damage the reputation of legitimate businesses. To preserve authenticity and protect consumer safety, solid anti-counterfeiting measures can be implemented. One crucial aspect of anti-counterfeiting efforts is using packaging solutions that are both secure and reliable. Let’s take a closer look at the types of counterfeiting and the packaging options available to protect brands and consumers.
What is Counterfeiting?
There are two main types of counterfeiting that we’ll focus on:
Packaging Impersonation: Occurs when fraudsters recreate the packaging of popular and trusted brands. The aim is to deceive consumers into believing they are purchasing authentic products from a brand. Counterfeit packaging can closely mimic the design, colors, and labeling of genuine products, making it difficult for consumers to differentiate between authentic and counterfeit items. This poses a risk to a brand’s reputation if counterfeit products are being sold under their name because these fake products usually do not meet a brand’s standards for safety and quality.
Product Tampering: Product tampering involves attempts to alter, manipulate, contaminate, or compromise cannabis products. This poses significant health and safety risks to consumers, especially if harmful contaminants are introduced or if the potency of the product is affected.
Anti-Counterfeiting Options
To combat packaging impersonation, there are a myriad of solutions available. Most solutions aim at making packaging replication difficult. Using holograms on packaging is one option that will increase the difficulty fraudsters will face when trying to duplicate packaging accurately. Holograms can also incorporate additional security features like microtext and unique serial numbers. This further increases the complexity and uniqueness of the package. The complexity, specialized equipment, and materials required to create convincing holograms may deter counterfeiters from even trying to replicate that specific package, as it increases the cost.
Additionally, color changing inks, specifically tamper-indicating inks, can provide a visible indication of tampering. If someone attempts to move or reposition a label, the tamper-indicating ink is triggered and will display a different color indicating that the product may not be valid. Another type of color changing ink technology is photochromic inks. This color changing ink technology can act as an invisible layer of protection. They are only visible under specific lighting conditions and fraudsters may miss adding these to counterfeit packaging. Lastly, digital watermarking is a great option to combat packaging impersonation. These are not visible to the naked eye, but are embedded within your packaging design, for example in your logo. When these watermarks are scanned with specialized software, devices or cell phones, it can allow for verification of authenticity. Not only do digital watermarks help with authenticity, but can add customer interaction as well. When a customer scans the watermark with their smartphone, they can be taken to the brand’s website, a special landing page, and more. To take the level of protection even further, with digital printing it is possible to put a different code in each package which creates unique IDs for one product. These watermarks can even contain important information such as batch numbers, production dates, and more to enable product tracing.
To combat product tampering, a simple solution is using tamper evident bands on containers. Tamper-evident bands fit snugly around the closure of a container and are applied when the product is sealed. The only way the product can be opened is if the band is removed. Tamper evident bands provide visual evidence of tampering to the consumers and also help prevent the container from being refilled and sold. Similarly, tear notches on flexible packaging provide the same benefit that temper bands do. These are small indentations or perforated areas on flexible packaging that provide a visual indicator to consumers if a product has been opened. Both tamper bands and tear notches instill confidence in consumers by ensuring that the product meets brand’s standards for quality and safety. Lastly, using a tamper-evident seal which incorporates color-changing inks to indicate unauthorized access to a package. When the seal is intact, it will remain the original color, however if someone attempts to peel off or break the seal, the ink changes color providing evidence of potential tampering. This technology helps to safeguard products during storage, transportation, and distribution, providing assurance to consumers and protecting against counterfeit or tampered goods.
Best Practices and Conclusion
In addition to implementing the anti-counterfeiting options above, brands in the cannabis industry should consider adjusting their labels and packaging designs to increase the difficulty for replication. Furthermore, educating consumers about the key elements to observe on a brand’s package or label can enable them to detect subtle indications of tampering. By protecting both the packaging and the product, the cannabis industry can preserve its reputation and ensure the success of legitimate businesses.
Member Blog: Safeguarding Cannabis Businesses – Managing Product Liability and Ensuring Consumer Safety
The rapidly expanding cannabis industry presents unique challenges when it comes to managing product liability. As the sector continues to grow, businesses must prioritize quality control, labeling requirements, and consumer safety to protect their reputation and financial well-being. In this article, I will explore the various risks associated with product liability in the cannabis industry and discuss risk transfer strategies to safeguard businesses from claims related to cannabis products. One of the largest misconceptions I hear is that if a client is not making the product, they do not need product liability. Unfortunately, the reality in the industry is that in a product allegation, everyone through the entire supply chain could be named in a suit.
Quality Control and Labeling Requirements:
One of the key challenges in the cannabis industry is maintaining consistent product quality and ensuring accurate labeling. Product liability claims can arise if a consumer experiences adverse effects due to contaminated or mislabeled products. To mitigate these risks, cannabis businesses must implement robust quality control measures specific to what part of the supply chain.
From cultivation to manufacturing and distribution, every stakeholder should prioritize quality assurance practices. This includes regular testing for potency, contaminants, and pesticides. By adhering to rigorous standards, businesses can minimize the chances of their products causing harm to consumers and reduce the likelihood of product liability claims.
Accurate and compliant labeling plays a critical role in managing product liability risks. It’s vital for cannabis businesses to stay informed about the specific labeling requirements in their market, as laws and regulations vary across jurisdictions. Take California, for instance, where non-manufactured products have their own set of requirements, distinct from those for manufactured products. Whether it’s raw flower or gummies, each product category has its own labeling specifications.
Sadly, there have been instances where products were packaged to attract children or imitate popular snack brands. These cases highlight the deceptive packaging that misleads consumers and targets underage individuals. By ensuring proper labeling, businesses can offer transparency to consumers, building trust in their brand. Furthermore, accurate labeling of THC content is crucial to avoid potential product liability and advertising claims. By providing clear and precise information about THC levels, businesses can protect themselves while also meeting consumer expectations.
Consumer Safety and Education:
Cannabis businesses must prioritize consumer safety by providing clear instructions for product usage and appropriate warnings, especially for edibles and other products with specific dosage instructions. Consumers should be informed about potential risks, possible side effects, and any known allergens present in the product. Accessible information to consumers can help reduce the likelihood of product misuse and associated liability claims.
Insurance Strategies for Product Liability:
Product liability insurance is a critical component of risk management for cannabis businesses. The cost of insurance premiums is typically based on gross sales, meaning that the more products a company sells, the higher the associated risk. However, it is important to note that not all insurance policies cover product liability in the cannabis industry. Therefore, businesses should work with specialized brokers who understand the unique risks and challenges in this sector.
In addition to product liability insurance, implementing further risk transfer processes can play a significant role in reducing the likelihood of being involved in a lawsuit. Businesses should establish clear contracts and agreements between cultivators, manufacturers, and distributors, outlining each party’s responsibilities and liabilities. These agreements help allocate risks appropriately and provide a legal framework for dispute resolution.
Overall, managing product liability in the cannabis industry requires a proactive and comprehensive approach. By prioritizing quality control, adhering to labeling requirements, and ensuring consumer safety, businesses can minimize the risks associated with all aspects of the supply chain when it comes to product liability. Additionally, securing appropriate insurance coverage and implementing additional risk transfer processes can provide further protection and peace of mind. As the industry evolves, staying informed and proactive in risk management will be key to long-term success and sustainability in the cannabis market.
For more information, please reach out toValerie Taylor, Vice President, Liberty Company Insurance Brokers.
Member Blog: The Drawbacks of Doing Your Own Payroll
The cannabis industry is unique in that there are many issues to consider when it comes to payroll. Doing payroll in-house can prove to be a complex endeavor and can have many drawbacks along the way. For instance, it can be difficult to keep up with ever-changing laws and regulations relating to payroll taxes, safety net contributions, and labor law compliance. Additionally, in-house payroll requires comprehensive knowledge to compute withholdings and deductions from employee wages, which can prove to be challenging.
Using a third-party payroll provider can help to improve accuracy and ease the burden of managing employee payroll. Third-party payroll providers can handle all the complexities involved in payroll, such as withholdings, benefit deductions, and payroll tax filings, freeing up valuable time and resources. Furthermore, a third-party payroll provider will be securely monitoring and tracking payroll changes, ensuring compliance with the latest payroll regulations.
In general, doing payroll in-house can be a complex endeavor that requires specialized knowledge and can be a resource-consuming task, but in a heavily regulated industry like cannabis this is especially true. For these reasons, cannabis businesses who switch to a third-party payroll provider often find the benefits far outweigh any obstacles.
Business owners have their minds set on ensuring the growth and stability of their businesses, figuring out modes to cut down costs along the line. Particularly, budding businesses in a bid to satisfy this widespread phenomenon, decide on DIY payroll – choosing to oversee the bookkeeping and accounting arm of their businesses. The common misconception is that payroll outsourcing options constitute a financial burden, contrariwise, the costs incurred from consistent errors (as is always the case) sum up to impact much more extensive financial repercussions on the company.
It is noteworthy that the convincing nature of DIY payroll also bears characteristic flaws which could pose serious threats to your business enterprise. Details on the drawbacks of doing your payroll are highlighted in this article.
Extreme Dependency
Seeing that you and/or another member of your workforce is solely charged with the responsibility in addition to other work-related assignments, chances are that your company finances will take a nosedive if you or the designated other is unavailable for any reason. This isn’t the same if you outsource, as payroll software and service providers are unfazed by such challenges.
Reduced Productivity
Settling financial statements and record keeping are time-consuming processes. Therefore, taking this up yourself would suggest that precious time and labor that could be spent on other vital aspects of the business will be diverted, influencing the work rate and eventual results.
In addition, payroll requires rapt attention to detail, precision, and patience. There is increased stress and the resultant frustration that could result could negatively impact productivity.
Heightened Susceptibility to Errors
Payroll is a complex system of procedures, requiring well-trained and skillful personnel. Experienced service providers are prone to errors and sometimes make mistakes, the chances, therefore, are that if you handle it yourself, you will make grave errors.
Miscalculating Profits
Inaccurate bookkeeping can lead to miscalculation of profit. Unpaid invoices would remain unnoticed, and the establishment suffers losses.
Missing Important Deadlines
The workload makes missing deadlines a high possibility. Poor handling of documents and vital information can result in missing payment dates, ignoring tax information and forgetting payment bonuses and overtime, to mention a few. This could result in noncompliance with government rules and your business might spend a large chunk satisfying fees and fines.
Cash Flow Problems
With inaccurate bookkeeping, there is no adequate knowledge of cash inflow and outflow. This common DIY payroll challenge could lead to payroll issues in the long run and set your business up for a downturn.
Apprehension by Regulatory Agencies
With DIY payroll, you may have inaccurate books, payment issues, consistent complaints, and noncompliance with state and federal laws. This would ignite the swift actions of government agencies like the Internal Revenue Service (IRS) and your business may suffer grave repercussions.
Indeed, the complications accompanying DIY payroll may outweigh the advantages proposed, hence the need to consider helpful payroll services to ease the burden and help your business focus.
Having an effective payroll system is crucial for Human Capital Management, an important ingredient for business growth and advancement.
Member Blog: Transportation Woes – The Unique Risks Cannabis Businesses Face and the Need for Specialized Insurance
In recent years, the cannabis industry has continued to grow with the legalization movement gaining momentum across the globe. As the market expands, so do the unique risks that cannabis businesses face, particularly when it comes to transportation. From theft and accidents to regulatory compliance, navigating the road to success in the cannabis industry requires adequate insurance coverage. In this blog post, I will explore the specific risks cannabis businesses encounter during transportation and the increasing importance of insurance products tailored to these challenges.
The Rising Threat of Theft
Protecting your valuable cargo from theft is a constant concern for cannabis businesses, especially during transportation. The high value of cannabis products makes them an attractive target for criminals. With high value products and cash amounts involved, the consequences can be devastating. That’s why it’s crucial for cannabis businesses to invest in insurance policies that specifically address theft risks during transportation. These policies can provide coverage for stolen goods, ensuring that businesses can recover from such losses and continue to thrive.
On the Road
Whether a retail delivery or wholesale distributor, transporting cannabis comes with its own set of challenges, particularly when it comes to employee safety, accidents and liability. Cannabis businesses must comply with strict regulations regarding transportation, including proper labeling, packaging, storing, tracking and secure transport methods. Additionally, accidents involving cannabis delivery vehicles can result in property damage, bodily injury, or even fatalities. Insurance products tailored to cannabis transportation risks can provide coverage for these eventualities, protecting businesses from costly lawsuits and providing peace of mind.
Staying Compliant
Navigating regulatory compliance with ever-changing regulations is a top priority and can be a challenge for any cannabis business. When it comes to transportation, the rules can be even more complex. Each jurisdiction has its own set of regulations governing cannabis transportation, such as licensing requirements, transport manifest requirements, and restrictions on the quantity of cannabis allowed per shipment. Failure to comply with these regulations can lead to significant penalties or even the suspension or loss of a cannabis license. Insurance products designed for the cannabis industry can help businesses stay compliant by providing coverage for regulatory fines and legal expenses.
Tailored Insurance
Meeting the unique needs of the cannabis industry and recognizing the unique risks faced by cannabis businesses, insurance providers have developed specialized products to address these challenges. Cannabis transport insurance policies offer elements of risk transfer strategies by providing comprehensive coverages, including theft, auto damage, liability and employee injury, while simultaneously meeting regulatory compliance issues. These tailored insurance solutions are essential for cannabis businesses, providing financial protection and ensuring business continuity in the face of inherent risk.
In general, the transportation of cannabis presents unique risks for businesses operating in the industry. From the constant threat of theft to accidents and regulatory compliance challenges, cannabis businesses must be prepared to face these risks head-on. Insurance products tailored to the specific needs of the cannabis industry offer crucial protection, allowing businesses to navigate the road to success with confidence. Investing in this insurance is not just a wise business decision — it is an essential step towards safeguarding the future of your cannabis business.
Committee Blog: Defining Legal Hemp – It Isn’t Always Simple Math
If you are a cannabis-related business, and are looking to accept credit cards, it is only possible to do so if you are selling a product that is defined as legal hemp by the 2018 Farm Bill.
The 2018 Farm Bill provides that:
“The term ‘hemp’ means the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.”
For the most part, it’s pretty cut-and-dry. Marijuana is a schedule 1 drug. Hemp is not. If your product has less than .3% Delta-9 on a dry weight basis, it’s not marijuana, it’s hemp. And since it’s hemp, it’s federally legal. And since it’s federally legal, it can be purchased with checks, credit cards, or debit cards. Hemp products are, reductively, as incendiary as a stick of butter.
Of course, there is the law and there is how acquiring banks—banks that offer merchant accounts—interpret the law. Across the U.S., there are hundreds of acquiring banks. Of those, only six or seven offer merchant accounts to hemp businesses.
That’s it, plus payment service provider Square.
The immediate problem for the few acquiring banks that have, laudably, said, “Yes,” to hemp is, “how do we distinguish products that are .3% Delta-9 or less (and therefore, yawningly legal) from those that are over .3% Delta-9 (and therefore, illegal as angel dust)?”
Enter the Certificate of Analysis, or COA, or lab report. While there is nothing in the law stating that COAs are required to prove that a product is within the federally legal limit, their role is sacrosanct during the boarding process. For every hemp-derived product, there must be a corresponding COA proving that the product being sold is hemp, and not marijuana.
Fortunately, there are labs across the nation. The U.S. Department of Agriculture website lists 85, as of May 2023. Manufacturers and businesses ship their samples to these labs. The labs run their tests and the COAs are issued.
Simple, right?
Not really.
There are no standards in place for these reports. No templates. Every laboratory’s COAs—while substantively providing the same information—look a little different. Furthermore, most bankers haven’t seen a lab report since high school chemistry, and you’ve got a recipe for confusion or misunderstanding (frequently both).
This COA, when it was initially presented to the bank, was rejected. To the underwriter, it was an open and shut case.
When the bank opened its door to offering acquiring to hemp businesses, its policy was to reject anything with greater than .3% Delta-9 by weight.
The top of this COA showed an instance of Delta 9 that read .189%. That passed muster, certainly. However, when he delved further into the analyte detail, he noted additional Delta-9 figures in excess of the .3% limit:
10.368 in the mg/unit cell
1.892 in the mg/g cell
It was not clear to the bank’s underwriter which of the two—per-unit or per-gram—corresponded with the by-weight percentage he was to be mindful of, but both were certainly over the .3% limit.
So, open and shut case: DECLINED
The salesperson that brought the merchant to this bank was surprised by the rejection. He hadn’t looked at the COAs very closely, but it seemed unlikely that this merchant had been selling products on her website that were in excess of .3% Delta-9.
Why? Because if the merchant had been selling products on its website in excess of .3% Delta-9, it would have been engaging in egregious felony drug trafficking. The salesperson doubted that was the case.
The salesperson did something he didn’t normally do: he took out his calculator.
He wanted to know why it read .189% Delta 9 at the top, but 10.368 in the analyte table. He noted the unit size at the bottom of the page was a gummy weighing 5.480g.
For the sake of simplicity, he multiplied that by 1000 to convert it to milligrams. That made it 5480 mg
Then he entered the onerous 10.368mg from the mg/unit figure in the analyte table and divided it by 5480mg. The resulting calculation netted the following total: .0018919.
Next, he converted it to a percent, and found that the result was .189%, which matched the figure at the top of the COA, exactly.
The next day, the salesperson presented the COA to the bank, with the markings and The Equation just as shown here.
It was an open and shut case: ACCEPTED
This situation is an example of why banks and credit unions unknowingly reject compliant hemp businesses from merchant processing solutions. As stated, a simple mathematical calculation was the difference between being accepted or rejected for necessary merchant processing services. Without proper merchant servicing not only are cannabis businesses’ profitability affected because they can only take cash; cash is also not as traceable or auditable as electronic transactions.
In general, businesses providing services to the cannabis industry are often challenged with disentangling legal risks with the benefits of their necessary services providing more transparency. With enhanced knowledge of the cannabis industry and its parameters, the cannabis industry will recognize a greater participation by all businesses necessary for the life of the industry thereby enhancing cannabis businesses’ likelihood to succeed but also enhancing the legitimacy and regulation of the industry.
Member Blog: Pre-Roll Market Industry Trends and Growth Potential
Having the ability to identify trends in the cannabis industry is vital for producers to build a successful brand, and the biggest trend in ther cannabis industry right now is pre-rolls. Growing at 12% YoY in the US and 38% YoY in Canada, pre-rolls are the fastest growing cannabis product in the world of legal cannabis, and it’s not close.
This trend could be chalked up to a sudden rise in popularity and as something that will decline once another hot trend appears; however, we believe that the rise of pre-rolls is more than just a flash in the pan. In fact, after looking over the sales data we received from Headset, we believe that pre-rolls will not only continue their growth, but they will become the bestselling cannabis products by 2030.
Here’s why!
Prices Fall, Sales Rise, Both Stabilize
Over the past few years, the wholesale price of flower has dropped dramatically in mature markets, and cheaper cannabis costs have allowed producers to source higher quality flower for their pre-rolls. Combined with the advances in pre-roll making machinery, quality pre-rolls are now able to be sold at a lower retail price, which has driven strong growth for the category.
As you can see from the graph, pre-roll sales have steadily increased as prices have fallen, but the last two years have seen both sales and prices begin to stabilize. The pre-roll segment that has seen the most growth during this time is infused pre-rolls. Customers love high THC percentages, and producers are happy to finally be able to offer it to them in an affordable pre-roll form.
Pre-Rolls have the Least Amount of Price Compression
It’s not just pre-roll prices that are falling. Prices are down across the board, but even though prices for all cannabis products declines over time, pre-rolls are showing the least amount of price compression. In other words, if you are in the business of selling cannabis, and you are worried about declining margins, pre-rolls are a category you should be expanding into to maintain and boost profitability.
You can also see from the graph that Canada has actually seen the average price of a pre-roll increase, but there is nuance to this data. This does not mean that pre-rolls are getting more expensive for Canadian consumers. This data shows just how popular infused pre-rolls are becoming. They are becoming so popular that people are choosing to buy them over regular, more affordable pre-rolls, and that change in buying habits has increased the average sales price for pre-rolls.
Pre-Roll Multi-Packs
Another interesting trend we see in the sales data is that pre-roll multi-packs have become extremely popular. In 2018, multi-packs of pre-rolls only made up 27.7% of the market in Oregon, Washington, and Colorado. By 2023, multi-packs make up 47.62% of the market—representing a growth of about 20% over 5 years. Also, Since 2021, we have seen an almost 400% growth in multi-packs that have a volume of 2 or 5 grams as well as steady growth across most other sizes.
Buying pre-rolls by the pack is a lot more convenient for consumers. It means not making a special trip to the dispensary every time a pre-roll is wanted. The rise in their popularity is a sign that consumers are investing in pre-rolls as a staple in their cannabis routine. Because they know they will continue to enjoy pre-rolls, they buy multiples at a time for convenience, and it’s this kind of product loyalty that moves a product from a trend into something more.
Wallet Share by Age
Another interesting thing about pre-rolls is that, when it comes to wallet share, they are the most consistent product segment across all age groups. Other products show a significant increase or decrease in popularity with each new generation; however, pre-rolls steadily hover between 12.8% and 14.5% in each group and even show a slight increase with the younger generations.
It’s also important to note the decline of flower with younger generations. Why this is significant is because, at their core, pre-rolls are a flower product, and they are not following the same decline in sales. They distinguish themselves from loose flower by providing consumers a way to enjoy their flower without extra paraphernalia. In this way, we think pre-rolls could start to eat into the flower market, as they better meet the consumption needs of flower customers.
Pre-Roll Attachment Rates
Another big reason why pre-rolls will remain a dominant product segment in the future is that they are the perfect add-on item at the point of sale. The data shows that, when a person walks into a dispensary, they will add-on a pre-roll 15.5% to 23.3% of the time. In fact, in all product segments, pre-rolls either have the highest attachment rate or are within a single percentage point of the leader.
In other words, no matter what a customer is interested in purchasing, it doesn’t take a lot of convincing to get them to add on a pre-roll. They’re reasonably priced, made with quality materials, and incredibly convenient. Whether they want to consume it right away or want to save it for later, pre-rolls have become something flower lovers like to have on-hand for whenever, and that makes it more than a trend. That makes it a staple.
Convenience Impacting Pre-Roll Purchasing
Cannabis is starting to make its way into mainstream culture. You can’t buy it at your local grocery store, like you can buy wine or cigarettes, but it’s out there. The legalization of cannabis has opened the door to innovation in the cannabis industry, and those innovations are starting to have an impact on everything—especially consumption.
Flower needs paraphernalia to be consumed, and, if you are just trying to enjoy cannabis, sometimes you just don’t want the hassle. Pre-Rolls are unique in that they offer the consumer flower as well as a way to consume it, so it’s not too much a leap to think that pre-roll could keep expanding and start eating into flower sales.
In this way, cannabis can be compared to tobacco. Even though people can buy loose tobacco and roll their own cigarettes or use a pipe, most people are buying pre-rolled products. Even though the tobacco quality, smoking experience, and price point can be better when you buy loose tobacco, most people are choosing the convenient option. It shouldn’t surprise us that cannabis starting to fall into this pattern as the market matures.
Final Thoughts on The Pre-Roll Market
The data lets us know that pre-rolls are doing amazing things when it comes to sales, but it is also giving us hints as to trends in consumption methods. Pre-rolls are a flower product, and it’s clear from the data that flower consumers are buying into the convenience of pre-rolls. This is more than just a trend, but a shift in the preferences around flower consumption. Because of this shift, we can see pre-rolls taking on a more prominent role as the cannabis industry continues its expansion.
For a more in-depth look at the pre-roll industry, be sure to check out the State of the Pre-Roll White Paper, and, if you have any questions, feel free to reach out to the Pre-Roll Experts at Custom Cones USA.
Committee Blog: Optimizing the Cannabis Dispensary Experience – An In-depth Look at Terpenes, Cannabinoids, and THC for Superior Customer Service
The cannabis industry has experienced rapid growth in recent years, with more and more states legalizing its use for medical and recreational purposes. As a result, cannabis dispensaries are becoming increasingly popular, with many people visiting them for the first time. For dispensary owners, managers, and budtenders, it’s essential to provide a positive customer experience to build brand loyalty and attract repeat business. This blog will discuss the importance of focusing on the customer experience at cannabis dispensaries and how understanding terpenes, cannabinoids, and THC percentages can improve the overall experience for both new and experienced users.
Understanding the Customer Experience
What makes a great customer experience at a cannabis dispensary? A positive experience can be characterized by:
Knowledgeable Staff:
Budtenders and other staff members should be well-trained and able to provide accurate and easily digestible information on various cannabis products, including their effects and appropriate dosages.
Welcoming Atmosphere:
Dispensaries should be clean, well-organized, and aesthetically pleasing, making customers feel comfortable and at ease during their visit.
Product Selection:
A wide variety of high-quality cannabis products should be available to cater to the diverse preferences and needs of customers.
Personalized Recommendations:
Budtenders should be able to make personalized recommendations based on the customer’s preferences, desired effects, and level of experience with cannabis.
Terpenes, Cannabinoids, and THC: Key Components of Cannabis
To provide an exceptional customer experience, it’s essential for dispensary staff to understand the key components of cannabis, including terpenes, cannabinoids, and THC percentages. These components play a significant role in the overall effects of cannabis and can help staff make tailored recommendations for customers.
Terpenes:
Terpenes are aromatic compounds found in many plants, including cannabis. They give each strain its unique aroma and taste, and they can also have therapeutic effects. There are over 100 different terpenes in cannabis, with some of the most common ones being myrcene, limonene, and pinene. Understanding the terpene profile of a specific strain can help staff recommend products based on the desired flavor and aroma, as well as the potential therapeutic benefits.
Cannabinoids:
Cannabinoids are the chemical compounds found in cannabis that interact with the body’s endocannabinoid system, producing various effects. Many Cannabis products advertise “full-spectrum” CBD, meaning that the product not only contains CBD, but can also contain the other cannabinoids as well as terpenes, essential oils, and up to 0.3% THC. There are over 100 different cannabinoids in cannabis, with THC (tetrahydrocannabinol) and CBD (cannabidiol) being the most well-known. THC is responsible for the psychoactive effects of cannabis, while CBD has various therapeutic effects without causing a “high.” Dispensary staff should be familiar with the different cannabinoids and their effects to help customers choose products based on their desired experience.
THC Percentages:
The THC percentage of a cannabis product indicates the concentration of THC, which largely determines the psychoactive effects of the product. Generally, higher THC percentages lead to more potent effects. However, it’s important to note that the overall effects of a cannabis product are influenced by other factors, such as the terpene profile and the presence of other cannabinoids. Dispensary staff should be able to explain the significance of THC percentages and guide customers in selecting products with appropriate potency levels.
Educating Customers and Tailoring Recommendations
Dispensary staff should prioritize educating customers about terpenes, cannabinoids, and THC percentages to help them make informed decisions about their purchases. By understanding these components, customers can better tailor their cannabis experience to their preferences and needs.
For example, a customer looking for a relaxing experience may be interested in a strain high in myrcene, a terpene known for its sedative and relaxing effects. In contrast, someone seeking a more uplifting and energizing experience might prefer a strain with a higher concentration of limonene, which is associated with elevated mood and increased energy. Additionally, customers with little to no experience with cannabis may prefer strains with lower THC percentages to avoid overwhelming psychoactive effects.
When assisting customers, dispensary staff should ask about their preferences, desired effects, and experience level with cannabis. Based on this information, they can recommend strains and products that align with the customer’s goals while considering the terpene profile, cannabinoid content, and THC percentage. This personalized approach can help customers feel more confident in their purchases and lead to a more satisfying experience.
For HR Professionals: Training and Development
To ensure that dispensary staff can effectively educate customers and provide tailored recommendations, it’s crucial for HR professionals to invest in comprehensive training and development programs. Training should cover a wide range of topics, including:
Cannabis Fundamentals:
Staff should have a solid understanding of cannabis basics, such as the differences between indica, sativa, and hybrid strains, and the various forms of cannabis product, methods of ingestion and their varying timing of effects (e.g., flower, edibles, concentrates, tinctures, and topicals, vaping, eating, and drinking).
Terpenes, Cannabinoids, and THC:
As discussed earlier, staff should be well-versed in the role of terpenes, cannabinoids, and THC percentages in determining the effects of cannabis products.
Customer Service Skills:
Staff should be trained in effective communication, active listening, and empathy to better understand and serve their customers.
Compliance and Regulations:
Dispensary staff should be knowledgeable about state and local regulations regarding cannabis sales, as well as safety protocols and best practices for handling cannabis products.
By providing thorough training and development opportunities, HR professionals can ensure that dispensary staff are equipped to deliver an exceptional customer experience.
The Role of Technology in Enhancing the Customer Experience
As the cannabis industry continues to grow and evolve, technology is playing an increasingly important role in enhancing the customer experience at dispensaries. In this section, we’ll explore several innovative technologies and tools that can help dispensary owners, managers, and staff provide an even better experience for their customers.
Point-of-Sale (POS) Systems:
Modern POS systems designed specifically for cannabis dispensaries can streamline the sales process and improve the customer experience. These systems can track customer preferences, manage inventory, calculate taxes, and ensure compliance with state and local regulations. By investing in a robust POS system, dispensaries can provide a more efficient and personalized service for their customers.
Digital Menus:
Instead of relying on printed menus that can quickly become outdated, dispensaries can use digital menus to display their product offerings. These menus can be easily updated to reflect current inventory, and they can also include detailed information about each product, such as terpene profiles, cannabinoid content, and THC percentages. By providing customers with easy access to this information, digital menus can help them make more informed decisions about their purchases.
Online Resources and Mobile Apps:
Dispensaries can enhance the customer experience by offering online resources and mobile apps that provide valuable information and tools related to cannabis consumption. For example, they can develop educational content about terpenes, cannabinoids, and THC percentages or create interactive tools that help customers determine their ideal dosage based on their preferences and experience level. By providing customers with access to these resources, dispensaries can support them in their cannabis journey and help them make more informed decisions.
Customer Engagement and Community Building
Another crucial aspect of providing an exceptional customer experience at cannabis dispensaries is fostering a sense of community and engagement among customers.
Events:
Hosting events such as product launches, tastings, and guest speaker sessions can provide customers with an opportunity to learn more about cannabis, sample new products, and connect with other like-minded individuals. These events can also help establish a dispensary as a trusted source of information and a hub for the local cannabis community.
Educational Workshops:
Dispensaries can offer workshops that focus on various aspects of cannabis, such as understanding terpenes, cannabinoids, and THC percentages, cooking with cannabis, or cultivating cannabis at home. These workshops can help customers gain a deeper understanding of cannabis and its various uses, ultimately improving their overall experience.
Social Media:
Actively engaging with customers on social media platforms can help dispensaries stay connected with their audience, provide real-time updates on products and promotions, and gather valuable feedback. Dispensaries can also use social media to share educational content, answer customer questions, and participate in industry-related conversations.
Loyalty Programs:
Dispensaries can implement loyalty programs that reward customers for their repeat business, encouraging them to return and further engage with the dispensary. Loyalty programs can include discounts, exclusive promotions, or early access to new products, and can be an effective way to strengthen the customer-dispensary relationship.
Focusing on the customer experience at cannabis dispensaries is crucial for building brand loyalty, attracting repeat business, and maintaining a competitive edge in the growing cannabis industry. Dispensary owners, managers, and budtenders must prioritize educating customers about terpenes, cannabinoids, and THC percentages to help them make informed decisions and tailor their cannabis experience to their preferences and needs. HR professionals play a key role in ensuring that staff receive comprehensive training and development, enabling them to provide exceptional service and create a positive customer experience. By investing in the customer experience, dispensaries can set themselves apart and thrive in the competitive cannabis market.
Member Blog: What Is New Hire Reporting and Why Is It Critical for Cannabis Companies
Cannabis is amongst the fastest growing industries in America, and it is also one of the most inexperienced. From the individual employee to the entire organization, the lack of commercial and regulatory knowledge can be a real burden for those facing it.
As an employer, one of the most common regulations you are responsible for is the reporting of any new hires to your state, or federal, governing body. Although new hire reporting can become quite recurrent, it is also critical to your business operations.
What is New Hire Reporting?
New Hire reporting is a process by which you, as an employer, report information on newly hired and rehired employees to a designated state agency shortly after the date of hire. As an employer, you play a key role in this important program by reporting all your newly hired employees to your state.
The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996, known as welfare reform, requires all employers to report certain information on their newly hired employees to a designated state agency.
Who is considered a newly hired employee?
The law defines a “newly hired employee” as an employee who has not previously been employed by the employer; or was previously employed by the employer but has been separated from such prior employment and rehired.
Is the reporting process difficult?
The majority of the information you submit is already collected when your employee completes a W4 form. Still, the reporting process is an additional requirement, which may possibly add time and expense to your company’s operations. To ease the process, states are working together with employers, offering them a variety of reporting methods.
New Hire reporting is one of the many services we offer at Tesseon to reduce your burden and help you to stay in compliance.
Does New Hire reporting benefit employers?
A potential benefit to employers is the reduction and prevention of fraudulent unemployment and workers’ compensation payments. Timely receipt of New Hire data allows each state to cross-match this data against its active workers’ compensation and unemployment insurance claimant files to either stop or recover erroneous payments. States have saved millions of dollars of erroneous unemployment insurance payments because of these cross-matches.
What is done with the New Hire information?
States match New Hire reports against their child support records to locate parents, establish a child support order, or enforce an existing order. In addition to matching within a state, states transmit the New Hire reports to the National Directory of New Hires.
State agencies operating employment security (unemployment insurance) and workers’ compensation programs have access to their state New Hire information to detect and prevent erroneous benefit payments.
In addition, each state can conduct matches between its own New Hire database and other state programs to prevent unlawful or erroneous receipt of public assistance, including welfare, food stamps and Medicaid payments.
How is the data safeguarded after it is submitted?
Security and privacy of New Hire data are important issues for all those involved in this nationwide program. Federal law requires all states to establish safeguards for confidential information handled by the state agency.
All state data is transmitted over secure and dedicated lines to the National Directory of New Hire (NDNH). Federal law also requires that the Secretary of Health and Human Services (HHS) establish and implement safeguards to protect the integrity and security of information in the NDNH, and restrict access to and use of the information to authorized persons and for authorized purposes.
Where and how do companies send New Hire information?
New Hire reports should be sent to the State Directory of New Hire in the state where the employee works. Federal law identifies three methods for submitting New Hire information: first class mail, magnetic tapes, or electronically. For employer convenience, states offer additional options such as fax, email, phone, and website transmissions. Your state New Hire contact can provide you with instructions on where and how to send New Hire information.
Federal employers report New Hire data directly to the National Directory of New Hire.
What information must an employer report?
Federal law requires you to collect and report these seven data elements:
Employee’s name
Employee’s address
Social Security number
Date of hire (the date the employee first performs services for pay)
Employer’s name
Employer’s address
Federal Employer Identification number (FEIN)
Some states require additional data, please check your state’s specific reporting requirements.
Are there penalties for failing to report New Hires?
States have the option of imposing civil monetary penalties for noncompliance. Federal law mandates that if a state chooses to impose a penalty on employers for failure to report, the fine may not exceed $25 per newly hired employee. If there is a conspiracy between the employer and employee not to report, that penalty may not exceed $500 per newly hired employee. States may also impose non-monetary civil penalties under state law for noncompliance.
Is New Hire reporting required for independent contractors?
Some states do require the reporting of independent contractors. However, federal law does not require it. Contact the person identified on the State New Hire Reporting Contacts and Program Information matrix for state-specific requirements.
How soon must I submit a report after hiring someone?
Federal law mandates that New Hires be reported within 20 days of the date of hire. However, states are given the option of establishing reporting time frames that may be shorter than 20 days. You must adhere to the reporting time frame of the state to which you report. Be sure to check with your state New Hire contact to learn your state’s requirements.
What form is used to send New Hire reports?
Reports must be made either on a copy of the W4 form or, at your option, an equivalent form developed by you. Some states have developed an alternate form for reporting, but its use is optional.
Options for multistate employers to report new hires?
If you are a multistate employer, you have two reporting options:
Report newly hired employees to the states where they work, or
Select one state where your employees work and report all your new hires to the selected state.
If you choose to report all new employees to one state (option B), you must:
Register with HHS as a multistate employer
Designate the state that you will report
Submit your new hires electronically or by magnetic tape to the state you have chosen, no more than twice a month (12 to 16 days apart)
There are two ways to register as a multistate employer, either online or by downloading and filling out the designated paper form (PDF).
Once you complete the registration as a multistate employer, report employees to the state that you have chosen.
Need advice for your business?
At Tesseon we understand that your organization may need help getting things done. That is why we offer stand-alone services for areas that can be a challenge to any business. With our in-house expertise and award-winning support we can help you handle any business challenge that comes your way.
Member Blog: Building Trust for Your Brand in a Distrustful World
by Gary Paulin, VP of Sales and Client Services at Lightning Labels
“Trust,” “like,” and “respect” are three time-tested criteria for deciding everything from friendships to business relationships. Despite all the trendy buzzwords and expensive technology-driven “customer service” programs that purport to increase sales revenues, most buying decisions revolve around trusting, liking, and respecting the company.
It’s that basic. And that human. Too many companies are trying to supplement—or even supplant—the value of human interaction with the latest shiny technology tools. People still matter, in some ways more than ever before in an increasingly impersonal world. Many consumers crave top-notch customer experiences shaped by people doing right by the customer in every way possible.
Key to success is achieving a balance between human and technology interaction where the two support each other. While technology can be a valuable support system in the relationship-building process, it isn’t the solution in and of itself.
For example, technology that automates perfunctory pieces of the customer journey can free up more human resources for personal interactions. One primary example is a call center where much of the intake process is automated, getting more people more quickly into the queue to talk to someone. (In smaller companies, this truly can mean the difference between employees filling much of their time with routine, non-interactive tasks and actually talking with consumers—where human participation is most valuable.)
Technology itself drives—or drives away—trust, likeability, and respect
A report released by Ernst & Young (EY) notes that the technology itself adds to or detracts from customer engagement. In part, it noted: “This isn’t just a question of choosing the right technologies…It’s crucial that digital innovation protects and nurtures the relationship with the consumer. Three things matter here: trust, respect and value. Can people trust you to use technology responsibly and safely? Do they feel you are using technology to help them, or to take advantage of them? Is the value they get from an innovation fair, considering how much your business benefits?”
The EY report continues, “Consumers remain wary about the impact of new technologies…They can become highly reliant on a tool, while also worrying about its risks to their mental and financial wellbeing. For example, people take the constant connectivity of their mobile devices for granted, yet they increasingly want to turn off alerts and reminders because they find that persistent connectivity overwhelming.”
What are key takeaways for cannabis industry purveyors?
Assess what you’re doing well and not so well in the trust, like, and respect categories. If you receive substantial reviews through credible non-curated platforms such as Google, see what people are saying about customer service, product quality, technology interactions, et al. Ask questions when customers are on-site or on the phone to help assess what they feel is working well and what needs improvement. Get them live and in the moment for more authentic information. If you must follow the online survey trend, use responses as part of the total picture. Make sure it doesn’t take respondents too much time, and ask thoughtful, probing questions that address the areas of trust, likeability, and respect.
Synthesize reviews, discussions, and survey results to chart a course for better outcomes. Companies can be too linear. For example, they examine only survey results and base future enhancements on those findings. Get input from multiple sources, then synthesize findings and feedback to chart a course for improvement. It’s not unlike the job of a good reporter. One source provides information. Then, the reporter attempts to verify with at least a couple other reliable sources before coming to conclusions. This is a case where being a good reporter will lead to better outcomes.
It’s way past time to address the tried-and-true cornerstones of how best to build and maintain solid relationships. And understand that enduring solutions come from multiple sources, with technology playing an appropriate support—not be-all, end-all—role.
VIDEO: The Bright Future Of The Cannabis Industry
The future is bright for the cannabis industry!
Let’s build it together.
Despite the many struggles our industry faces due to federal prohibition, there’s strong optimism for the direction we are going into the future.
Hear more from these NCIA Members about the amazing industry we are building together:
For even more inspiration, download this NCIA Policy Council Report – “The New Politics of Marijuana: A Winning Opportunity For Either Party” – to learn more about the significant voter support for marijuana policy reform and the legal cannabis industry through thoughtful examination of recent public opinion polling and electoral wins.
Plus, check out our event calendar and get your team registered!
Not yet a member of NCIA?
Stay up to date about the rapidly evolving landscape by networking with nearly 2,000 member companies who are part of a movement to build a responsible industry.
Survey: Employee Engagement in the Cannabis Industry
Needle Consultants, LLC, presents the Cannabis Industry Employee Engagement Survey
With thousands of employees working in the cannabis industry, the industry has become a significant employer in the states that have legalized cannabis production, processing, and consumption. Ensuring that the industry is creating a satisfying work environment and a fulfilled workforce is key to attracting and retaining top talent and provides certainty to business planning.
Workers today not only seek this sense of purpose within their places of work, but have also been known to accept less compensation, if fulfilled in other ways, offered “nontraditional” benefits, and/or opportunities to engage in authentic community activities.
Marc Ross, Chief Instigator at Needle Consultants
As the leading cannabis industry organization, NCIA desires to see our member businesses thrive, with tens of thousands of satisfied and fulfilled workers, eager to participate and add their talent and passion to our work. We also seek to be an industry that improves the lives of not only our members’ patients, clients, and customers, but their communities.
“I’m really excited to have this opportunity to do a deep dive into employee engagement as it pertains to the cannabis industry” says Marc Ross, Chief Instigator at Needle Consultants, LLC. “It is my belief that by gathering a baseline of this data and identifying opportunities for improvement, we’ll be able to help create a healthier and more satisfying environment for the industry’s workers, which in turn, will elevate the industry overall.”
· Overall Worker Satisfaction
· Worker Needs and Desires around Benefits
· Worker Desires around Community Engagement opportunities
Who should take this survey?
Employees of direct-to-plant cannabis companies, including cultivation, retail, and processing and manufacturing from MIPs and concentrate companies, with a heavy focus on Colorado-based companies.
The survey is anonymous.
Cannabis companies that self-report participation of over 90% will receive recognition by NCIA in the future report. One lucky participant will even win a complimentary Seed To Sale Show 2018 registration.
How long does it take to complete the survey?
The survey takes approximately 5 to 10 minutes to complete.
How long is the survey open? The survey will be open for collecting anonymous responses between now and December 1, 2017.
We believe the results of this survey will provide immeasurable value as companies within our industry seek to build happy and fulfilling work environments. The results will be analyzed and compiled into a comprehensive report which will be shared with the cannabis industry at large.
