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Taking the Long View – Strategic Facility Design Considerations for the Schedule III Era

In the dynamic landscape of the cannabis industry, regulatory changes can significantly impact how businesses operate and plan for growth. The recent proposal to reschedule cannabis from Schedule I to Schedule III has sparked discussions across the industry, particularly regarding facility design and operational strategies. This blog dives into key insights from the National Cannabis Industry Association’s webinar on “Taking the Long View – Strategic Facility Design Considerations for the Schedule III Era,” highlighting expert advice and practical recommendations for stakeholders navigating these changes.

The webinar, hosted by Brian Gilbert of the NCIA, served as a crucial platform for industry professionals to explore the implications of cannabis rescheduling on facility design and operations. The session focused on four main pillars: understanding tax changes, enhancing operational efficiency, promoting sustainable growth, and implementing practical strategies to navigate regulatory shifts.

Key Takeaways

1. Policy and Tax Implications

The discussion, led by Shawn Cooney of Cloud Farming, Chair of NCIA’s Facilities Design Committee, underscored the potential financial benefits for businesses following cannabis rescheduling (00:03:41). A highlight was the exploration of Section 280E, which could offer substantial tax savings once regulatory changes are implemented. Jeremy Schlicher of Urban Green Design expanded on these insights, offering strategic financial planning advice aimed at leveraging tax incentives to reinvest in facility improvements (00:07:21).

2. Operational Efficiency and Sustainability

Efficiency in energy management emerged as a critical theme throughout the webinar. Experts emphasized the importance of conducting energy audits and adopting efficient lighting and HVAC systems (00:10:18). These measures not only reduce operational costs but also align with sustainability goals crucial for long-term viability in the industry. Practical recommendations tailored to cultivation, manufacturing, and retail sectors were discussed to optimize workflow efficiencies and regulatory compliance (00:15:10).

3. Cultivation Methods and Environmental Considerations

Kim Kannapel of Modern Thermal Design provided invaluable insights into cultivation methods and environmental sustainability. The webinar highlighted the viability of various methods—indoor, greenhouse, and outdoor—each catering to different market segments and regulatory landscapes. The discussion underscored the role of climate and local regulations in shaping cultivation decisions (00:37:28), emphasizing the need for adaptable strategies that prioritize energy efficiency and environmental stewardship.

Speaker Highlights

Shawn Cooney

As Chair of NCIA’s Facility Design Committee, Shawn Cooney brought deep regulatory expertise to the discussion. He emphasized the importance of holistic sustainability practices and compliance with evolving regulatory frameworks. His insights into tax implications and strategic planning resonated with participants seeking clarity on financial strategies post-rescheduling (00:25:32).

Kim Kannapel

Kim Kannapel’s contributions focused on environmental sustainability within cannabis cultivation. Her expertise in optimizing cultivation methods highlighted the interconnectedness of environmental stewardship and operational efficiency. By advocating for adaptive strategies, Kim encouraged businesses to consider long-term environmental impacts when designing and expanding their facilities (00:37:28).

Jeremy Schlicher

A staunch advocate for the innovative triple bottom line approach, Jeremy Schlicher brings a wealth of knowledge to the discussion on strategic facility design in the cannabis industry. He emphasizes the integration of economic prosperity, environmental stewardship, and social responsibility in every aspect of facility planning and operations. Jeremy’s insights into maximizing operational efficiency through sustainable practices, such as energy audits and efficient HVAC systems, underscore his commitment to reducing environmental impact while enhancing business profitability.

Importance of Participating in the Public Comment Period

Participating in the public comment period is crucial for shaping the future regulatory landscape of the cannabis industry. The Department of Justice’s proposal to reschedule cannabis presents a unique opportunity for stakeholders to voice their perspectives and influence policy decisions. NCIA has launched a dedicated tool to streamline this process, making it easier for industry professionals to submit informed comments. Submit your comment here.

Recap of Episode I & II

Episode I: Understanding Section 280E and its Impact on Cannabis Businesses

In Episode I, the focus was on the financial and tax implications of rescheduling cannabis. Section 280E was a major topic, with discussions centered on how the rescheduling could lead to significant tax savings and the importance of strategic financial planning for businesses to maximize these benefits.

Episode II: Cannabis Rescheduling’s Impact on Research and Safety

Episode II delved into the implications of cannabis rescheduling on research and safety protocols. This session emphasized the potential for increased research opportunities and the necessity for businesses to stay ahead of regulatory changes to maintain compliance and ensure product safety.

Looking Ahead: Preview of Episodes 4 & 5

Episode IV: Navigating Insurance and Risk Management in the Schedule III Era

Join us for the fourth episode of NCIA’s multi-part #IndustryEssentials webinar series, “Navigating Insurance and Risk Management in the Schedule III Era,” led by our Risk Management & Insurance Committee. This session delves into the evolving landscape of cannabis insurance and risk management, highlighting the opportunities and challenges presented by the rescheduling of cannabis to Schedule III.

Date: Tuesday, July 9th, 2024
Time: 3:00 PM EST – 4:00 PM ET

Register Now

Episode V: Cannabis Manufacturing in the Schedule III Era

Building on the insights from our first four episodes, join us for the fifth installment of NCIA’s #IndustryEssentials multi-part webinar series. This session, led by our expert Cannabis Manufacturing Committee, will focus on the profound impacts and implications of rescheduling cannabis on the manufacturing sector. As we navigate these unprecedented changes, our panel of industry leaders will provide critical insights and practical guidance to help your business adapt and thrive in this new landscape.

Advancing the Industry Together: NCIA’s Mission in Action

The overarching theme of this series is to equip cannabis industry stakeholders with the knowledge and strategies needed to navigate the complex landscape of regulatory changes. By understanding the financial, operational, and research implications of cannabis rescheduling, businesses can better position themselves for sustainable growth and success. Each episode builds on the previous one, creating a comprehensive resource for industry professionals to stay informed and proactive in their planning and operations.

The webinar “Taking the Long View – Strategic Facility Design Considerations for the Schedule III Era,” offered a comprehensive roadmap for stakeholders navigating regulatory changes in the cannabis industry. By addressing tax implications, promoting operational efficiency, and advocating for sustainable growth practices, the session equipped participants with actionable strategies to thrive amidst evolving regulatory landscapes.

Call to Action

As the industry continues to evolve, staying informed and proactive is crucial for cannabis businesses. Explore NCIA’s resources, including upcoming webinars and educational materials, to deepen your understanding of regulatory changes and strategic facility design considerations. Engage with industry peers and experts to share insights and best practices that drive sustainable growth and operational excellence.

For those not yet members, consider joining the National Cannabis Industry Association (NCIA) to unlock unmatched benefits, resources, and access. Membership provides exclusive opportunities to influence industry standards, gain regulatory insights, and network with industry leaders. Join NCIA today to leverage these benefits and stay ahead in the competitive cannabis market.

Committee Blog: Three Things Your Company Can Do For Sustainability (And Why You Should Care)

Contributors to this article include current and former members of NCIA’s Sustainability Council: lead author Laura Wilkinson Sinton, Shawn Cooney, David Schwartz, Fred Whittlesey, Gabe Cross, Emily Long, and NCIA’s DEI Manager, Mike Lomuto.

“Everyone talks about changing the world. Nobody talks about changing themselves.”  – Leo Tolstoy

Sustainability can be a confusing term for cannabis companies. The reality is, in a still- federally-illicit market, individual businesses taking active steps towards reducing their own environmental impact (no matter how small) is the catalyst for systemic change across the broader industry.  Does sustainable mean to recycle? Does it mean regenerative farming? Compostable packaging? 

It means some – or all – of those things, depending on your industry vertical. It means a collection of all of the seemingly little steps toward a larger collective impact. 

Sustainability is the ability to exist and develop in the current generation without depleting our natural resources for future generations.

Here are our top 3 reasons why you should pay attention and take action.

Your future depends on it.

As the cannabis industry seeks legitimacy with both private and institutional investors, institutional and private investors have made it clear that a robust sustainability plan is mandatory. The Security and Exchange Commission (SEC) will be instituting reporting standards for publicly traded companies, and ESG (Environmental, Social, and Governance) reporting will be required. If you are or will be looking for capital and investors in the near future, you need to start reporting metrics today. If you have to play catch up, it may play out like musical chairs – leaving you with a “nosebleed” seat at the money table, if at all. Another point to consider – the number of women in cannabis has been rapidly declining, so pay attention to your hiring practices and be aggressive on inclusion. Women sit on investor boards and will be looking closely at your leadership gender balance metric when you court them. It’s both environmental AND social statistics they’ll be looking for and inclusion gives you a competitive advantage. The inclusion of minorities and those affected by the “War on Drugs” should be on your roster as well.

Your customers are demanding it.

According to a recent Calivate survey, 79% of cannabis retail customers (the revenue drivers) indicate through their purchases that environmentally conscious brands get their preference. Companies like Wyld, with their forward-looking ESG reporting and social justice activism, demonstrate the power of their market positioning. It has become a major competitive advantage for Wyld. You can make it yours, too. The ICR-Spectacle 2021 showed customers prefer to buy their weed from women (46%) and from people of color and veteran-owned businesses (44%). Sustainability and ESG reporting of these types of metrics go hand in hand. It will bring different perspectives (and customer acquisition viewpoints) to your strategy. It’s not just about the cheapest price point or highest THC anymore. And all indicators show that ESG reporting will play an even more crucial role in the future, with both investor and customer loyalty,

It’s actually easier than you think.

Depending on your vertical, you can easily start measuring and setting benchmarks today. Most of these metrics you already measure, but not for sustainability reporting. Efforts to improve them will impress investors with both prudent money-saving strategies and social indicators. Here are a few easy ones to start quarterly or monthly, depending on your company.

Water. Indoor and outdoor grows and most manufacturers already measure water usage. Establish a benchmark of where you currently are and measure quarterly for seasonal changes. Then you can develop strategies to reduce usage, including, as simply as installing low flush toilets and watering less volume but more frequently throughout the day to reduce wasted runoff 

Electricity/Power. Everyone, regardless of vertical, pays a power bill. Establishing a quarterly benchmark and implementing reduction strategies (including time of day use and working with local utilities) will save both money and power usage e.g. lower wattage LEDs. Avoid bandaid approaches to environmental controls such as installing more and more systems providing a single function, like additional large dehumidification units.  You don’t want to be using diesel generators for your indoor cultivation facility in a major Port of a major California city on the water adjacent to a low-income population area like these guys. It will get you in trouble with every authority, and likely cost you your license (and any downstream customers). The news cycles will hammer you and your brand’s reputation in the worst possible way. Be mindful of the perils of making a quick buck with cheap, polluting energy. It comes at a cost. It’s unsustainable.

Waste. All verticals can measure their waste output. Organic waste with cultivation can be included in the metrics of landfill-waste diversion (and there’s a simple way to calculate this measurement in “cars taken off the road.” Plastic waste – which so many manufacturers must use for child-proof packaging – is a fertile arena for reduction. Several cannabis packaging companies like Sana Packaging use oceanic plastic lids on glass bottles, which are recyclable. Wyld is now using compostable child-proof packaging which is a revolution in our industry. Manufacturers have different takes on waste depending on process type. 

The most important thing is to just get started. Even if you think you don’t need it today, you will tomorrow. And make sure your CEO is onboard 100%. If you don’t have the backing of your CEO and investors, you will have an uphill battle that will make your sustainability goals nearly impossible. Make sure you bring them the data and the reasons why your company will benefit financially from these actions and get them to engage in this process. This may mean hiring an environmental sustainability professional or consulting firm to help collect the data to bring to the executives showing the clear financial benefits. If you are a smaller company, try it yourself.

If you feel overwhelmed, try this free sustainability website to input sample data and see instant graphs. It’ll start you on the path, and prepare you for the future of cannabis. 

But only if you plan to be around for it.

 

 

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