Member Blog: How to Prepare a Winning Dispensary License Application
by Gary Cohen, Cova Software
The cannabis industry has come a long way in the U.S. Although we still await federal legalization, many new states have recently jumped on the bandwagon, and legacy states are awarding more social equity licenses. While New Jersey and Mississippi will be opening their first dispensaries by the end of 2022, New York has started accepting applications for CAURD licenses from justice-involved individuals. But scoring high points on your dispensary license application can be challenging, especially with all the stringent requirements. Here are some quick tips to help you stand out and prepare a winning dispensary license application.
Follow your State Cannabis Authority’s Guidelines
Every state in the US has different guidelines and regulations for a cannabis dispensary license. Do a thorough review of all the information available on your state cannabis authority’s website, and keep a look out for when they will start accepting applications. Most states accept only electronic applications, and you will likely have to create an account online on a designated website and link your company’s official information. For an application to be deemed complete, a response to each criterion specified must be included, along with the required documents.
Ensure You Qualify and Apply for the Right Category
To be eligible to submit a cannabis dispensary license application, you must reside in the state where you are applying or must be registered to do business in that state. Many states are awarding conditional cannabis business licenses to social equity applicants first or prioritizing applicants impacted by the war on drugs to build an equitable cannabis industry. If you qualify for any of these categories, ensure that you apply for the right one to expedite the processing of your dispensary license application.
Connect with the Community Where you Plan to Operate
Some states require your dispensary to be located in the municipality you live in, and you will be awarded a license only for a particular zone. Community reach and impact are also criteria laid down by some cannabis authorities, and you must establish connections with not just local and state officials but also other people who can help you understand the bigger picture better. For example, New Jersey and New York want you to explain the positive community impact your dispensary business will have. If you don’t connect with the community, you won’t be able to align your vision with their needs in your dispensary license application.
Fortify Application with a Business Operations & Security Plan
After familiarizing yourself with the license requirements and structure, you must dive into how you can prepare the best possible application to score higher points on every measure. For example, to obtain a conditional dispensary license in New Jersey, 40 out of 100 points are for your dispensary business plan, and another 50 points are for a regulatory compliance plan. One of the most crucial aspects of this is a dispensary operations plan that you must include in your application. This plan helps authorities understand how your dispensary business will comply with all cannabis laws and regulations and ensure safe access to cannabis for your customers.
Compliance is the Name of the Game
The detailed plans included in your cannabis dispensary license application must also mention the technology provider you intend to partner with, and choosing a compliant cannabis retail platform will help you fortify your application further. Prepare a winning dispensary license application by downloading Cova Software’s free template, Dispensary Operations and Security Plan, which will serve as a comprehensive guide to writing a winning plan for a successful cannabis retailer license application.
Gary Cohen is the CEO of Cova Software, the fastest growing technology brand in the cannabis industry. Cohen’s focus has been driving the company’s overall strategy, including its vision, go-to-market plan, and strategic development. Since joining the cannabis industry in 2016 and launching Cova commercially in 4q17, Cohen has led Cova to dominate the enterprise sector for dispensary Point of Sale, while forging client relationships with hundreds of single-store retailers across North America.
With Cova’s cannabis POS and its excellent integrations with eCommerce and delivery services, the online order automatically pops up for the budtender to tender the sales, and the POS system updates inventory once payment is approved. Cova offers multiple eCommerce solutions to choose from, as per your needs and budget, and you can legally sell cannabis online stress-free while staying compliant with strict government regulations.
Behind Closed Doors: NCIA at CANNRA’s June Conference
The discussion about the future of cannabis legalization is ongoing, to say the least. Recently, Cannabis Regulators Association (CANNRA) held a two-day conference in early June to gather Marijuana government regulators, trade associations, and businesses. The Cannabis Regulators Association (CANNRA) is a national nonpartisan organization of government cannabis regulators that provides policymakers and regulatory agencies with the resources to make informed decisions when considering whether and how to legalize and regulate cannabis.
Representatives from NCIA participated in the conference – NCIA Board Members Khurshid Khoja (Chair Emeritus) and Michael Cooper (Board Secretary), and we caught up with them in this blog interview to better understand the goals and outcomes of the event.
From a bird’s eye view, what was the overall goal of this conference?
MC: The conference was an opportunity for regulators from around the nation to hear directly from stakeholders on the current and future challenges that face these markets and different models of regulation to tackle them.
KK: I’ll add that our own goals, as the current Policy Co-chairs for NCIA, were to better understand the priorities of state and local cannabis regulators across the country, and anticipate future developments in cannabis policy early on, so we could take that back to the NCIA membership and the staff – especially Michelle Rutter Friberg, Mike Correia, and Maddy Grant from our amazing government relations team.
Let’s talk about who was invited to participate in these panel discussions. From cannabis industry associations to those who regulate cannabis, who else was there?
KK: Michael and I each spoke on a panel. The other speakers included reps from federal trade associations, lobbyists, vendors, and ancillary companies who were helping to underwrite the event (along with NCIA). Given that CANNRA is a non-profit that doesn’t receive any funding from their member jurisdictions, and has a single paid full-time staff member, I thought they were still able to obtain a fairly diverse and interesting set of speakers at the end of the day – including NCIA Board and Committee alums Ean Seeb, Steve DeAngelo, Amber Senter and David Vaillencourt (representing the Colorado Governor’s Office, LPP, Supernova Women and ASTM, respectively), as well as folks from Code for America, Americans for Safe Access, and the Minority Cannabis Business Association, U.S. Pharmacopeia, NIDA, the CDC, and the Alcohol and Tobacco Tax and Trade Bureau, representatives of the pharmaceutical, hemp, tobacco and logistics industries, and public health officials.
Were there any organizations or sectors of the industry that were not in attendance, whether they weren’t invited or just didn’t participate, and why is it important to note the gaps of who was not represented?
MC: No licensed businesses were invited. Instead, organizations that represent industry members were invited. As a result, we felt it was crucial to inform these discussions with the perspective of the multitude of small and medium-sized businesses otherwise known as Main Street Cannabis that have built this industry and continue to serve as its engine.
KK: Sadly, we did not have an opportunity to hear from members of the Coalition of Cannabis Regulators of Color. I can’t speak to why that was, but it was unfortunate for us nonetheless. And while we had some public health officials there, I know that CANNRA Executive Director Dr. Schauer would have preferred to see more of them in attendance.
Across the spectrum of policy and regulations and legislative goals, what topics were covered in the panel discussions across the two-day conference?
KK: We covered a ton, given the time we had, including the federal political and policy landscape; interstate commerce; the impact of taxes on the success of the regulated market; social equity and social justice; preventing youth access; regulation of novel, intoxicating and hemp-based cannabinoids; the prospects for uniform state regulations; technological solutions to improve compliance and regulatory oversight; and delivery models.
What information or perspectives did NCIA bring to the panel discussions that were unique from other participants? What does NCIA represent that is different from the other voices at the event?
MC: There really are a wide variety of perspectives on how best to regulate this industry. We felt it was essential that NCIA give a voice to Main Street Cannabis, the small businesses that so many adult-use consumers and medical patients rely upon. We emphasized, for example, that these are often businesses that cannot simply operate in the red indefinitely, but provide essential diversity (in the background and life experience of operators as well as in product selection and choice). NCIA wants to make sure that the future of cannabis isn’t simply the McDonalds and Burger Kings of cannabis. There are times when consumers want that, but there are also times when they want something unique and different. And it’s crucial that policy not destroy the small and medium-sized, frequently social equity-owned, businesses that provide those choices.
What else was interesting to you about this gathering of minds? Were you surprised by anything, or was there anything you heard that you disagreed with?
MC: There are a ton of different perspectives and approaches to cannabis, and that’s no surprise to anyone who has followed these issues closely because the tensions are very clear in the policy debates that are ongoing.
As the voice for the industry, we sought to urge an approach grounded in reality. Americans want these products. That’s clear from the ballot box and public polling. The question should be about how to encourage Americans to purchase regulated, tested versions of these products.
KK: There was definitely stuff we didn’t agree with – some of it from folks that we otherwise largely agree with. For example, our good friend Steve Hawkins of the USCC shocked a few of us in the audience when he seemed to indicate some receptivity to re-scheduling cannabis on an interim basis, rather than moving to de-scheduling immediately. I think that while rescheduling may benefit scientific research and pharmaceutical development, it could ring the death knell for Main Street Cannabis businesses. NCIA has consistently advocated for de-scheduling rather than re-scheduling.
After two days of panels, did anything new come through these discussions, or were any accomplishments achieved?
KK: I think there’s a growing recognition that addressing social equity solely through preferential licensing and business ownership for the few isn’t enough and that the licensing agencies and regulators that execute social equity policies have a very limited (and often underfunded) arsenal to comprehensively redress the harm caused by federal, state and local governments prosecuting the war on drugs. In my remarks, I said it was time for us to start discussing additional forms of targeted reparation and had a number of regulators approach me afterward to continue the discussion. Candidly, I expected my remarks to fall on deaf ears. They didn’t. That was very encouraging.
MC: There was definite progress. At the end of the day, these cannabis regulators are working hard to try to get this right. But in such a new area, and with so many competing perspectives and voices, their job isn’t easy. We were heartened to see the level of engagement from regulators on these points, including follow-ups to get more information on some of the pain points we identified for small and equity businesses in the industry.
It was definitely rewarding to provide NCIA and our members’ perspectives in a forum like this, and we’re looking forward to continuing to further strengthen NCIA’s relationship with CANNRA and regulators around the country.
Service Solutions | 7.13.22 | Scarcity Shouldn’t be Scary – How to Fund Your Growth
NCIA’s Service Solutions series is our sponsored content webinar program which allows business owners the opportunity to learn more about premier products, services and industry solutions directly from our network of established suppliers, providers and thought leaders.
In this edition originally aired on Wednesday, July 13, 2022 we were joined by e2b Teknologies whose team of leading integration & technology experts discussed some easy steps to prepare your business for funding and accelerated growth. As you all know, competition was stiff for funding prior to 2022 but with the current economy and rising interest rates, capital is much harder to acquire today. You should be taking steps get noticed and get the MONEY you need to grow your business now.
After viewing you’ll walk away with a better understanding of:
• How to leverage a team properly
• What’s most important – It may not be what you think.
• What’s necessary in terms of reporting, compliance, and record-keeping
• Evaluating potential technology partners
Sit back and settle in for an informative and timely program outlining the challenges facing operators and how you can position yourself for success with the right tools to help succeed at scale.
Positioned for Success – Highlights from the Insights & Influencers: NY Opportunity Tour
Any cannabis insider knows that New York is poised to become the next cannabis epicenter since legalizing last year. As such there is naturally incredible interest in learning about the business opportunities, how to best position yourself for success, as well as networking with potential future partners and clients. To meet these needs for our members and supporters, NCIA hosted the “Insights & Influencers: NY Opportunity Tour”, a weeklong series of events across New York featuring stops in Rochester, Albany and Brooklyn in partnership with founding members Canna Advisors, a trusted advisor to cannabis entrepreneurs who are starting or expanding a cannabis business.
(C) Sam C. Long / Honeysuckle Media, Inc.
Returning with our first in person events of the year, we couldn’t have been more thrilled to meet face-to-face with nearly 150 attendees who were either current or prospective business owners operating in New York and interested in expanding their operations or trying to break into the industry. With stops in Rochester, Albany, and New York City, the events brought together attendees from across the Empire State to not only learn about the developing regulatory landscape and opportunities to get involved with the burgeoning cannabis industry, but also the latest developments with NCIA’s work on federal cannabis policy.
(C) Sam C. Long / Honeysuckle Media, Inc.
Speakers were NCIA CEO and co-founder Aaron Smith and representatives from Canna Advisors including Bob Wagener, Vice President of Real Estate Development; Sumer Thomas, Director of Regulatory Operations; and Vincent DiMichele, Regulatory Content Manager. During the hour long presentation, numerous topics were covered that were relevant to business owners in the cannabis industry such as:
• The possibility of federal legalization and the work NCIA is doing to ensure small — or “main street” — cannabis businesses have a seat at the table as legislation is written
(C) Sam C. Long / Honeysuckle Media, Inc.
• Benefits of starting the license application process early and the importance of community engagement efforts
(C) Sam C. Long / Honeysuckle Media, Inc.
• Understanding zoning requirements and ensuring your business can operate in the best location possible
(C) Sam C. Long / Honeysuckle Media, Inc.
• Developing staffing needs and protocols so the team behind your operations is positioned for success and growth
• Engaging in public comment periods including the New York Office of Cannabis Management’s (OCM) current 60 day comment period open now through August 15 surrounding regulations for packaging, labeling, marketing, advertising, and laboratory testing of adult-use cannabis
Throughout the tour, representatives from the OCM were on-site to chat with participants, answer questions that attendees had, and generally get to know those interested in owning or operating a cannabis related business in the state. We are proud to facilitate those connections at our events time and time again, so that regulators and business owners alike can meet in person to build relationships which in turn helps break down the barriers to communication down the line.
Nevillene White, Manager of Community Relations and External Affairs for OCM, joined our Albany gathering right next door to The Egg performing arts venue located inside of Empire State Plaza. Throughout she was able to supplement the presentation by providing comments directly to crowd feedback during updates on the licensing process in the Capitol.
(C) Sam C. Long / Honeysuckle Media, Inc.
Trivette Knowles, Press Officer and Manager of Community Outreach for the OCM, was present in Brooklyn and commented ”We need more events like this to show people that cannabis touches all walks of life,” he said. “It’s part of the culture.”
(C) Sam C. Long / Honeysuckle Media, Inc.
NCIA’s Aaron Smith closed out each of the events with a final call to action for everyone in the room: Contact New York’s U.S. Senators Chuck Schumer and Kirsten Gillibrand to urge them to support the SAFE Banking Act and bring it to the floor for a vote. As the Majority Leader in the Senate, Sen. Schumer has the power to allow the legislation to be voted on but has not done so, stating a preference for more comprehensive legislation. Smith also discussed the Cannabis Administration and Opportunity Act (CAOA), which addresses federal legalization on a broader scale. A final version of that bill is still yet to be introduced however, and passage of the SAFE Banking Act would provide protections to financial institutions working with cannabis business and would have a positive impact on the cannabis industry while support for CAOA and comprehensive reform builds in Congress.
Of course we encourage anyone reading to take this call to action even further, and plan to join NCIA at our upcoming 10th Annual Cannabis Industry Lobby Days from September 13-14 in Washington, D.C. Find out more details and register online here.
We can’t thank all our members and supporters who attended the events on our “Insights & Influencers: NY Opportunity Tour” enough, as well as our co-hosts, Canna Advisors, for making these events possible!
(C) Sam C. Long / Honeysuckle Media, Inc.(C) Sam C. Long / Honeysuckle Media, Inc.(C) Sam C. Long / Honeysuckle Media, Inc.(C) Sam C. Long / Honeysuckle Media, Inc.(C) Sam C. Long / Honeysuckle Media, Inc.(C) Sam C. Long / Honeysuckle Media, Inc.
Interested in attending our next in-person event this Summer? Register now for the Colorado Industry Social taking place on Thursday, July 28 in Denver, CO.
Want to know how you can sponsor events like these? Please contact our Events Team at events@thecannabisindustry.org to explore possibilities.
Member Blog: Three Reasons Why Cannabis Business Owners Outsource Their Accounting
Every entrepreneur knows that staying ahead of business demands is challenging and time-consuming. Unless you have access to enough capital to hire a large team of dedicated employees, you’ll probably have to juggle a wide range of tasks. From promotional marketing to financial forecasting, it seems cannabis business owners always have their plates full.
With this being said, it’s important to understand that taking on too many tasks at once can have negative consequences. The quality of your work is likely to suffer, and you could end up making mistakes that impede your ability to drive growth. Not to mention, doing everything on your own can leave you feeling tired and burnt out.
Unlike companies in many other industries, the cannabis industry is closely regulated, meaning entrepreneurs have to conduct rigorous administrative work. Failure to stay on top of state regulations could result in reputational damage, lost revenue, and even the loss of your business.
So, what’s the solution? Whether you’re a grower, manufacturer, or dispensary owner, outsourcing your accounting burden could significantly lighten your workload. As well as ensuring your accounts are accurately maintained, enlisting the services of a reliable firm will free up time for other important jobs, such as product and vendor management, marketing and promotion, partnership-building, and much more.
Of course, you shouldn’t rely on the first accounting firm you stumble across to look after your financial affairs. As an entrepreneur in the cannabis industry, you must find an accounting firm with knowledge of the sector – and, of course, a non-judgmental approach to hemp and cannabis sales.
This article will explore three key ways working with a cannabis-oriented accounting firm could significantly improve business outcomes.
1. You’ll Maximize Profits by Knowing Your Numbers
To see long-term success in your business endeavors, it’s important to know your numbers forwards and backward. Your financial records tell the story of how your company has evolved from start to finish. If you don’t have a comprehensive understanding of your business’s story, you’re not getting the full picture.
By hiring an accountant, you can rest assured knowing that you have someone on your team to oversee all of your accounting and record-keeping initiatives. An accountant will keep track of tax costs, payroll expenses, retirement plan costs, office equipment purchases, marketing & promotional fees, and much more. This means you can avoid unnecessary expenses and ensure your business is as fiscally responsible as possible.
If you’re overspending, they’ll help you cut back and offer valuable advice about maximizing profits while fulfilling key business goals. If you’re prone to overspending or don’t feel confident with complex mathematics, hiring an accountant could represent one of your smartest business moves.
2. You’ll ensure your business remains compliant with state and federal laws
The rules and regulations surrounding cannabis sales can be confusing and hard to follow. While many states have legalized the sale of medical marijuana, the substance remains a class 1 substance under federal drug laws. Because of this, there is uncertainty surrounding whether banks should service clients working in the cannabis industry and how to handle the Internal Revenue Service’s (IRS) tax regulations surrounding “illicit substances.”
By selecting a skilled accountant with knowledge of the cannabis industry, you can avoid such confusion and avoid penalization. By hiring the services of a company like Green Space Accounting, you can ensure the following:
That setting up your bank accountant is quick and easy: An accountant will know which documents to bring when setting up a new bank account, including your marijuana license, information about your sales tracking system, legal documents about operating agreements, Employee Identification Numbers (EINs), Articles of Incorporation, and more. Failure to present such documents could slow down the process.
That you remain compliant with tax code 280E: This rule states that taxpayers cannot claim deductible expenses related to the sale of illicit substances such as cannabis. Given that cannabis remains illegal on a federal level, it can be tricky to get around this law and make the most of business-related write-offs. Fortunately, you can write off expenses related to the cost of goods sold (COGS), an exception that your accountant will help you navigate to ensure you hang on to as much profit as possible.
That you maintain a healthy relationship with your bank: Hiring an accountant will help you maintain an open and honest relationship with your bank, as they will know precise details about your incoming and outgoing expenses. Failure to provide accurate numbers or meet regularly to discuss the details of your accounts could make your business seem untrustworthy. In the long term, this could lead to legal issues or the closing of your account.
3. You’ll have time to focus on core business tasks
One of the primary reasons entrepreneurs outsource tasks is to make time for the creative aspects of growing a business. Driving business growth requires much more than smooth day-to-day operations and well-maintained accounts. It also requires the ability and motivation to set your business apart from competitors and present customers with dynamic new offerings.
Doing the creative work involved with entrepreneurialism is tricky if you’re faced with a pile of administrative tasks. By enlisting the help of a professional accounting firm, you’ll enhance the quality of your business’s accounting work while freeing up plenty of time for other tasks, such as:
Expanding your product line or service offering
Selling your products across new platforms
Investing in customer acquisition
Conducting industry research
Researching new business tools
Drawing up a growth plan
Generating new business models
The Bottom Line
Managing the financial side of your business can be daunting, complicated, and most of all: stressful. If you own a business in the cannabis space, it’s wise to consider outsourcing your accounting initiatives to an industry professional.
Whether you are a start-up, a growing business, or a multi-state operator, specialized firms like Green Space Accounting can help you with intimate knowledge of cannabis rules and regulations.
Green Space Accounting is one of the leading cannabis accounting, tax, and advisory firms in North America. Our client service philosophy has helped forge an excellent working relationship with dispensaries, grows and ancillary businesses in the space. From accounting and tax services to business consulting and financial planning, we possess the knowledge and experience needed to assist you with your current and future needs.
LaKia Bourne has 20+ years of experience as an accomplished and trusted accounting professional. As a women-owned and minority-owned accounting firm, LaKia has a passion for working with other small businesses and engaging in the local community, and her values drive her overall career goals and mission to uplift businesses and encourage financial competency through reliable accounting services.
With her exceptional credentials and years of accounting experience, JoAnne Williams is a leader in every area of accounting and business consulting. Driven by a deep commitment to client satisfaction, JoAnne has helped non-profits and businesses of all sizes across various industries. Client satisfaction is her number one goal, making her a leader in every area of accounting and business consultation.
Committee Blog: Is American Cannabis Still the Wild West?
by NCIA’s Risk Management and Insurance Committee Matthew Johnson, Quadscore Insurance Services
Cannabis is America’s riskiest business.
Cannabis itself is a highly valuable commodity, but cannabis businesses also deal largely in cash – making them a prime target for thieves across the country. Recent headlines have reported a rash of unsolved robberies in the Bay Area and Washington State, not to mention the seizure of cash from Empyreal’s fleet of armored transport vehicles (fortunately, that cash has now been returned by the police).
This is a national problem, which begs the question… What should cannabis businesses do to stay safe during these trying times?
There are many different means of minimizing the risk faced by your modern cannabis business, but we’re going to focus on the big three today – security, technology, and compliance. Through careful consideration of these three tenets, cannabis businesses can take significant steps to mitigate risk and protect their employees. Appropriate investments can yield tenfold savings in the form of fewer stolen assets, lower insurance premiums, peace of mind, and safer employees.
SECURITY
Let’s start with the topic that gets the most attention during a crime spree – security. In cannabis, security means a number of things… video cameras, man traps, motion sensors, hardened glass, ID checks, and more. When building or retrofitting a facility for cannabis operations, it is crucially important to consult with security experts like Sapphire Risk Advisory Group or Cannabis Compliant Security Solutions.
“In many areas, it’s not a question of ‘if’ a cannabis business will be robbed – it’s ‘when,’” cautions Chris Eggers, CEO of Cannabis Compliant Security Solutions. With 13 years of experience as a law enforcement officer in the Bay Area – including several years working as an undercover narcotics officer – Chris is uniquely qualified to address the ongoing issues in Oakland and other areas along the West Coast. “There’s a question of how you navigate and survive an incident, but beyond that, how you ensure that your business will survive too.”
There’s an important distinction between security consultants like CCSS, security integrators, and vendors. To achieve best results, cannabis businesses should work with a security consultant who can identify ways to protect the business – without being tied to commission-based sales contracts or a specific ‘brand’ of security solutions.
TECHNOLOGY
Physical security aside, there are a number of high-tech security tools that can help cannabis business owners protect their operations. For example, let’s take a look at the biggest security company you’ve never heard of – an organization called 3SI Security.
3SI Security began their journey over 50 years ago as the original producer of dye and smoke packs intended to deter bank robbers in the 1970s. Technology has evolved over the years, and so has 3SI’s product offering – now, their GPS tracking tech is ubiquitous throughout banking, pharmaceuticals, luxury retail, and telecommunications.
As VP of Business Development for 3SI, Carlos Casas works to connect cannabis businesses with this tech to protect their assets and employees. “According to a Forbes report from July 2020, an estimated 70% of cannabis businesses are cash-based. This is a staggering statistic which shows the real risk to the industry is on an upward climb.” With the SAFE Banking Act still in the works, savvy business owners have to explore alternative solutions like 3SI’s technology to ensure their business stays safe.
Apart from 3SI, there are a number of technology companies that provide technology to make the cannabis industry a safer place. ADT Security has recently launched a cannabis-focused divison of ADT Commercial to provide critical security technology to cannabis businesses around the country. After spending three years keeping HERBL’s fleet secure on the west coast, Andy Fleet now leads ADT’s efforts to provide security solutions to the cannabis industry.
According to Andy, “Security planning is critical for any cannabis organization. Take the time to evaluate all the risks within your establishment and build a robust plan that ensures all areas of physical safety and security are considered and protected.” Underscoring the points above, Andy continues, “Working with a licensed, experienced consultant will ensure adherence with all relevant regulations and help keep your employees safe while having technology do the heavy lifting for you.”
COMPLIANCE & COVERAGE
Next up, everyone’s favorite topic: compliance. In this sense, we’re not talking about adhering to the myriad regulations imposed on cannabis businesses wherever they operate – but rather, making sure that your operation complies with the protective safeguard requirements in your insurance policy. Non-compliance with or material misrepresentation of your active protective safeguards could result in an uncovered or denied claim – and could even cause problems with your investors. If you’re buying insurance, you want to make sure that your policy will pay out when stuff hits the fan!
Theft Sublimit – Most cannabis insurance policies will only cover theft losses up to a certain ‘sublimit’ depending on the quantity of cash/cannabis being stored, the physical location of the cannabis business, and any relevant losses that the insured business may have sustained due to theft. Make sure that you are comfortable with the sublimit provided and, if you aren’t satisfied, work with your insurance broker to see if you can secure higher limits.
Protective Safeguards – Virtually all cannabis insurance policies carry some warranties around protective safeguards that can impact your coverage in the event of a claim. Make sure to read the Protective Safeguards endorsement and check that all of your security systems are functioning in compliance with these requirements.
Motor Truck Cargo – Similar to the protective safeguards warranty, make sure that you study your policy to ensure that any requisite safeguards are in place. For transportation operations, these safeguards are likely to include vehicular telematics, buddy systems for drivers, GPS tracking, and possibly even an escort vehicle to accompany the transport unit.
Security guards – When hiring security guards, it is recommended to employ a third-party guard service that carries appropriate limits of insurance. Make sure that your business is listed as an additional insured on their insurance policy to ensure coverage in the event of an altercation at your business!
Financing – Lenders and VC firms will often stipulate that the companies accepting their funds will need to adhere to certain requirements, like securing Directors & Officers insurance for the officers and executive board. Beyond insurance, it’s important to make sure you are actually doing what you promised to do in terms of safeguarding the property and not just so that you may be eligible for coverage, but also so that you are not held liable for losses suffered by third parties, such as lenders and investors.
Joseph Cioffi, chair of the Insolvency+Finance practice at the Davis+Gilbert law firm in New York advises, “Operators typically make certain representations to investors, lenders, and other capital providers, and undertake certain activities intended to preserve asset and collateral values. The operator is looking at default if it’s in breach of contract, but worse, the operator and its principals could be sued for misrepresentations made in obtaining funding – and be held liable for losses that flow from those misrepresentations.”
CONCLUSION
Like an onion, there are many layers to a risk management program for cannabis businesses. Through careful implementation of security measures and protective technology, many businesses will be able to prevent damage to their business with proper planning. In case all security measures fail, a comprehensive insurance policy should be able to help make a business whole again after a claim. Make sure to work with the proper insurance, security, and legal experts when building or restructuring a cannabis operation!
As we approach the end of Q1 2022 and prepare to enter Q2, it’s become clear that this is going to be an important year for the cannabis industry. Cannabis business professionals and investors looking for signs of growth or stagnation in the industry will certainly be interested to see how things unfold. With that in mind,CannaBusiness ERP has put together a list of the top cannabis trends for 2022, and those trends appear to be pointing to more growth. However, it’s clear that difficulties for the cannabis sector are still imminent.
Cannabis Trends for 2022
It almost goes without saying that the cannabis industry is complex and not without its fair share of challenges as the most highly regulated industry on the market. For businesses looking to grow, keeping up with complicated and evolving regulations can be stressful enough on a business in and of itself. Cannabis cultivators, processors, and consultants can look to cannabis industry trends to inform their operational decisions.
Increased legalization in the United States
Support for legalization in the USA continues to rise. In fact, a2021 Gallup poll found that 68% of Americans are in favor of legalizing cannabis. Not only is this a record number of supporters, but this percentage also reflects a growing sentiment among Americans regarding the use of legal cannabis.
The changing tide towards legalization is clear – more states passed legislation to legalize cannabis either medicinally or recreationally in 2021, with several more introducing legalization bills in2022. Because states operate independently of each other, every state will have its own policies as well as regulatory and compliance requirements, which can make things very confusing for cannabis businesses, especially multi-state operators (MSOs).
Leading cannabis business experts are predicting strong sales growth this year due to the growth in legalized markets for cannabis. In fact, legal cannabis sales reached $19.5 billion in 2020, and expertsare projecting sales to reach $30 billion in 2022. Washington State alone, which legalized cannabis ten years ago in 2012, is expected to generate $1.5 billion in sales, up from $1.2 billion sales in 2020. But Washington’s projected sales are small when you compare them to California’s projected sales of $7.6 billion. And as more states legalize cannabis, more sales will surely follow.
Another contributing factor to increased cannabis sales is related to increased demand and a growing number of product types. More consumers are learning why cannabis can be beneficial to them, including more restful sleep, lowering stress, lessening pain symptoms, and recreational use. Additionally, with so many products on the market, cannabis consumers have many options to choose from, ranging from edibles to tinctures to topical ointments and more.
Cannabis experts are predicting a growth in cannabis consumption lounges – the cannabis equivalent of a bar or restaurant that allows consumers to use cannabis on-site. According to theCannabis Industry Journal, the popularity of these lounges is growing because they provide consumers with a legal and safe space to consume cannabis. Just as with alcohol, the lounges are regulated according to laws set by each state.
Increasing sales means cannabis businesses are at a critical junction and need to scale operations to meet the growing demand. One way cannabis growers and processors can capitalize on the demand is by streamlining the business end-to-end withcloud-based cannabis business management software. Otherwise known as Cannabis Cloud ERP, it manages production, cultivation, compliance, inventory, financials and traceability, sales, purchasing, and more, all in one system that lives in the Cloud.
Increased legislative bills and pressure for federalization
Under U.S. Federal Law in the Controlled Substances Act, cannabis is still considered a Schedule I substance. However, as the number of states legalizing cannabis either recreationally, medicinally or both has increased, so too has broader support for federalization in the U.S. government. In fact, there are several bills in the U.S. congressional houses that may positively impact the cannabis industry, especially with banking challenges.
Due to the Schedule I federal classification of cannabis, many banks will not work with cannabis companies, creating tedious banking hurdles that are difficult to solve. TheNational Law Review writes, “Yet, in comparison to other industries, legitimate licensed cannabis-related businesses remain hobbled by the difficulties they face in accessing traditional banking and financial services – largely due to the fact that ‘marijuana’ is still considered illegal on the federal level under the Controlled Substances Act (“CSA”). Currently, financial institutions (including federally insured banks) are hesitant, and oftentimes unwilling, to work with cannabis-related businesses due to fear of reprisal from federal banking regulators.”
Congressional representatives have introduced a decent amount of bills geared towards making much-needed changes to banking processes for cannabis, such as the SAFE Banking Act of 2021, passed by the U.S. House of Representatives in April 2021. It is currently awaiting action in theU.S. Senatewith broad support from both sides of the aisle. If it passes both chambers of Congress, the act will allow cannabis companies to have business-critical access to banking and financial services and would reduce their need to operate as cash-only businesses and remove yearly challenges with tax accounting and reconciliation.
In addition to the SAFE Banking Act, there are other bills like U.S. Senate Majority Leader Chuck Schumer’s Cannabis Administration and Opportunity Act (CAOA), which is a push for federal cannabis legalization as well as an equity play. If passed, it is a measure towards ensuring small businesses and minority-owned businesses have access to financial services.
However, even with the tide of public opinion and legal momentum shifting in the industry’s favor, there remains a challenge with the U.S. tax code. Due to IRS Code Section 280E, if a business is trafficking certain controlled substances, like cannabis, that business is unable to deduct business expenses on their taxes. California has taken steps to address this by signing bills that help cannabis businesses overcome this code, but this is still a prohibitive factor for cannabis companies across the U.S.
Fortunately, cannabis companies that invest in a comprehensive Cannabis Cloud ERP solution with a reputable and experienced industry partner are better able to handle any hurdles that come their way.
Increased Merger and Acquisition (M&A) activity
Merger and Acquisition (M&A) activity has been steady in the industry and 2022 will see even more M&A activity. According toMJBizDaily’s article, “Marijuana M&A sizzled in 2021 and is poised for a hot 2022. Marijuana merger and acquisition activity proceeded at a torrid pace in 2021 – and could accelerate in 2022 – thanks to lower interest costs and pressure on larger companies to expand their footprints and boost revenue.”
Citing prominent cannabis acquisitions in 2021, such as Jazz Pharmaceuticals’ acquisition of GW Pharma (for $7.2 billion) and Trulieve’s acquisition of Harvest Health (for $2.1 billion), it is apparent that M&A is not going to slow down. According toBusiness of Cannabis, several deals are already taking place in 2022. Massachusetts-based Curaleaf acquired Arizona-based Bloom Dispensaries for $211 million, adding a total of 13 Arizona dispensaries and 121 dispensaries nationwide to Curaleaf’s portfolio.
For cannabis companies dealing in M&As and becoming Multi-state Operators (MSOs), it is essential to have a comprehensive, full-suite Cannabis Cloud ERP system that can run all the companies in one system. It is a crucial ingredient to manage their M&A transactions and handle their financial statements, compliance, business transactions, and more.
Most important of all, cannabis companies need to choose the right cannabis ERP.
Jennifer Spanos is the VP of Product and Vertical Strategy at CannaBusiness ERP. She has 14+ years of experience in cannabis and food manufacturing software and operations, working to maximize the efficiency and profitability of customers’ businesses.
CannaBusiness ERP: The Right Cannabis Business Management Software. Cannabis companies can grow their business with an ERP solution designed for the cannabis industry and for MSOs expanding into new markets. Learn how CannaBusiness ERP can set businesses on the right path. Manage financials, operations, quality, compliance, traceability, customers and more.
CannaBusiness ERP iscannabis business management software that is built-inSage X3 and configured byNexTec industry experts to deliver a complete cannabis business solution. Our specialization in developing solutions for the cannabis cultivation and processing industry has resulted in some of the most respected companies around the world managing their day-to-day operation using CannaBusiness ERP.
To learn more about the fast-paced movement in cannabis legalization and how Cannabis Cloud ERP software can help your company keep pace,reach out to us. We’d love to show you what CannaBusiness ERP can do for your business.
Member Blog: Expanding into New Cannabis Markets
by Jennifer Spanos, VP of Product and Vertical Strategy at CannaBusiness ERP.
According to Grand View Research, Inc., the global legal cannabis market is expected to do two things: Reach USD 70.6 billion by 2028 and expand at a CAGR of 26.7% from 2021 to 2028. Support for federalizing cannabis and increased sales—during a global pandemic and a recession—have transformed the cannabis industry’s status as that of a relative newcomer into that of a seasoned player. As new markets begin to emerge, cultivators and processors are eyeing the possibility of becoming multi-state operators (MSOs).
The Who, What, Where and When of Expanding in New Cannabis Markets
Anyone ready and willing to take on the complexities of a cannabis-related business is welcome to do so. However, there are challenges. Investopedia provides a list of these challenges, including (but not limited to) competing against other more established industries, such as alcohol and tobacco, that are joining the fray; facing the stigma of selling, producing, and distributing a newly legalized drug; and complying with the differing laws on legality, use, distribution and growth in states.
If someone is ready to take the plunge, the guide offers a list of 10 states MSOs should focus their attention on, such as Nevada, New York, and Pennsylvania. It also highlights the pros and cons of each state’s legalization efforts. For example, here’s what it says about New York, which legalized adult-use cannabis this year:
“With adult-use cannabis officially legalized in the state as of March 2021, the New York market is predicted to be one of the biggest to watch for over the next few years. Sales in the state are expected to begin in 2022 and huge growth is expected in both the recreational and medical cannabis markets.”
For existing large-scale cannabis companies, these states represent expansion opportunities. To expand, they need to get a new license or acquire an existing cannabis company. Or do both.
However expansion occurs, challenges and benefits exist. For instance, a challenge for companies securing new licenses is the need to set up brand-new operations and production processes.
“Even if an MSO is successful in another market, rules around taxes, packaging, and serial numbers vary from state to state, so new business practices will likely have to be built from the ground up,” the guide notes. “On top of this, MSOs vying for new licenses will also need a mother plant, seedlings, equipment, people, and more to get the business off the ground.”
A benefit for companies going through the acquisition route is that they are acquiring a company that has licensing in place and has established processes for state rules and regulations.
Irrespective of expansion benefits and challenges, cannabis companies looking to successfully manage their businesses must implement cannabis business management software.
The ‘How To’ of Successfully Expanding Into New Markets
With cannabis ERPsoftware, MSOs can juggle multi-site, multi-company, and multi-state requirements. But, as the guide cautions, they need to realize that not all ERP solutions have the width and depth of functionality that is needed to support MSO expansion. MSOs’ research and evaluation process should lead them to a full-scale, true ERP software solution that operates as a single, unified system.
The right cannabis ERP software provides finance, operations, and seed-to-sale capabilities. Here are some featural highlights to consider:
Costing
Compliance reporting
Recall management
Inventory control
Multi-company features
Traceability
Robust Business Intelligence (BI) functionality
MSO cultivators and processors also should look for cannabis software that is flexible and adaptable to the changing needs of an expanding business, implementing only the features they need for their business now. As an MSO expands, such as adding a cultivation operation or purchasing an edibles manufacturer, the cannabis software’s built-in functionality will make it a seamless endeavor.
Jennifer Spanos is the VP of Product and Vertical Strategy at CannaBusiness ERP. She has 14+ years of experience in cannabis and food manufacturing software and operations, working to maximize the efficiency and profitability of customers’ businesses.
CannaBusiness ERP is a solution built in Sage X3 and delivered by NexTec industry experts. Over the past 25 years, their ERP and business process experts have helped organizations across North America streamline business operations and lower costs. Specializing in developing solutions for the cannabis cultivating and processing industry has resulted in some of the most respected cannabis companies around the world managing their day-to-day operations and delivering products off of the CannaBusiness ERP platform. CannaBusiness ERP by NexTec is the go-to answer for cannabis cultivators and processors seeking a software platform built to help you grow.
NexTec’s CannaBusiness ERP is the specialized solution for cannabis companies looking to grow. Contact us today to learn more about it. We’d love to chat.
Learn More About the Cannabis Industry and Cannabis ERP Software
Propelled by new legalization easing the regulations and laws surrounding its use and distribution, the nascent cannabis industry has experienced unparalleled growth. Expected to expand at a CAGR of 26.7% from 2021 to 2028, the market is loaded with potential for up and coming businesses.
However, to realize this potential and maximize one’s ROI requires a thorough understanding of the industry and the flexibility to evolve with the market. Thankfully, the recent legalization of cannabis in many states has spurred a significant increase in available data for organizations to use in facilitating their decision-making.
Understand key market trends
Lacking a mature market history due to cannabis just recently being legalized, businesses within the cannabis industry can’t reflect on previous purchasing trends in strategizing their approach to consumers. Whether or not a product experiences success largely depends on it being positioned in the right market segment.
By leveraging transactional data based on a variety of factors (demographic, seasonality, delivery method, etc.), organizations can identify which products are selling and who they’re being sold to. The wide diversity of both available strains and consumer demographics means there is no one-size-fits-all solution to cannabis.
Additionally, the cannabis industry’s young age and heavy investment in product innovation has produced a relatively volatile market. Businesses have to be able to quickly adapt to the always-evolving consumer trends if they’re to remain successful.
Utilizing data in their decision-making can also aid executive administrators in creating long-term business strategies and identifying realistic goals.
Identify opportunities for improvement
Many organizations still guide their decision-making based on factors like gut feelings and prior experiences, which are prone to error and often fail to address the underlying causes in any given situation. Without access to the right metrics, it can be very difficult for both young and mature businesses to identify weak points in their enterprise.
Hidden in the data are countless opportunities for improvement from product design to customer processing. Organizations need a way to transform their data’s potential into meaningful insights if they’re to successfully scale their business.
Comprehensive data analytics systems are capable of employing automated business rules to generate useful metrics for determining what steps an organization needs to take to grow its enterprise. Many platforms come with a host of built-in KPI measures as well as self-service features that allows users to define their own business rules custom-tailored to their businesses’ needs. This means that organizations can apply analytics in a manner that best suits their own unique circumstances.
Comply with regulatory policies
The complex legal status of cannabis has led to an extensive list of regulations and laws that must be abided if the industry is to experience any long-term sustainability. Even in regions where cannabis has been legalized, governing bodies still maintain strict requirements in terms of product quality and distribution. Many of these challenges are only complicated by the fact that the different regions a business operates in all have their own set of unique rules.
Because most of these requirements are monitored and enforced through data collection systems, businesses have to implement a reliable analytics platform that can track product data all the way from cultivation to retail. In addition to handling information governance on an organization’s behalf, enterprise data solutions also employ automated features to mitigate the penalties incurred from human error.
Furthermore, by reducing the employee labor costs associated with ensuring regulatory compliance, businesses can free up time and energy for staff to focus on other business functions.
Optimize supply-chain operations
Supply chains, regardless of industry, have always depended on data to guide the transportation of products and ensure that inventories always reflect market demand. However, the short shelf-life and complex regulations of cannabis has made it even more critical that businesses turn to comprehensive analytics platforms.
Due to the volatile nature of the cannabis industry, businesses need real-time data reporting that can allow them to adapt to the always-evolving market trends quickly and efficiently. Every level of the supply chain is prone to a variety of risks and potential obstacles that businesses must be able to respond to at a moment’s notice. The ability to address a minor setback before it turns into an emergency can have profound implications for both the short- and long-term success of a business.
Outside of responding to potential accidents, data analytics can also optimize the more general functions of the supply chain and increase a business’s ROI. By coordinating schedules, maxing cargo loads, organizing inventories, and addressing other potential areas of weakness, businesses are able to reduce wasted time and resources.
John Kievit is Dimensional Insight’s Vice President of Goods and Services, Industry Strategy, and Business Development. In this role, Kievit helps Dimensional Insight understand customers’ needs and their use of its products. Kievit has nearly 40 years of experience in such a role, including working as an Administrative Vice President for sales and marketing. In addition, he has handled multi-million-dollar portfolios during his years in the goods and services industry, many of which involved using Dimensional Insight’s products, and spent many years in direct sales management.
Deciding how your organization implements data analytics depends entirely on the needs of your business and what your long-term goals look like. Solutions like Dimensional Insight’s CannaBI provide a comprehensive data governance package and manage your data at every step of the way, from integration to visualization. To learn more about how analytics can help your business grow, check out Dimensional Insight’s webpage on the cannabis industry.
Member Blog: Why an Efficient Dispensary POS System is Crucial for Cannabis Retailers
Running a cannabis dispensary isn’t like running any other type of business. You don’t only have the stress of inventory, expenses, a demanding customer base, and sales to worry about, but also incredibly stringent state, county, and city laws. State compliance is at the core of keeping your storefront running, but automating reporting with software can alleviate some of the stress associated with compliance.
Selecting a cannabis software that fits your business model is crucial to scaling your business. Here are five essential things to look for in an efficient dispensary POS system and how they will benefit your cannabis operation.
Improving Customer Experience
Customer retention will make or break your business. Building a base of happy customers is imperative for your dispensary to survive and thrive. There are lots of ways to create a memorable and positive experience for your customers. Seamless transactions, loyalty rewards, and employees that understand buying habits make it enjoyable for customers to shop. A premier dispensary POS system will give you control over all of these. Checking out customers quickly and efficiently, while utilizing a rewards program to incentivize them to come back is what customers expect and not all POS systems deliver on these expectations.
Another sign that a POS system is worthy of your business is one that has a strong user base and an active support team. Frequent engagement with their users and regular help center articles are a good indication that the POS provider is actively working with their community to solve issues and create a better experience.
Furthermore, the software provider should provide multiple training sessions when you come on board. This gives you, your staff, and management team the knowledge and know-how to use the software proficiently. A good POS provider will also help you develop standard operating procedures that best work for your business and their software. Implementing your software in tandem with best practices will maximize the efficiency of your dispensary. After all, POS systems aren’t always cheap, so you should expect a “white glove” approach by their team.
Optimizing Cannabis Inventory
There is very little room for mistakes in the cannabis industry. Inadequate cannabis ERP systems can cause issues with inventory discrepancies which can easily lead to compliance fines, penalties, and even your license being revoked. A reliable POS system provides accurate, real-time data that seamlessly allows you to manage your stock and improves customer shopping experience.
Better inventory management also helps in team day-to-day operations. When your staff can easily audit inventory and use reports to see what is selling, they can make informed decisions when purchasing stock to keep your customers coming back. This results in high customer satisfaction, repeat business, and more sales. You want to optimize your inventory ordering so you can have enough of the right products at the right times to meet demand and offer a superior customer experience.
Automating State Compliance
Compliance is the x-factor for cannabis businesses. Few other industries deal with regulatory restrictions as stringent as the cannabis industry. That’s why it is so important to have cannabis POS software that is integrated with track-and-trace programs selected by the state. Metrc and BioTrack are the most commonly used track and trace systems. You’ll want to make sure you dispensary ERP automates compliance reporting to avoid any risk of human error.
Real-time compliance integrations with Metrc and BioTrack will report sales accurately as they happen. There are no shortcuts when it comes to compliance so your cannabis POS needs to factor in all the required taxes as well. Additionally, it should enforce customer purchase limits and verify age. These are two regulatory rules that can quickly cause easily get your shop shut down if not strictly followed.
Useful and Seamless POS Integrations
Be wary of POS systems claiming to be all-in-one solutions. These tend to be masters of none. A great POS will integrate with other leading softwares to bring you a well-rounded platform. Look for one with a wide range of integrations that help with things like marketing, e-commerce, loyalty, analytics, etc. Finding a dispensary POS that supports your current tech stack will save you time and headaches.
It’s also useful to do research on software review sites to see how these integrations hold up. Just having integrations isn’t enough. These integrations need to work seamlessly with your POS system and be as easy to utilize as the platform itself.
Cannabis Software That Scales
The last thing you should look for in a POS system is one that has the ability to handle your business as it scales into multiple locations or a delivery fleet. Not all dispensary software can support a multi-storefront or delivery. It really comes down to the features and functionality. Is there a master inventory catalog that can categorize inventory across multiple stores?
Does your dispensary POS also offer built-in dispatch and delivery functionality? Evaluate which software can serve you best long-term versus a short-term fix. Look for one that broadcasts its new features, integrations, bug fixes, and improvements. This will give you a good idea of how the POS is keeping up with the pace of new industry advancements.
How to Decide on a Dispensary POS
Looking for these five things will give you a solid understanding of what your POS platform should have and steer you in the right direction when it’s time to buy. There are a few additional ways to evaluate potential cannabis software providers. It never hurts to come prepared with specific questions during a demo that are relevant to the workflows utilized in your dispensary. This will give you a clear understanding if the dispensary POS system can seamlessly integrate with your current SOPs or if you’ll need to adapt your internal procedures.
Before making the big decision, inquire about the migration plan, the onboarding process, and any additional hardware that might be needed. These are important factors to consider so you can avoid future roadblocks. Lastly, call their customer support line just to test their response time. Waiting to be connected to a support agent can be frustrating if something does go wrong. It’ll give you more confidence in your decision if you know that the support team is easy to contact and capable of resolving issues quickly.
Steven Lynn, a California resident since 2011, has dedicated his career to destigmatizing and legitimizing the cannabis industry through technology. Steven started his career in cannabis as the Director of Marketing at IndicaOnline in 2017. He now serves as the Director of Marketing at BLAZE® responsible for driving all marketing strategy, brand development, and lead generation programs. His professional background in early-stage B2B cannabis SaaS startups has made him adept at executing scalable, impactful, and sustainable strategies to achieve exponential growth. Steven received his BA in Communications from the College of Charleston in 2006 and is a seasoned marketing professional with over 10 years of experience working in both the entertainment and canna-tech industries.
Founded in 2017, BLAZE, a VC-backed California technology company, offers unified seed-to-sale software and apps for the cannabis supply chain. Developed by tech entrepreneurs and former cannabis company operators, BLAZE makes tech simple with an easy-to-use frontend powered by an enterprise backend for dispensaries, delivery services, distributors, and cultivators. Customers can be more profitable and productive while creating a better user experience for end customers and employees. The company’s software ensures compliance with local laws and taxes. BLAZE offers full APIs and integrates seamlessly with over 40 technology vendors in the cannabis industry.
Member Blog: What Every Cannabis Company Needs to Know About Compliance Now
By Nicole Cosby, Chief Data & Compliance Officer at Fyllo
Two Thirds of Companies in Highly Regulated Industries Such as Cannabis Say Compliance Is Key Barrier to Growth
Not long ago, the role of the General Counsel with regard to compliance in highly-regulated industries was largely about setting up sensible guardrails. The job was to ensure a solid approach focused on good reporting, defensible “best-effort” internal practices, and a rock-solid audit trail. The words “compliance” and “growth” wouldn’t be used in the same sentence.
However, according to a study Fyllo recently completed in partnership with The Harris Pollof more than 300 compliance leaders, nearly two-thirds of heavily regulated companies agreed compliance was the critical factor blocking growth. In fact, compliance issues ranked as a bigger barrier than having the right strategy or even capital to fuel growth. This belief was shared by companies as small as local cannabis start-ups managing rapid growth and global banks with deeply-experienced compliance leaders.
One of the biggest factors cited by compliance professionals is the inability to adapt quickly. Nearly two-thirds (61%) did not believe their organizations could adapt quickly to sudden changes in regulations, with 28% pointing to outdated technology as the cause.
Patchwork Legislation is a Significant Pain Point
When taking a look even closer, managing regulations across jurisdictions is a significant pain point for compliance professionals, with 76% citing that decentralization of regulatory information is a challenge. The majority of professionals discussed how complicated it is to decipher between local and state laws. More than half of respondents (51%) even went as far as to say that the number of regulations their organization needs to keep on top of is unmanageable. Moreover, the dynamic nature of regulations even has these leaders questioning their own compliance.
For cannabis operators, even basic functions of marketing and advertising are so restricted by location that it would take a literal army of compliance officers to humanly tackle the problem on a day-to-day basis.
Among companies in highly regulated industries, data for privacy regulations (59%), product-related regulations (45%), and marketing or advertising-related regulations (44%) are the three most common areas where regulatory or compliance issues are the most difficult to balance with business processes.
What risks must General Counsel (GCs) guard against?
Growth risks
Market expansion and innovation may be constrained
Opportunity risks
A lack of awareness of pending regulatory shifts that may open new opportunities may leave your company unable to respond quickly enough
Reputation risks
Companies with a poor track record may face harsher scrutiny from the government. In cannabis, this might make obtaining new licenses in new geographies slower and more difficult
Revenue risks
Every compliance misstep risks delays in products getting to shelves, or worse, requiring product to be destroyed. Every delay and loss of product results in lost revenue.
Cost risks
Keeping up to date with ever-changing regulations is costly and difficult, particularly for understaffed compliance departments
Compliance Missteps Go Beyond Financial to Reputational
While compliance citations have become the norm, with companies being cited on average 12.6 times for noncompliance over the past five years, the ramifications of those missteps reach far beyond fines.
Nearly two-thirds (73%) say that key stakeholders like consumers, employees, and regulators have lost trust in a company due to compliance issues, and almost half (49%) say it results in higher costs to attract new customers and investors.
Use Technology to Turn Compliance Into a Competitive Advantage
The emphasis on growth demands a different approach that encompasses both defense and offense. Fast-growing companies need to access new markets, develop innovative new products, and challenge the status quo — all while managing the challenges of dealing with an ever-changing patchwork of state, local, and federal legislation.
Compliance professionals need to redefine their compliance roadmap based on real-time intelligence which should take into account federal, state, and local laws and ordinances. In fast-paced, highly-regulated industries, the winners are the companies who know more and know it sooner. Leveraging technology can help.
Once GCs recognize that a compliance suite does much more than just protect a company from citations, they can begin to understand the true cost of non-compliance from a financial, operational, and reputational perspective, giving them a leg up in today’s most challenging regulatory environments.
Nicole Cosby, an attorney and ad tech executive, has an impressive background in digital advertising/data policy, brand strategy/licensing, and business alliance development across the advertising, media, fashion, and entertainment industries. After earning her bachelor’s degree at Tufts University and her JD law degree from Howard University, Nicole entered the fashion field in New York, working in licensing and business affairs for Donna Karan, Phat Farm, Anne Klein, and the Jones Apparel Group.
Prior to joining Fyllo, Nicole was senior vice president, standards, and partnerships for Publicis Media. She has also held director-level posts in product management, ad product marketing, and partnership development for AOL, Kai Communications, and BET Networks. Previously named one of Cynopsis Media’s Top Women in Digital, Nicole received the Facebook/PMX Marisa Marolf Strength Award and earned a place in Campaign Magazine’s Digital “40 Over 40” for 2019.
The Fyllo Compliance Cloud is a suite of software and services that enable organizations to navigate today’s ever-changing regulatory landscape, streamline compliance and scale with speed. Mainstream brands also use the Fyllo Data Marketplace to target previously inaccessible cannabis and CBD consumers.
Member Blog: Cautionary Tales of Cannabis Compliance
As a member of the NCIA, you probably already know how difficult so many of the aspects of business are due to the nature of the industry. Unfortunately, sometimes it seems like the laws and regulations are never-ending, and frankly, it can cause quite the impact on the way operations are handled.
As much as we hate to be the bearer of bad news, it is likely a good idea to be wary of these things, especially regarding compliance regulations.
Cannabis Compliance Regulations
While numerous states have legalized cannabis, it remains federally illegal under Schedule I of the Federal Controlled Substances Act. While the hope is that cannabis will soon be federally legalized and decriminalized, we haven’t quite gotten there yet.
Because of the state of our society and often the stigma associated with cannabis, not to mention the astronomical fines associated with being involved in the legal industry incorrectly, many financial institutions refuse to touch cannabis businesses. Yes, even when a client does everything correctly.
Cannabis companies constantly have to get creative with how they handle revenue –– which is enough to make any business owner pretty uneasy. Without banks, stores are often forced to take payment in cash and invest in ATMs for their shops while they’re at it. Holding so much cash means armored vehicles to collect the money and tremendous crime risk. Yikes, talk about a debacle.
In an attempt to make things easier, some companies have opted to funnel cash through shell companies, but as you can imagine, that puts a big target on their backs. “It can start to look a lot like money laundering,” says businessman Tim Cullen. Despite complaints from states that collecting hundreds of thousands of dollars in cash for taxes is troublesome (to say the least), little has been done to rectify the problem.
A Cautionary Tale
A Massachusetts company running three cannabis dispensaries has found itself in quite the mess despite believing they were following protocol properly. After an eight-month investigation, the company has been ordered to pay $300,000 in restitution and penalties.
This situation has resulted from unintentionally neglecting a state law requiring businesses to pay 1.2 times the regular hourly wage on Sundays and Holidays. The company has admitted that these errors have stemmed from difficulty in hiring a traditional payroll service provider.
Avoiding Compliance Related Repercussions
One way many owners are attempting to get around payroll and tax issues is to misclassify their employees as 1099 contractors to avoid many of the tedious payroll-associated hurdles. Sounds too good to be true? It is! The Department of Labor does not take this kind of infraction lightly, and if you think $300,000 for missing Sundays and a few holidays is a steep fine, buckle up, and fast. If the DOL suspects the misclassification was intentional, you can expect up to $1,000 in criminal penalties per employee and even jail time. So for some legal options……
A Promising IRS Initiative
The IRS has recently launched a program titled “Cannabis/Marijuana Initiative” with the hopes of implementing a strategy to increase voluntary compliance. This is fantastic news for the industry because, as was the case for the dispensary above, often, the breeches are simply a result of misinformation. Hopefully, with an initiative such as this one put in place, small business owners can grasp tax regulations before any compliance issues arise with the guidance of the IRS on the industry’s side.
A Helpful Hand
Another great option is investing in a software solution that supports the cannabis industry and won’t leave you hanging. With payroll support and full-service banking, HCM software can prevent issues that may arise by automating the systems that cannabis businesses spend a great deal of time on in avoiding any missteps. You must find a company that won’t leave you hanging with an unreliable banking service.
Conclusion
While more and more of America seems to be coming around to the idea of legal cannabis businesses being a legitimate industry, we still have some ways to go. In the meantime, covering all your bases and ensuring compliance is the best bet to ensure you don’t end up between a rock and a hard place — and as a result, spending a small fortune in fines and fees. Be sure to keep up with changing laws and consider your options for the best shot at easy and secure payroll and tax keeping.
PeopleGuru develops and supports cloud-based Human Capital Management (HCM) software to help mid-market organizations in the Cannabis Industry attract, retain, and recognize their people and streamline back-office HR and Payroll functions.
PeopleGuru HCM is a highly configurable, true single solution residing on one database that efficiently manages every stage of the employee lifecycle. Behind PeopleGuru’s best-in-class technology, is a team of Gurus who are passionate about helping clients meet their desired business goals by ensuring that they always have the tools and support they need to deliver on their strategic HR objectives, maintain tax & legislative compliance, and boost people productivity.
Alexa is the Assistant Marketer at PeopleGuru. With a B.A. in Advertising and currently pursuing an M.A. in digital strategy, Alexa has a passion for writing, content creation and branding strategy. Specializing in copywriting and unique niche positioning, the world of HCM Software is her latest and greatest challenge.
All businesses must adhere to tax rules and regulatory compliance, but for cannabis companies, the laws are significantly more challenging to navigate. The cannabis industry has specific tax rules that differ from other sectors, and failing to follow them can result in severe financial and legal implications.
At Green Space Accounting, we know that managing your finances as a cannabis company can be much more complicated than the average start-up. Keeping a compliant financial system in place is not always easy with constantly changing state laws and regulations.
Here are a few tips on how to avoid compliance issues with your budding cannabis business.
Have Your Business Documentation in Order
One of the first steps to staying compliant is to have all the appropriate financial information and licensing for your business on hand.
Always be prepared with copies of your cannabis license, information from your seed-to-sale tracking system, and your point of sale software records. Having this paperwork, along with legal documents like operating agreements, Articles of Incorporation or Organization, and EINs will ensure that you have a fully compliant relationship with your bank, as well as local and state government.
It’s also a good idea to have detailed records on all sales transactions within your business, especially ones dealing with cash. Cash is used more frequently in cannabis dispensaries than in other retail industries. Having proper cash-handling procedures in place can save you from theft and keep you ready for any unexpected auditing.
Stay up to Date with State and Local Regulations
It’s important to remember that regulations surrounding cannabis change over time, so monitoring your state legislature and all applicable state and local agencies is crucial to keeping your business compliant. By making yourself aware of the rules for the cultivation, manufacturing, and distribution of cannabis, you can avoid the risk of fines or legal action and build a better relationship with your local government, law enforcement, and, most importantly, customers.
One way to stay up to date with regulatory compliance laws is to consume state and industry news surrounding cannabis daily. Not only do these publications keep you informed on business and consumer trends, but they also avoid complicated legal jargon, speaking directly to business owners in a way that’s easy for them to understand.
Another great way to stay on top of state and local cannabis laws is to network and build relationships with your local regulators. While maintaining compliance internally is the biggest goal, creating an ongoing relationship with the regulators in your area can help you better understand the changes within the industry and the steps you can make to conduct business more transparently.
Develop SOPs, Training, and Reporting Systems
Think of these SOPs as a set of rules that all employees need to abide by to keep your company’s production, sales, and accounting processes consistent and safe. Having a set of standard operating procedures can help you recognize potential compliance issues and fix them before they occur. These procedures can include an employee handbook on proper handling and storage of cannabis consumables to installing a seed-to-sale tracking system for inventory management purposes.
The best way to stay on top of your SOPs is to create reports, checkbooks, and logs in all aspects of your operations to show regulators that you are a transparent business that has a complete understanding of your state’s compliance laws. Frequent compliance training sessions are also an effective way to educate your entire team on the legal and tax regulations associated with your business.
Cannabis Payroll
To avoid issues concerning payroll, installing time tracking software for employees is also a great way to keep your staff organized and stay on top of the 280E tax code. The 280E law denies cannabis businesses federal income tax deduction for operating business expenses, which means that the wages for some employees may be deductible, and some may not be. By introducing software where employees can specify the tasks they’re doing and track the salaries they’re receiving, you’ll stay compliant with the tax code and better understand the productivity your team is generating.
Frequently Audit your Business
Hiring an outsourced accounting team to audit your cannabis business is a great way to avoid any potential risks regarding compliance. Auditors serve as an additional, unbiased set of eyes that will examine all areas of your organization and identity aspects that might need improvement.
If you are looking to stay on top of the legal and tax regulations for your cannabis business on a tight budget, self-auditing your company is a great way to check whether or not your training, bookkeeping, and SOPs are being appropriately implemented.
Entrepreneurs who belong to the National Cannabis Industry Association can receive discounted access to an acclaimed compliance management platform created by Simplifiya, which gives licensed operators a self-audit checklist that helps them identify, track, and mitigate potential issues before it’s too late. The platform also provides templates for creating SOPs customized for each license type and tied directly to your state regulations.
The Bottom Line
Whether you are a start-up, a growing business, or a multi-state operator, complying with federal and state compliance laws is essential. By following the above tips and staying transparent with your employees, partners, and investors, you’ll be ready for any audit that comes your way.
Whether you’re looking for cash flow management, business planning, or internal controls, our team is dedicated to helping you achieve peace of mind when it comes to your company’s finances and compliance. We understand that the financial side of your business can be daunting, complicated, time-consuming, and most of all: stressful. You don’t need to go through it alone. Our team is prepared to help you achieve your financial goals. Whether you’re looking to earn more revenue, scale your business or achieve a little peace of mind, you can trust Green Space Accounting to guide you.
Member Blog: Want to Open A Dispensary In Oklahoma? Here’s What You Need to Know.
In Oklahoma, the cannabis business is thriving. Yes, the controversial plant that users were prosecuted for using so very recently, is on a roll. You could even say, there is a cannabis rush.
In this article, we will cover how you can go about opening a dispensary, including how to acquire a license, and some laws you should be aware of. And we will also touch on how to set up your dispensary operations and software! Let’s dig in!
What do you need to open a dispensary in Oklahoma?
The process of opening a dispensary should go smoothly if you fill out an application form and follow the Oklahoma Medical Marijuana Authority’s guidelines. Although the costs of opening a cannabis dispensary in Oklahoma are significantly lower than elsewhere, it is critical to have accurate information and to review some of the most relevant regulatory constraints.
Let’s start at the beginning, if you intend to learn how to open a dispensary in Oklahoma for commercial purposes, you must be at least 25 years old before proceeding. You must also make the following items available:
Proof of Oklahoma residency
A tax ID number, as well as a general business license
Valid identification documents
You’ll need to assess your commitment after you’ve got everything in place. Not only must you be informed of current cannabis production and sales regulations, but also of proposed legislation and revisions that may shortly come into force.
Now that you’re certain you’re ready to make this big move, it’s time to proceed to the next step: finding a suitable property.
You should check the following:
Rent cost
Cost of license
Licensing application fee
Employee salary
Transportation and storage of product
Security
How to get a dispensary license In Oklahoma.
Licenses for growers in Oklahoma come in the form of a certificate and are issued through the OMMA website. The charge to producers, processors, and dispensaries for applying for a license is $2,500. You must provide the following to apply:
A business plan
A financial plan
An inventory control plan
Patient education
Record keeping
Security plans
There are distinct rules in every state in the United States about opening dispensaries. Each state sets its own standards. You will need to study the rules that apply in Oklahoma.
The general requirement for opening a dispensary in Oklahoma is that you undergo marijuana dispensing training and acquire a license.
How to keep your dispensary compliant in Oklahoma.
You must abide by all of Oklahoma’s strict marijuana regulations to keep your dispensary compliant. These include:
Marijuana dispensaries in Oklahoma are prohibited from selling more than the following amounts in a single transaction:
Three ounces of cannabis
Concentrate of one ounce
72 ounces of cannabis
Oklahoma dispensary owners, like any other legitimate business, must pay taxes and ensure that they give the following information:
All cannabis-related information with other permitted firms
Details of batch numbers that show the weight of cannabis acquired at wholesale
The number of plants that have been approved for relocation to other locations
Batch numbers showing the weight of cannabis sold
Record of all items that have become obsolete
Substantial fines are imposed for noncompliance. There is a $5,000 punishment for a first infraction while a second offense will result in license revocation. Because of this, you are going to need the assistance of technology to automatically update you if the OMMA cannabis rules change.
Understanding Metrc in Oklahoma.
Metrc is an integrated system for tracking and tracing marijuana products in real-time. Every plant and its wholesale shipment has a unique tag attached by licensees. To uniquely identify each plant, these tags use readable text, barcodes, and radio frequency identification (RFID) chips for easy identification.
Metrc is already being used in Oklahoma following the state’s legalization of marijuana. The OMMA can only see and track inventory once it has been entered into Metrc by a commercial licensee.
To get started with Metrc in Oklahoma you should:
Watching their training videos and schedule training.
Request online access and complete the New Business System Metrc training with your dedicated Metrc Account Manager.
Connect all of your employees with Metrc and make sure they have the permissions they need for their jobs.
Request Metrc plant tags, package tags, and other UID tags and document the physical receipt of requested Metrc UID tags.
Assign UID tags to your cannabis items.
Access the Beginning Inventory Guide in Metrc for proper guidelines and references to other important factors.
What are the dispensary laws in Oklahoma?
Cannabis laws in Oklahoma are the guidelines that every cannabis dispenser must heed while dispensing medical marijuana. Every prospective cannabis retailer will be guided by these same rules, and it is one of the first things you discover when learning how to operate a dispensary in Oklahoma.
Some of these rules include:
To legally sell cannabis, you’ll need a state-issued license, but CBD oil made from industrial hemp is permitted without one.
Patients must first obtain an authorized medical marijuana card to acquire and consume medicinal cannabis.
Possession of paraphernalia is a misdemeanor that carries a maximum sentence of one year in prison and a fine of $1,000.=
Individuals under the age of 18 are only allowed to enter a dispensary with an adult who has a valid medical card.
The sale of fewer than 25 pounds of marijuana is a felony punishable by a two-year prison sentence and a $20,000 fine.
Who can your dispensary sell to in Oklahoma?
Only medical cannabis patients (or their caregivers) with valid patient licenses can shop at an Oklahoma dispensary. Medical cannabis is available to Oklahoma residents over the age of 18 who have a physician’s recommendation.
A physical medical marijuana ID card or the state’s database can be used to verify a patient or caregiver. Out-of-state persons or companies are not permitted to purchase medical marijuana from licensed dispensaries. Licensed processors can sell to other licensed processors and licensed dispensaries.
Oklahoma dispensary market size and opportunity.
Despite its accomplishments, the cannabis industry in Oklahoma is still in its infancy, and the environment is rapidly changing. Marijuana laws in the state are continually changing to make it more accessible.
Another feature that distinguishes Oklahoma from other states is that it allows cannabis smoking and vaping anywhere that tobacco can be lawfully consumed, such as on the sidewalk or in a bar that allows smoking. As a result, Oklahoma has morphed into an industrial cannabis state with a variety of dispensary options.
There are only a few challenges to overcome. Any sort of cannabis — from raw flowers to topical lotions, from oils and gels to vaporization and patches — can be sold by anybody who pays $2,500 for a dispensary license.
Cannabis legalization has resulted in a significant expansion in legal cannabis cultivation and distribution, as well as an explosion of related service providers in many states. Cannabis has become a lucrative business prospect for many inhabitants in the state.
What cannabis software do I need to run a dispensary?
To run a compliant dispensary in Oklahoma, you will need the following business software:
One of the most important technologies in a dispensary is a point-of-sale system. A compliant POS system will make sales transactions easier for your dispensary’s staff and provide the greatest payment options for customers. A POS can help run the following tasks:
Regulate inventory control and legal compliance
Manage customer check-in and ensure that your customers follow the daily sales tracking guidelines
Assists you in automatically rejecting transactions for people who are not authorized to buy.
Integrate with the Metrc system, and keep you compliant.
Integrate with yourscheduling softwareand provide labor forecasts for scheduling.
Produce all sales and customer reports for the approval of cannabis authorities.
Dispensary payroll software.
Integrated dispensary payroll software will assist you in managing your employees’ pay. It manages all expenses and interfaces with other systems such as personnel administration and payroll tax deductions. It makes direct contributions to the IRS and compensates employees via direct deposit. Another benefit of using an integrated payroll system is that you can integrate your company’s payroll with the rest of your workforce management suite; performing tasks like approving clocked hours to payroll, and running payroll in the click of a button. Dispensaries who used this type of system report saving 5 hours per week on running dispensary payroll.
Scheduling and time tracking software.
Also known as workforce management software, integrated scheduling and time tracking software makes creating staff schedules, and managing staff hours very hands off. With this type of software, you are able to create schedules remotely, and staff can request shift swaps or time off. With time tracking, staff can sign into work using facial recognition technology, and staff-approved hours can be streamlined to payroll – so staff who clock into their shifts, get paid with the click of a button.
Dispensary HR software.
Recruiting, hiring, interviewing and onboarding can take up a lot of time. Especially when staff have important documents they need to sign, and criminal record checks that need to be completed. With dispensary HR software you can automate recruiting, and onboarding, by having staff onboard themselves and sign digitized documents.
A Security system.
A good security software system with cameras to monitor what goes on inside and outside your dispensary should be paramount to ensure your dispensary remains compliant. You will need a system where you can monitor all the affairs of your dispensaries at one glance without being in different places at the same time.
Inventory management software.
You require some software to help you manage your inventory, and the process of placing orders and confirming inventory counts from your vendors. You’ll also need a system that will remind you when new orders are needed when it detects product shortages.
Website.
If you are in a state that allows e-commerce for dispensaries, a website should be a top priority for competing for top rankings in today’s market. Because of technological advancements, you may now open an e-store where customers can buy cannabis online and have it delivered to their doorsteps.
Your website should be able to collect KYC information from your consumers to verify their identities and eligibility to acquire cannabis products, so you can be confident you’re following the cannabis serving guidelines. If you deliver a cannabis product to someone who isn’t eligible for it, you’ll be breaking the rules guiding cannabis consumption, and this might be a huge risk for your new business.
Metrc.
Metrc, also known as Marijuana Enforcement Tracking Reporting Compliance is a regulatory compliance system and was built to keep track of cannabis cultivation, preparation, and packaging. Basically, Metrc is a database for tracking cannabis from seed to sale, and identifying it using RFID tags. In Oklahoma, you must submit data to Metrc to run a compliant dispensary. Reporting to Metrc can be done manually, however cannabis-specific POS systems are offering a Metrc integration, meaning it is done automatically for you as you sell your product.
What else do I need to know?
Now that we have covered all the technical and operational bases, the rest is up to you.
Other key parts of opening a dispensary include considering where your store might be located, what your brand value and vibe will be, and how your product and store will look.
Marketing should also be a consideration, as well as staff training, and company culture.
Many new cannabis entrepreneurs hire consultants to help them navigate these areas.
For now, we hope this has been a helpful way to get you started.
Tommy Truong is the Director of Partnerships at KayaPush; the cannabis software helping dispensary owners manage their HR, scheduling and payroll all from one easy to use platform. KayaPush also integrates with leading dispensary POS systems, giving you an end-to-end solution. Tommy loves hot sauce, fried chicken, and running with his Boston terriers.
Committee Insights | 7.14.21 | How to develop a Risk Assessment for your Canna-Business
In this edition of our NCIA Committee Insights series originally aired on Wednesday, July 14, 2021 we were joined by members of our Risk Management and Insurance Committee for a discussion on how to evaluate and rank risks to your cannabusiness.
Our experts discussed the potential impact of risk to cannabusiness operations and how to effectively identify and rank them. The discussion included risks posed by product sales, partnership agreements and corporate culture. The expert panelists also shared insights gained from their respective areas of specialty which include; Legal, Financial, Manufacturing, Technology and Insurance. Their insights will arm YOU with the tools needed to fortify yout operational practices and minimize or avoid costly losses.
Mathew Grimes
Vice President – Cannabis Specialty Group
HUB International Limited
Summer Jenkins
Business Development Manager
Cannasure Insurance Services
Service Solutions | 7.13.21 | Learn How to Grow Your Cannabis Business with Acumatica Cloud ERP
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 Service Solutions series is our sponsored content webinar program which will allow business owners the opportunity to learn more about premier products, services and industry solutions directly from our network of established suppliers, providers and thought leaders.
With shifting public sentiment, state-specific cannabis laws, and licensing requirements, the Cannabis industry is in a constant state of change. From securing capital and licensing to hiring qualified people and meeting compliance mandates, the path to success is filled with challenges, but a mobile, adaptable business management solution will expedite and ensure your progress.
Enterprise resource planning (ERP) solutions provide Cannabis companies like yours cloud-based financials, inventory management, sales, operations, as well as tracking, monitoring, and reporting on raw materials from seed to sale. Learn how Acumatica – the leading innovator in Cloud ERP – will make your growing business more agile and efficient.
Learning Objectives
• Hear an Acumatica company overview, real success stories from Cannabis companies just like yours, followed by a product demo.
• Learn how ERP can be used to track, monitor, and report on raw materials and finished goods.
• How to manage accounting, sales, operations in one system and track the cost of goods – manage staff, assign tasks, and reduce manual error calculations.
• Streamline the signal flow throughout your business with the world’s fastest growing and most adaptable cloud ERP solution, Acumatica.
Panelists:
Sean Chatterjee
Vice President, Partner Sales
Acumatica
Eric Moreau
Director, Presales
Acumatica
Member Blog: Cannabis Compliance – 6 Tips To Avoid Dispensary Fines
Cannabis Compliance is one of the things to which every cannabis dispensary must pay attention. Not only does compliance ensure that you have the legal right to carry out your cannabis-related operations but it also helps keep your business from unnecessary fines and sanctions.
The U.S. Food and Drug Administration (FDA) has stipulated various regulations for cannabis-derived products at the federal level. In addition, there are regulations at the state level. Violating any of these regulations can land your cannabis business in trouble that could potentially lead to revoking your license.
Also, people generally have greater trust in regulation-compliant businesses, so compliance is healthy for your business reputation. It is important, therefore, to structure your business operations to align with the cannabis dispensary guidelines and regulations operational in your area. In this article, we will cover 6 tips and tools to help you keep your cannabis dispensary from incurring any fines or lawsuits, let’s dig in!
1 – Digitization of licenses and renewal
In an industry as critical as cannabis dispensing, unauthorized operations constitute a serious offense and may attract severe penalties. The reason should be obvious—cannabis and its products can pose a raft of risks when handled by the wrong people.
This is why your dispensary must be properly licensed by the appropriate government body to be fully authorized for cannabis operations. Your cannabis business is at the risk of heavy fines, suspension, or even total shutdown if you operate without a license.
Different states may have different requirements for obtaining dispensary licenses. There may also be local laws and regulations within the state. You need to ensure that you discover and comply with all the requirements applicable to your locality.
For instance, the State of Colorado requires that employees in the cannabis industry must possess a MED (Marijuana Enforcement Division) license. This means that if your dispensary is in Colorado you not only need to get licensed as a business but each of your employees must also obtain licenses.
You must also ensure that your business license and those of your employees (where applicable) are up to date. The requirements for licensing evolve with changes in cannabis regulations and you will need to stay abreast with information about license requirements in your area in order to maintain your cannabis compliance.
Tracking your licenses and their renewals can be quite a task. But you can save yourself hassle and stress by using a digital HR system to store and manage your licenses.
With HCM software, you can manage your employee profiles and ensure that every worker has the necessary licenses to work in your company. This way, you minimize the risk of operating without a license and violating cannabis compliance regulations.
The software also lets you store and track your licenses and set up reminders to alert you when a license is coming due for renewal. This feature makes it easy for you to maintain up-to-date licenses and renewals.
2 – Use state traceability with a seed-to-sale integrated POS.
One of the major concerns in the wake of the increased legalization of cannabis is the ability to monitor the product from seed to sale. From the top of the production and supply chain to the bottom, traceability is crucial to cannabis compliance.
Monitoring and tracking every single step of this supply chain helps to ensure that cannabis and its products do not fall into the wrong hands — and this goes a long way to ensuring that the product is not abused in any way.
Cannabis and its products can be exposed to contamination with toxic chemicals and other harmful substances via pests or unhygienic processes. Such contamination may pose serious health risks if not prevented or properly managed. With well-detailed traceability, you will be able to track each step to be sure all necessary safety measures are in place.
Your license proclaims that you can be trusted with handling a product as sensitive as cannabis. One of the ways you can demonstrate this is by accurate accountability — and this comes naturally with good traceability. You should be able to give a proper account of every single cannabis product offered by your dispensary in case of audits or investigations.
Implementing adequate traceability is not as difficult as you might think. Compliant POS software that has this feature enables you to automate traceability with relative ease.
This type of software is integrated with the required traceability systems such as Metrc, BioTrackTHC, and Leaf Data Systems. With these, you can rest assured that your data reporting complies with the requirements of the U.S. government.
3 – Time clock software that uses facial recognition technology
Staying compliant in the cannabis industry requires that you commit your operations to qualified employees. Given that cannabis is a highly sensitive commodity and can easily be abused, you must establish a means of regulating who gets involved in your processes.
A time clock softwareproduct will help you keep track of your employees, their clock-ins, breaks, meal times, and other important indices. You can restrict and regulate who gets access to what, where, and at what time.
For instance, an underage person might attempt to clock in for a friend and get involved in your cannabis business operations. Also, chances are that someone in your company might attempt to punch in for a shift when it’s not their time.
These buddy punching practices can sometimes land you in serious compliance violation trouble. Using software with advanced face recognition technology will help you control unauthorized employee clock-ins by granting access only to the right person in the right place — so you can be sure you are staying compliant as your workers have minimal chance of violating labor codes.
Time clock software not only protects you from cannabis compliance risks but also from violating other laws that might lead to severe consequences. For example, violating the California labor codes — part of the laws in California — can lead to a lawsuit that may eventually cost you a fortune.
The California labor code provides that employees are entitled to a 30-minute meal break per five hours of work. This means an employee can potentially sue you with aPAGA lawsuitclaiming that they have been deprived of meal breaks — a violation of a labor code. As trivial as this may sound, the lawsuit may eventually attract serious penalties to your business.
In this scenario, you can avert such lawsuits by providing proof that the employee clocked in and out for their meal breaks so gathering such evidence won’t be an issue. You can also automate your payment system to sort out necessary employee payments to ensure you stay compliant.
4 – Select POS software with purchase limit alerts and built-in ID
As part of cannabis regulations, different states in the U.S have different purchase limits. This means that you are not legally allowed to sell more than a stipulated amount of cannabis and its related products to a customer within a stipulated time.
For instance, both medical and recreational consumers can only purchase one ounce of cannabis per transaction in the state of Alaska. The limits are different in California where medical cardholders are allowed up to eight ounces per day, while recreational buyers are constrained to just one once daily.
If your dispensary does not pay attention to these purchase limit regulations, there is a high risk that you will be found to be violating the law and face dire consequences. Since it cant be difficult to manually track transaction limits, you can leverage POS software to set up purchase limit alerts.
Using POS compliance technology provides you with this very important feature. You can customize your system settings to alert your dispensary whenever a transaction goes beyond the stipulated purchase limit for a customer so, it becomes easier to set up your system to maintain your cannabis compliance anywhere you are in the United States.
Using a system with built-in ID features can also help you combat looping. Looping occurs when cannabis buyers purchase up to their limit, lay it off somewhere, and return for another purchase. It is usually done as a way to bypass the transaction limits.
With the built-in ID feature, you can link a customer profile to the transactions carried out by that customer. That way, you can easily detect the number of products a particular registered customer has purchased and set purchase limit alerts on their profile. So, no matter how many times they come, you will not be able to sell more to them if they have already reached their limit.
5 – Create customizable clock-in surveys
Clock-in surveys can help you ascertain some important details that enable you to maintain a compliant working environment. You can customize your clock-in surveys to obtain different information from different employees for different analyses and purposes.
For example, you can customize a clock-in survey to confirm that a new employee understands and remembers the compliance regulations applicable in your company. You can automate the survey to run for an employee’s first week at work to help them get accustomed to the regulations.
You can customize another clock-in survey to ascertain that your employees are up to date with the most recent legislative changes in cannabis compliance rules. This kind of survey can be automated to run at intervals, say once every 3 months.
Such clock-in surveys help you ensure that you leave nothing to assumption or chance. It goes a long way in keeping the consciousness of cannabis compliance very much alive in your dispensary.
6 – Hire a compliance manager
Given how important compliance is in the cannabis industry, it makes sense for you to prioritize ensuring that your dispensary is as compliant as possible. One of the most effective ways to do this is by hiring a compliance manager.
Notwithstanding, it is great to automate your operations to ensure compliance, it is also not a bad idea to employ a compliance manager to oversee your compliance-related issues.
Part of what a compliance manager does is to help you develop, implement, and review your internal operational policies to ensure they match the current compliance demands. In case any changes are made in compliance regulations in your area, your compliance manager will be devoted to enforcing those changes to keep your dispensary from violating the new rules.
Stipulating policies and regulations might not be sufficient. You may need someone who is committed to enforcing these policies among your employees. This is where employing a compliance manager can pay off.
With a compliance manager in place, you can focus on your business, its growth, and development while you can rest assured that you are not at risk of dispensary fines as a result of violating cannabis compliance regulations.
Tommy Truong is the Director of Partnerships at KayaPush; the cannabis software helping dispensary owners manage their employee HR, scheduling, and payroll. KayaPush also integrates with leading dispensary POS systems.
Tommy loves hot sauce, fried chicken, and running with his Boston terriers.
Member Blog: How Cannabis Dispensaries Can Navigate The METRC System
Cannabis dispensary owners must bear in mind that this industry operates under strict laws and regulations that set their business apart from conventional retail operations. State governments must balance public health and safety with the business needs of the regulated community, and that requires complete tracking of all marijuana products from seed to sale. Most states have already switched to METRC, the largest traceability system helping dispensaries from coast to coast stay compliant with the law. The goal of METRC is to easily retrace the steps from sale to seed and facilitate transparency in the legal cannabis industry. This post will help you understand better why METRC is required, how it benefits everyone, and how can you navigate the system while using the right technology to stay compliant.
What is METRC & Why it is Needed?
Marijuana Enforcement Tracking Reporting Compliance (METRC) is a cloud-based, state-mandated platform used by 15 states in the U.S. It facilitates real-time tracking and tracing of cannabis plants and products from seed to sale. METRC was first adopted by Colorado and early reports in 2014 indicated that this regulatory monitoring technology allowed for accurate quality control and ensured that the safety of the end consumer was prioritized.
In all METRC states, cannabis stores and dispensaries must use the system either directly or integrate it with their POS. All data about your dispensary is safely stored in the cloud and is only accessible by you or the state regulatory authority. State regulatory authorities use data inconsistencies in METRC to detect any diversions from the mandated regulations and if they find any discrepancies, they could conduct an investigation and impose hefty fines.
How to Prepare for METRC?
To gain access to the METRC system, all employees working at your dispensary must get certified. The process involves training, studying the terminology and workflows, and then taking a 40 questions multiple-choice test. METRC uses RFID tags as unique identifiers to recognize and monitor all transactions, these are not reusable and must be purchased in batches or bulk by dispensaries.
Every dispensary must incorporate its own solution to work with METRC. One can navigate the system manually but it is a risky and time-consuming process, as it involves countless hours of data entry, auditing, and reconciling processes to deal with the errors that inevitably pop up. The most convenient way to implement METRC is to automate as much of the process as possible. Investing in a robust point-of-sale solution that integrates seamlessly with METRC will ensure complete compliance with state regulations.
What are the Daily Obligations?
METRC’s cloud-based software requires only an internet connection and computer or tablet to access and use it, and an advanced POS system can automate the whole process for you. METRC tracks all plants and products with Radio Identification Tags. The plant tag is used to track each plant from its immature phase through to the harvest, while package tags are available for harvest batches or packages of one kind of product. All these activities must be recorded by dispensaries and reported to state regulatory authorities on time.
METRC charges $0.45 per plant tag and $ 0.25 per package tag. The tags can be ordered directly from METRC’s online software system, and are custom-printed for each dispensary. These can not be returned once the printing process has begun, are non-refundable, and cannot be reintroduced into the supply chain. Recreational cannabis plant tags are blue while medical marijuana plant tags are yellow.
Manual or Automatic Reporting?
METRC is simply a reporting tool – an application that allows you to send data to the state to maintain compliance. In most states, reports about all activities must be submitted to METRC no later than midnight on the day they occurred. A cannabis-specific POS can facilitate reporting to METRC while providing a user-friendly interface. To get the best compliance solutions, look for a POS that offers 2-way integration. This ensures that reports are sent to METRC in real-time, manifest intake is automated, and inventory adjustments are automatically synced with the traceability system.
Manual reporting will require you to log in to your online METRC account at the end of every business day to enter all data from every single transaction and activity that occurred. This is a time-consuming option that can also result in errors, increasing the risk of compliance infractions, fines, or worse, loss of retail license. Automated reporting with a cannabis-specific POS solution will make your life easier as it integrates seamlessly with METRC and automatically sends all your inventory adjustments and sales transactions as they occur in real-time. Also, if there are ever any connectivity issues, all saved data automatically sync once you are back online.
METRC has standard operating procedures in all states, and dispensaries don’t have a choice but to comply with them. But dispensary owners do have the option of selecting the right POS system that can help their employees navigate the METRC system more efficiently. Download your free copy of ‘A Complete Guide to METRC Compliance for Marijuana Dispensaries’ by Cova, to learn in-depth about the different levels of POS integrations with METRC, how to work best with the system, and state-specific METRC differences.
Gary Cohen is the CEO of Cova Software, the fastest growing technology brand in the cannabis industry. Cohen’s focus has been driving the company’s overall strategy, including its vision, go-to-market plan, and strategic development. Since joining the cannabis industry in 2016 and launching Cova commercially in 4q17, Cohen has led Cova to dominate the enterprise sector for dispensary Point of Sale, while forging client relationships with hundreds of single-store retailers across North America.
In solutioning the POS platform, Cohen & the Cova team have met with over 1,900 operators and leveraged expert knowledge to provide retailers the support they need to get a license, pass inspection, launch a store, and improve operations. Cohen leads seminars on retail technology, compliance, business operations, and cannabis banking laws at the industry’s largest events, including the NCIA and MJBizCon. As Cova has become the predominate thought leader for cannabis retail tech, Cohen has established himself as a leading voice educating cannabis entrepreneurs as they build their own successful brands.
Member Blog: How To Choose A Point Of Sale System For Your Cannabis Dispensary
The Canadian cannabis industry has witnessed great success since federal legalization in 2018. In the United States, 35 states authorize the use of medical cannabis, and 15 of them allow recreational marijuana consumption. Potential dispensary owners should bear in mind that the cannabis industry operates under strict laws and regulations that set this business apart from conventional retail operations. A robust point-of-sale (POS) system is one of the most important tools that a dispensary owner must invest in. However, it’s also crucial to remember that not all POS systems are created equal, and a cannabis industry-specific POS will always be a better choice than a generic POS. Following are some of the most important criteria that you should consider when selecting a cannabis POS:
Product Design and UX
A cannabis-specific POS created specifically to address the nuances and pain points of cannabis businesses is your best bet. A well-designed system helps you quickly process actual sales and facilitate better inventory management. An intuitive and easy-to-use system boosts the performance of your budtenders by making product information and customer data available to them on the fly, thus elevating the overall customer experience as well.
Compliance and Traceability
Compliance is the number one administrative burden dispensaries have to deal with because of the stringent laws and scrutiny the cannabis industry has to undergo. A well-executed cannabis-specific POS system empowers owners to stay compliant at every stage of their business. Most states in the US require tracking of inventory and sales through a state-mandated traceability system such as Metrc or BioTrack. Even among cannabis POS systems, the level of integration with the government tracking system varies, with many offering only batch reporting at the end of the day. Choose a POS that automatically sends every reported transaction in real-time to the tracking system, thus helping you minimize human errors and always stay fully compliant. Many legal cannabis markets also require digital age verification scanners for dispensaries to scan IDs at the point of entry. So ensure that your POS provider provides all these functionalities.
Reliability and Data Privacy
There have been instances of generic POS crashing when used by cannabis stores. Even popular cannabis-specific POS systems have had recurring performance issues. Learn more about each of the POS systems in consideration by reading reviews and customer stories to figure out how reliable they are. A cloud-based POS system entails storing data on remote servers operated and maintained by a third party. It poses a lower technical barrier to entry and is definitely a cost-effective solution, but you must ensure that your POS provider protects all your dispensary and customer data, as per government regulations.
Inventory Management and Reporting
A well-designed POS system offers inventory valuation and costing methods integrated into your POS to streamline your inventory management. A dispensary-specific POS will provide you the sales trends data you need to most accurately judge the weights, strains, and quantity of products you need to stock up. Many states in the U.S. expect you to have a clear paper trail on every legally grown gram of cannabis, from seed to sale, and your POS system must have efficient reporting capabilities for you to report that. Powerful analytics and a customizable mobile reporting dashboard will enable you to monitor the health of your store and submit reports in real-time from anywhere.
Hardware and Software Integration
How your dispensary POS integrates with your other services and technology is another factor. Consider all the physical hardware that is being used in various sections of your dispensary and whether the POS provider can sync them with its software. You will have to integrate your accounting, HR, workforce, and security software solutions with your POS as well to ensure smooth operations. In a fast-evolving industry, new platforms and innovative solutions can hit the market almost overnight, but you must only select a POS that seamlessly integrates just not with your hardware and software but also with online marketplaces like Leafly, Weedmaps, and Dutchie so that you can offer easy pickup and delivery services to your customers as well.
Product Development and Support
A cannabis-specific POS company that has extensive experience in the industry will remain an authority on the latest developments, and will regularly update its product to stay ahead of regulatory changes. Find out about the after-sales customer support system they have in place- many companies will help you launch quickly but will disappear when problems may arise and leave you to tackle software glitches on your own. Also, choose a dedicated system for your retail business that specializes in the cannabis sector you operate in and is not an all-in-one solution.
Scalability and Cost of Ownership
An enterprise-level POS allows you to manage stock across all stores, set up location-level pricing, perform bulk editing, and even assign granular employee security permissions. It gives you complete visibility and full corporate control of your business with centralized reporting- accessible from anywhere, on any device. A POS built for multi-location brands has a robust platform with open APIs to enable flexible, plug-and-play integrations for easy scalability. Choose a POS provider that has the cannabis industry expertise and the ability to grow with you. Even if you may have to pay a bit more upfront, you will benefit from the long-term ROI and reduce your overall cost of ownership.
Gary Cohen is the CEO of Cova Software, the fastest growing technology brand in the cannabis industry. Cohen’s focus has been driving the company’s overall strategy, including its vision, go-to-market plan, and strategic development. Since joining the cannabis industry in 2016 and launching Cova commercially in 4q17, Cohen has led Cova to dominate the enterprise sector for dispensary Point of Sale, while forging client relationships with hundreds of single-store retailers across North America.
Cova designs and builds retail software solutions specifically for the cannabis industry. Our technology platform currently powers 20,000 retail stores and over 1000 cannabis dispensaries with virtually no downtime, even on 4/20, making us the most robust and reliable cannabis POS system available on the market. Our point of sale system and its suite of digital solutions make complex operations simple, so retailers can stay compliant, streamline their operations and deliver an amazing experience always.
Member Blog: 2021 Cannabis Compensation Survey Report Released!
We are pleased to announce the release of the 2021 Cannabis Compensation Survey Report. This second annual survey aggregates compensation data for cannabis businesses and ancillary services, establishing benchmarks to help those businesses better understand the market and stay competitive, all while following federal compliance regulations that guide the collection and dissemination of compensation survey data and results.
FutureSense and NCIA laid the foundation for the project in 2019 and released results for the inaugural survey at the end of that year. At the onset of the pandemic in early 2020, both parties took a step back to adjust their trajectories looking to enhance the scope and depth of the project. Marijuana Business Daily came on as a primary partner to assist with visibility and distribution. Green Leaf Payroll & Business Solutions came on as a supporting partner, providing the project with anonymized payroll data. NCIA has stayed on as an endorsing partner to promote the shared mutual interest of supporting cannabis businesses and the industry at large.
This year, the survey established benchmarks with reportable data for 98 unique positions, a jump up from the inaugural report, which included 78 positions. The benchmarking process also established more accurate job titles representing both specific job responsibilities as well as representing the scope and breadth of organizational structures within the cannabis industry. These benchmarks include close to 200 unique positions total that will be reported on as the project grows and more cannabis organizations participate and submit data in future years.
The final report also includes recent trends and observations connecting the data to anecdotal insights found through our work and involvement in the cannabis community. The final report also provides information about how to utilize the survey data and a “geo-differential” chart to inform making any adjustments by state. The results are presented as percentiles to show both central tendency and spread. They are meant to be used as ‘guideposts’ to help inform salary and wage decisions, rather than exact numbers to base those decisions on. Many factors can and should be taken into consideration when determining what and how to pay employees, but these results provide an accurate representation of what pay amounts can be.
As the survey evolves and more companies participate, the project plans to also produce results with demographic breakouts such as by region/location, industry sector, and company size; as well as data for benefits, incentives, and equity compensation. These are all very valuable insights but require more participation across the country to produce, per compliance regulations.
The results from the survey can be used across every facet of the cannabis business. Understanding not just how to pay your employees, but also how to attract, motivate, engage, and retain your employees through compensation can be make-or-break in this rapidly evolving industry. 60-70% of companies’ expenses are typically payroll; being even 5% on- or off-the-mark could mean thousands or hundreds of thousands of dollars lost or gained.
The survey’s success is contingent on participation. More and more companies are realizing the value of this information and the importance of transparency through 3rd party surveys. All submissions and their respective data are held in strict confidentiality. Abiding by the Department of Justice regulations, this survey produces anonymous and unbiased results.
The survey accepts organization-wide submissions for companies with ten or more employees at this time. Individual submissions are appreciated as anecdotal insights, but are typically not included in data calculation.
For any questions and/or to sign up for next years’ survey, please email matt@futuresense.com or visit: www.BlueFireCannabis.com
Matt Finkelstein is a consultant with BlueFire Cannabis by FutureSense. He has worked in the management consulting world since 2007 while also pursuing a passion for and career in organic farming. His farming experiences span across the many facets of the cannabis industry, lending itself to unique perspectives supporting his current work bringing FutureSense’s services to the cannabis industry and its community.
BlueFire Cannabis is the cannabis-forward division of FutureSense LLC, a management consulting firm providing holistic people strategies that improve business performance. Our specialties include business strategy, motivation and rewards, executive, employee and sales compensation, organizational and individual assessment, leadership development and coaching, human resources, communications, change and sustainable transformation. For more information, please visit www.BlueFireCannabis.com and www.FutureSense.com
Member Blog: Cannabis Compliance Pains and How to Solve Them
Amid increased anxiety and stress resulting from one of the most turbulent years in recent history, Americans everywhere have been turning to cannabis products to help them make it through. Bearing witness to a 71% increase in cannabis product sales nationally, according to industry experts at Leafly, the U.S. cannabis industry grew beyond expectations in 2020.
While dramatic increases in product demand may seem like a cannabis business owner’s dream, maintaining compliance with unstable and unstandardized cannabis regulations can bring on more than a few nightmares. Every state seems to have different guidelines, requirements, and procedures than the next, with some in-state laws differing even between municipalities.
Although maintaining compliance may seem like an unnecessary challenge without an immediately obvious return on investment, the real nightmare for cannabis operators begins once they’re found in violation. Non-compliance consequences usually include huge fines, the temporary loss of business, and even business license forfeiture.
As a cannabis professional, you know that regulatory compliance isn’t optional and instead, an absolutely critical function of every cannabis operation. From cultivators and manufacturers to distributors and retailers, no business in the seed-to-sale supply chain can expect longevity in this industry without a plan that ensures adherence to local, state, and federal laws.
The Most Common Cannabis Compliance Issues
One of the most common complaints regarding regulatory compliance involves the amount of time you have to spend on compliance: maintaining adherence, staff training, and preventing non-compliance violations. Let’s face it, this is a burden that doesn’t seem to directly correspond to a return on investment, particularly if you are a smaller cannabis business operating on thinner margins than some of the big guys. When time is among the most valuable things you have, wouldn’t you rather focus on front-end concerns that yield the more obvious benefits to the bottom line?
Often it’s the level of cannabis regulation complexities that takes so much time and energy to overcome. Without approval and regulation on the federal level, requirements can drastically vary by state, subject to rapid changes by state and local legislatures. Maintaining compliance becomes a more significant challenge if you are a growing business with an eye toward expansion into more than one location in multiple jurisdictions.
Together with medical privacy requirements, food safety, occupational safety, tax regulations, and other conditions, it seems like you’re spending more time investing in learning and implementing compliance initiatives than in product, facilities, or operational investments.
COVID-19 certainly didn’t make any of this easier. These regulations have proven to be the most unstable, with many state and municipal governments behaving inconsistently, seemingly unsure of what they were doing week to week.
On top of existing regulations before the pandemic, many cannabis businesses found ways to quickly adapt to new health regulations, mandatory facility closures, and point of sale changes. Dispensaries once focused on efficient customer service in limited-space shops now have to ensure social distancing, customer turnover, enhanced sanitation, and new capacity limits.
Alleviating Compliance Pains through Preparation
The hard truth of the matter for cannabis businesses moving forward is that regulatory compliance will continue to be one of the most critical leadership focus areas. With more states poised to follow legalization trends in the next few years and lasting changes from an ongoing pandemic, the complaints concerning regulatory compliance are likely to get louder and more frequent.
However, you can meet these challenges through systematic planning and the right cannabis tools to continue growing within the industry while striving for perfect compliance records.
The most impactful steps you can take as a cannabis business include acknowledging the significance and planning for 100% compliance. Not only does compliance protect your business from incurring hefty fines and licensure consequences, but regulations also work to protect the safety of customers and staff.
Regulatory compliance isn’t just about avoiding fines and protecting a business’s finances — it’s about providing a quality product consistently in a safe and secure environment. Tainted products can injure consumers, while children and animals are at risk of accidental consumption resulting from insufficient packaging.
As a cannabis operator, once you adequately acknowledge the implications of maintaining compliance, you can begin developing a plan to make it happen. Depending on the scope and size of your operation, requirements specific can vary from one cannabis business to the next. If you run a cannabis business with front-end sales, for example, you may be required to follow regulations that a delivery-only company would not be required to follow.
Ensuring your compliance plan focuses on the applicable statutes for your business type will save time, energy, and vital resources. Consulting with cannabis compliance experts is an economic investment every cannabusiness owner should make. They’ll teach you about meticulous record-keeping while helping you examine local regulations and understand the requirements specific to your business type.
Vice President of ERP Sales, Frank Nisenboum,is a trusted advisor at c2b teknologies who has guided organizations of all sizes enabling them to establish a technology presence and expand their business through technology. His proven ability to analyze the current and future plans of a company and work with team members to subsequently bring technology solutions to the organization result in improved processes and controls that assure continued growth and profitability.
Frank has worked in the ERP and CRM software selection, sales and consulting industry for almost 25 years. His strong ability to understand, interpret and match the needs of an organization to the right solution make him an asset to all of his clients.
c2b teknologies integration and engineering experts have partnered with leading cannabis industry experts to develop a software solution that provides a complete cannabis operations system. The best-in-class solution not only handles tracking of seed-to-sale activities but encompasses your entire cannabis operations with compliance needs handles along the way. Our passion for solving problems drives us to deliver innovative solutions for everyone we work with. Visit c2btek.com for more information.
Member Blog: How to Launch a Marijuana Gift Card Program for Your Dispensary
Gift cards are an excellent way to increase brand awareness and an opportunity to generate new customers for your dispensary. Research shows that these tiny pieces of plastic can boost revenue by up to 40%. They are indeed invaluable tools for upselling as well, as 75% of recipients tend to overspend on the value stored in their cards. Starting a gift card program requires minimal investment and is a proven tool to stimulate bottom-line revenues and enhance the customer experience.
Benefits of Gift Cards
A well-oiled gift card program has the potential to bring at least two customers into your store — the buyer and the receiver. A study by First Data showed that 11% of gift card receivers noted they had never or rarely visited the merchant location before receiving the gift card, and over a third became regular customers after redeeming the card. Also, if your loyalty program offers gift cards as an incentive, a customer will be encouraged to spend more money when receiving points redeemable for a gift card in the future. These cards don’t just boost your retail profits but also serve as tiny billboards for your brand.
Following are five important points to consider when launching a gift card program for your cannabis retail store:
#1. Choose and Configure the Best Solution
Choosing a gift card program that integrates seamlessly with your existing POS system is the most reliable solution. If your POS does not offer any gift card functionality, consider an upgrade to a more modern cloud-based cannabis POS system. You may also opt for standalone third-party gift cards that can be sold through your POS as SKUs, but this solution is not recommended as there is a risk of data slipping through the cracks.
#2. Create a Gift Card Strategy
Developing a gift card strategy is a crucial step in designing your program. Is your gift card-program meant to cover your bases across major holidays and slower seasons? Or is it supposed to be an all-encompassing component to your loyalty program and upsells? It is necessary to plan and design a program to meet your requirements and customer needs for gift card sales and redemptions at your cannabis dispensary. Also, choosing customizable branded gift cards will allow you to have total control over the look, logo, and design.
#3. Stay Compliant with Regulations
Cannabis is a highly regulated industry, and retail gift cards must fall in line with specific marketing and advertising restrictions. However, with an easy to manage, activate and track gift program that ensures end-to-end compliance as per local regulations, you can sell more gift cards and add to your revenues without the risk of any legal ramifications.
#4. Plan Gift Cards Orders and Sales
Your supply of gift cards must meet demand, and you must never run low on its inventory. Estimate demand based on your sales volume, holiday season, and target demographics, and plan your order accordingly. Placing gift cards at the payment counter is a great way to capitalize on impulse purchases. Train your staff to recommend gift cards to customers when appropriate, and establish incentives for them to sell the most cards.
#5. Promote, Track, and Report
Marketing online and organizing giveaways on social media are excellent tactics to build brand awareness. Capitalizing on holiday season sales and occasions that focus on gift-giving will further propel your cannabis gift card sales. You must also track, measure, and report your program’s results regularly against other established KPIs for your business. An integrated reporting system provides you with insights easily extracted from data within your POS so that you can focus on making your gift cards program a success.
Gift cards are one of the safest and most convenient ways to improve cash flow without increasing COGS. A branded gift card that is fully-integrated with your POS system is simple to set up, easy to manage, flexible, and affordable. However, just implementing a gift card program is not enough, and you must have a robust marketing and sales strategy for your gift cards as well. With the complexity that comes with shopping for cannabis products, your marketing campaigns must enhance brand visibility and be able to communicate to customers that the best gift they can give is the gift of choice.
Download your free copy of the Ultimate Guide to GIFT CARDS for Cannabis Businesses by COVA, which is a comprehensive guide to the best ways to use gift cards in the cannabis industry, with detailed information on how to scale and sustain retail growth through a gift card program.
Gary Cohen is the CEO of Cova Software, the fastest growing technology brand in the cannabis industry. Cohen’s focus has been driving the company’s overall strategy, including its vision, go-to-market plan, and strategic development. Since joining the cannabis industry in 2016 and launching Cova commercially in 4q17, Cohen has led Cova to dominate the enterprise sector for dispensary Point of Sale, while forging client relationships with hundreds of single-store retailers across North America.
In solutioning the POS platform, Cohen & the Cova team have met with over 1,900 operators and leveraged expert knowledge to provide retailers the support they need to get a license, pass inspection, launch a store, and improve operations. Cohen leads seminars on retail technology, compliance, business operations, and cannabis banking laws at the industry’s largest events, including the NCIA and MJBizCon. As Cova has become the predominate thought leader for cannabis retail tech, Cohen has established himself as a leading voice educating cannabis entrepreneurs as they build their own successful brands.
Member Blog: How Third-Party Safety And Quality Audits Can Help The Cannabis Industry Self-Regulate And Avoid Mandatory Regulations
The disadvantages of receiving a third-party audit are apparent – it takes a lot of time to build a cannabis safety and quality program that meets audit requirements, and the costs of an audit can be relatively expensive. Additionally, if your company decides to use an external consultant to help develop your cannabis safety and quality program, it can add even more costs to the equation. So why bother getting a third-party audit at all if it is not mandatory? If the ethical response of “it’s the right thing to do” does not resonate, consider these more practical responses.
Legal Protection
Note that the lack of legal requirements for cannabis cultivators and manufacturers does not offer protection from legal action, and defending against litigation can be expensive even if a company prevails.
Brand Protection
If a consumer becomes ill (or worse) from ingesting or inhaling one of your company’s products, the negative public backlash and decline in consumer confidence can damage both your company’s bottom line and the industry as a whole.
Insurance Benefits
Insurance companies evaluate cannabis businesses based on their history and their current safety programs they have in place (e.g. GMPs, Recall Programs, Supplier Approval Programs, etc.). Whether or not a company has programs like these in place can influence the costs of their insurance. Additionally, third-party audits give cannabis businesses a verification record that their safety and quality programs are operating as intended. This verification record could help that company when dealing with insurance claims made from recalls or other adverse events.
Marketing Benefits
Enhance your company’s marketability by becoming certified to a third-party audit standard. For example, the new CSQ Standard lists all their certified locations on their website. This database creates a network of cannabis businesses who all meet industry requirements. Cannabis retailers will be able to search this public database and determine to do business with a cultivator or manufacturer based on their compliance with the CSQ Standards.
Self-Regulation
By proactively self-regulating, the cannabis industry can mitigate the possibility for high-profile recalls or outbreaks that might prompt regulators, such as the FDA, to establish mandatory and imposing regulations for the industry. Mandatory regulations could have a more burdensome effect and even be more costly than self-regulation with third-party audits.
Self-regulation is always preferable to mandatory regulation, and evidence of this is found in the alcohol industry’s self-regulation of marketing and advertising, as well as the video gaming industry’s self-regulation of video game ratings by the Entertainment Software Rating Board (ESRB). While third-party audits are not mandatory in every region, a voluntary and proactive approach that includes third-party auditing of cannabis cultivators and manufacturers will keep consumers safe and protect your company’s bottom line. All while avoiding adverse incidents that would initiate further scrutiny of the cannabis industry or prompt mandatory regulations.
To ensure that the industry is self-regulating properly, there are five proposed principles for self-regulation through third-party auditing.
A set of transparent and specific standards created by industry stakeholders that includes a public comment period.
External oversight through accreditation bodies, benchmarking organizations, and other external committees to ensure no disproportionate power or voting authority.
A public database in which individuals can search what companies are compliant with the requirements.
Transparent procedures for stakeholders to file complaints and provide feedback on the standards and their enforcement.
Periodic assessments and reviews to determine if the goals of the standards are being met.
In addition to setting sound principles for industry self-regulation, it is also important to highlight things that could potentially go wrong with self-regulation. The following three practices are often associated with the failure of a self-regulating system.
Weak standards that do not apply globally and permit unsafe practices.
The absence of transparency or weak oversight can undermine the objectives of the self-regulating system.
Industry leaders neglect to be part of the movement towards self-regulation.
For this reason, I urge industry leaders to sign a commitment to provide the safest and highest quality products possible and volunteer to be part of the movement of self-regulation of the cannabis industry through independent third-party audits.
Tyler Williams is the founder and Chief Technical Officer of Cannabis Safety & Quality (CSQ). Over the years, Tyler has diligently worked with various industry stakeholders and conducted sample audits on several cannabis cultivators and manufacturers to ensure the CSQ audit requirements meet the needs of this new and booming industry. Tyler currently sits on the Policy Council and the Cannabis Manufacturing Committee for the NCIA.
Before founding CSQ, Tyler was the Vice President of Operations for ASI, one of the leading food safety auditing, training, and consulting companies in the U.S. In this position Tyler was responsible for the certification process of over 3000+ audits annually and managed ASI’s employees and contracted auditors around the world. In addition to managing the day-to-day operations of ASI, Tyler also trained and consulted several different major food and beverage companies around the world to help improve their food safety practices.
In 2019, Tyler started a non-profit organization called Show Me Food Safety. This organization provides resources to small food manufacturers and growers in Missouri to help improve their food safety practices and get on the shelves of local grocery stores.
When the COVID-19 pandemic started to ramp up in the U.S. last March and stay at home orders were being put in place, medical cannabis patients took notice.
I saw it firsthand with my wife who stocked up for three months, not knowing what she was in for and wanted to make sure she had her treatments, just in case dispensaries were closed down. She was not alone, it has been well documented that this stocking upsurge took place and sales increased dramatically over a few months.
But many of these businesses did not close during the shutdown and it was a big milestone that several state governments declared medical dispensaries essential. This was a big statement to make for an emerging new industry that has been saddled with controversy over the years.
Prior to COVID-19, the industry was already going through a reset in late 2019. The large players overextended themselves globally with huge capital investments in facilities and then oversupply hit the market, prices started to decline and the anticipated demand to pull CBD products did not materialize. Add COVID-19, and you have the perfect storm to amplify the reset button.
Consolidation is in the works — restructuring of management teams, companies closing doors because they were not strong enough to start with other factors too. This pushed these businesses over the edge.
As we have been slowly reopening the country, the cannabis industry has the potential to emerge stronger than ever. There might be fewer players, but the ones that have survived will be set for the next push of maturity of the marketplace.
States that do not currently have adult-use programs will most likely look at cannabis as a way to drive new tax revenue into the state to help offset the heavy losses during these several months of lockdown.
When these states do pull the trigger on adult-use, regulation and compliance will be a key issue. The current companies who have been using all the latest tracking platforms, ERP systems, and implementing cGMP standards will be in very good shape to meet the requirements and deliver authentic products that are high quality and safe to consume.
Consumers will want to know the origin of the materials being used to manufacture these products and demand transparency from the brands. New innovative technologies using unique molecular-based tags to apply to the flower, oils, isolates and edible products will help take the industry to a new level of scientific proof of authenticity offering forensic transparency across global supply chains.
Even in the face of a pandemic, cannabis is here to stay! Over 60% of the population is in favor of it for both medical and adult use. The science that has taken place over the last 20 years globally has articulated how the human body can take advantage of the cannabis plant in many ways. And for folks who want to use it as a recreational alternative, they should have the right to do so, of course with responsibility.
There is clear global demand, it still needs to be sorted out and that will happen over the course of the next couple of years as this emerging industry matures into a profitable market segment in the world’s economy.
It is an exciting time for cannabis and as we begin to focus on reopening business across the nation, we are eager to take advantage and to be a part of the opportunities that are ahead.
John Shearman, Vice President of Marketing and Cannabis Business Lead at Applied DNA Sciences, has over 30 years of deep enterprise and advertising agency experience across all marketing, sales and IT disciplines. John’s experience allows him to advise on structuring sound strategies that address business goals and objectives. His extensive technology background stems from working with several leading technology companies throughout his career. John spearheads Applied DNA Sciences Cannabis vertical leading the vision, strategy, and product development for this emerging market. John also oversees the marketing for the entire company driving the marketing strategy for its other core verticals.
Member Blog: Off The Backburner – Compliance During COVID-19
by Mark Slaugh, CEO and Co-Founder of iComply, LLC
Operational cannabis compliance has been a vital but often ignored part of many owners’ guides to success. With the hustle and bustle that is the ever-expanding nature of the cannabis business, most owners and operators want to believe they are compliant 100% of the time.
However, anyone who owns a cannabis business and is honest with themselves knows that to understand the constantly changing regulatory updates is a constant challenge. Often, the needs of the business outweigh the time it takes to assess the best ways to remain compliant. Too often, the distractions of growing the brand, networking, and conferences distract us from what’s happening with staff, procedures, and operations behind the scenes.
This has become alarmingly evident during COVID-19.
The pandemic began affecting how different operators in different States had to adjust various emergency procedures and restrictions on how cannabis could be bought and sold. From there, pandora’s compliance box released a torrent of issues to look at.
In our experience, 95% of the industry has a reactive approach to compliance management and will scramble to take time and pay expensive attorneys fees to dig them out of trouble once they are caught.
And what you resist, persists.
During COVID-19, owners are already making procedural adjustments to remain compliant and are staying at home for a change – which has allowed them and their teams more focus and less distraction by avoiding conferences, travel, and in-person meetings as much as possible.
What they are finding is that the compliance train has been off the tracks for a while.
Naturally, as the industry grows, so does the responsibility of mitigating liability and staying on top of the backburner projects in dealing with compliance. It is not the sexiest or most fun aspect of the industry (if you aren’t compliance nerds like us).
People tend to resist being honest about it, managing it appropriately, or holding others accountable until it’s too late.
COVID has at least provided some breathing room for owners and operators to put on their facemask and dust off their SOPs or untangle the strings around poor inventory management.
Some cannabis companies are asking themselves how they can use the boredom of COVID-19 (to some degree) and the extra time saved from travel, conferences, and meetings to re-examine their operational compliance infrastructure.
We are finding that owners in the cannabis industry are lacking a transparent cannabis compliance plan that can be easily adjusted to stay ahead of regulators, rules, and to mitigate product liability. They lack accurate employee training to specific procedures with accountability and wonder why turnover is so high. They are starting to realize that inventory, books and records, and daily compliance management are creating more risk than is tolerable for a tangible reward.
The word “decimation” comes from the Roman times and was considered a military punishment in which squads of 10 (deci) would draw stones from a bag. One black stone among the white ones meant beating that soldier to death by his fellows. While extreme, the lesson was an important one and is still relevant in the cannabis industry today.
Out of every inspection by the MED, in Colorado, around 10% of licensees were found in violation and administratively punished. Having come from a banking risk management background, it is shocking to see that level of risk be “ok” with most operators.
No other heavily regulated industry tolerates such a high level of risk. Cannabis, in fact, tolerates 10x more risk loss on average than is acceptable in banking (less than 1%).
Some of the biggest backburner projects in compliance coming to the forefront are:
SOPs and Employee Training Manuals
It is crucial to have compliant procedures that are accurate to current operations. One cannot effectively and proactively run a cannabis company without valid and accurate Standard Operating Procedures and related documents. They are essential.
What we find is that most established operators have to dust these SOPs off from whatever shelf they placed them on when they finally come around to looking at them.
Inventory and METRC
Another big problem area is inventory inaccuracies which require regular reconciliation and clean up. As we all know, once the snowball effect of inaccuracy happens, it simply gets more entangled and difficult over time.
During COVID-19, regulators are doing fewer in-person visits and are relying more on their ability to look at seed to sale tracking systems to identify potential non-compliance to conduct their inspections and request specific information from operators.
Books and Records
Most cannabis companies think SOPs, audits, and inventory are compliance management in a nutshell. The detailed accountability over files, logs, and forms often escapes their mind as soon as the file is saved or placed into the file cabinet.
Like dusting off SOPs, opening the file cabinet to ensure the accuracy of these documents can be best done during COVID-19 as well. Insight to this helps improve procedures and ensure accountability of staff members from visitor logs, to pesticide applications, incident reports, and manifests.
Staff Knowledge
For many of our medium to large clients, COVID-19 has affected their staff members. When one person is infected, many others may not want to come to work, and companies are forced to hire in additional labor to meet operational demand. If this hasn’t happened, consider you might want to be prepared for it as it takes away employees for a minimum of 2 to 4 weeks.
COVID-19 is causing a wide gap due to faster training requirements and creating more risk for non-compliance, product liability, and workplace safety without proper education, knowledge and accountability for staff.
Challenges like COVID-19, rule changes, and human nature are greatly mitigated and proactively managed when cannabis companies commit to taking compliance off the backburner and putting it at the forefront. Taking the time now to do so may be better than any other time for experienced operators to better prepare for “normalcy” when it returns.
An ounce of prevention is literally worth pounds of cure. And, during COVID-19, cannabis companies would do well to prevent the “decimation” of their very valuable licenses and operations by taking advantage of the extra time and energy to do the heavy lifting necessary to take compliance off the backburner.
Mark Slaugh, CEO and owner of iComply, works in the specialist sector of compliance for the medical, retail, and hemp industries and has over 12 years’ experience in cannabis industry development, consulting, and operational compliance and over 21 years’ experience in regulations and risk management.
Due to his extensive background and education, Mark knows what it takes to move markets forward at political, policy, and operational levels. He has developed small and large startups, improved existing operations, and has protected some of the top companies in the field.
iComply provides operational compliance services and validation of over 200 cultivation, manufacturing and processing, and dispensing facilities since 2011 and iComply consults for a variety of communities, organizations, and governments. Engaging in legacy projects over the long-term, iComply builds trusted relationships to ensure industry integrity, standards, regulations, and best practices are implemented and adhered to within organizations.
Member Blog: Attracting Investors Requires Compliance And Scalability
by Frank Nisenbaum, Vice President of ERP Sales, c2b teknologies
More new cannabis entrepreneurs are trying to carve out space in the industry, and as the market continues to expand, so are cannabis investors.
This comes as no surprise. Cannabis investors have more predictable ways to invest in cannabis companies since marijuana can now be found in everything from beverages to beauty creams.
But the needed operating capital coming from these investors isn’t being thrown at new upstarts riding on nothing more than the dream of success in the legal marijuana marketplace. Cannabis investors want to see the people and businesses into which they put capital have a strong commitment to their industry and a dedication to their processes. Of course, this entails strict adherence to local, state and federal regulations for compliance initiatives, but investors also want to see a solid foundation for expansion and scalability in place.
Scalability
Consider your projected growth over the next few years, what are you doing to meet it? Investors want to see more than forward-thinking ideas, they want to see the initiatives you’ve put in motion to meet your projections. Are you upgrading suppliers, creating new products, or even better, adding new locations?
Investors need to believe that organizational leadership has a sound plan for scalability in place. More importantly, as you expand into new markets and grow your product offerings, you have invested in the framework and infrastructure in order to grow their operation in line with your business plan.
Regulation and Compliance
Among the more burdensome compliance issues for cannabis operators is the need to track the entire lifecycle of cannabis products from seed to sale. You need to be able to account for every step in the lifecycle of your cannabis plants and be able to provide this information to regulatory agencies at a moment’s notice.
Adding to the complexity of tracking the plant, you’ll need tracking for each employee who works with the plant. These seemingly minor details can derail the best intentions, so demonstrating success surrounding mandated quality assurance testing at key points in the plants’ development will get the attention of would-be investors.
Multiple Jurisdictions for Added Complexity
Compliance is even harder to achieve due to the multiple bodies which have jurisdiction. Local, state, and federal agencies all jockey for partial control of regulatory measures placed upon your cannabusiness.
Some of the federal agencies involved in the regulation of legal cannabis plants include, but are not limited to:
United States Department of Justice
Environmental Protection Agency
Internal Revenue Service
Each state in the U.S. has its own regulatory body for cannabis operations. Examples include:
Department of Public Health
Department of Food and Agriculture
Department of Fish and Wildlife
Department of Pesticide Regulation
Alaska Marijuana Control Board
California Bureau of Cannabis Control
Colorado Department of Revenue Enforcement Division Marijuana Enforcement
Illinois Department of Financial and Professional Regulation, Cannabis Regulation
Maryland Medical Cannabis Commission
Massachusetts Cannabis Control Commission
Michigan Department of Licensing and Regulatory Affairs Bureau of Marijuana Regulation
Nevada Department of Taxation
Oregon Liquor Control Commission
Washington State Liquor and Cannabis Board
The full list of regulatory bodies is much longer. Compliance concerns are not exclusive to this industry, but as a cannabis operator, you face a tremendous number of regulatory bodies and each of these agencies has specific requirements to adhere to in order to stay compliant and stay in business.
As cannabis legalization becomes more widespread, each jurisdiction develops its own guidelines surrounding cannabis, from seed to sale. Unfortunately, this often creates confusion and leaves cannabis compliance open to interpretations. Without the systems in place to track and document multiple aspects of the cannabis industry, you’re at risk for considerable fines for non-compliance.
How to Present Your Cannabusiness
If you’re seeking capital from cannabis investors, understand that building a cannabusiness for compliance and scalability is nearly impossible without purpose-built technology. To that end, cannabis operations software is an invaluable platform for your cannabusiness when looking to attract investors.
Beyond your core business functions, investors consider the systems in place which support your cannabusiness. By planning ahead and incorporating a cannabis operations solution before you seek outside funding, you’re able to enjoy the fruits of efficiency, but you’re also able to prove it.
Cannabis operations software features tools for inventory tracking, asset management, and personnel scheduling and management, which means that the regulatory guidelines with which a cannabusiness must remain compliant are areas intrinsically handled by the platform. These systems excel at tracking inventory and allocating resources while maintaining clear audit trails, which is extremely important if a regulatory agency knocks on your door.
Cannabis operations software gives you and potential investors a unified view of your entire operation by bringing all operational data under the same umbrella, standardizing the data reporting and making it available for easy cross-referencing. By collecting all data into a single pipeline, a best-in-class solution gives everyone in the process the tools and insights necessary to make the right decision.
Vice President of ERP Sales, Frank Nisemboum,is a trusted advisor at c2b teknologies who has guided organizations of all sizes enabling them to establish a technology presence and expand their business through technology. His proven ability to analyze the current and future plans of a company and work with team members to subsequently bring technology solutions to the organization result in improved processes and controls that assure continued growth and profitability.
Frank has worked in the ERP and CRM software selection, sales and consulting industry for almost 25 years. His strong ability to understand, interpret and match the needs of an organization to the right solution make him an asset to all of his clients.
c2b teknologies integration and engineering experts have partnered with leading cannabis industry experts to develop a software solution that provides a complete cannabis operations system. The best-in-class solution not only handles tracking of seed-to-sale activities but encompasses your entire cannabis operations with compliance needs handles along the way. Our passion for solving problems drives us to deliver innovative solutions for everyone we work with. Visit c2btek.com for more information.
Committee Blog: Cannabis Banking – Regulatory Outlook and Effective Compliance
During a recent webinar, we polled the audience on their current positions on offering financial services – traditional financial services – to direct marijuana-related businesses (MRBs). The results, as you might imagine, were mixed but we identified one common theme: The vast majority have taken action to address cannabis banking issues. This has been the theme we’ve been championing for years. The dichotomy between state and federal cannabis laws has placed our financial institutions in a precarious position: Bank the cannabis industry, be first to the market in doing so, create a non-traditional revenue stream and help to solve public safety and other logistical issues by solving the all-cash conundrum OR continue to watch from the periphery as others take the leap?
We see the number of financial institutions – banks and credit unions – that offer financial services to cannabis businesses expanding, but not to the level suggested by FinCEN SAR data. There remains a critical need for financial services within the cannabis industry.
Why the hesitancy in tackling this issue?
The current regulatory environment is a critical factor. As it stands, our industry is relying primarily upon the FinCEN guidelines to offer financial services to cannabis-related businesses. These guidelines, coupled with a surge of proposed legislation and a regulatory perspective on risk-based risk-taking, have allowed financial institutions across the country to effectively provide financial services to cannabis-related businesses. There is a key term we’ve been using: cannabis-related businesses. Within this term, we encompass direct and indirect marijuana-related businesses, hemp, and CBD entities. The majority of those polled feel more comfortable with hemp and CBD entities primarily due to the passage of the 2018 Farm Bill. Getting into the intricacies of how the Farm Bill and the USDA’s resulting interim final rule have added a layer of complexity to banking hemp and CBD businesses is more than we can cover in this blog post. Let’s focus instead on those providing financial services to direct MRBs, those that are state-legal, licensed cultivators, extractors, and dispensaries.
It IS possible to actively bank direct MRBs, to offer stable banking services that bring the cash off the street and provide a means for these businesses to operate more effectively and efficiently, and surely in a less costly manner than an all-cash business. The regulators are not criticizing financial institutions for providing financial services to MRBs; they review these services as they would any higher-risk, complex activity. When an institution takes on too much too fast or does not have sufficient controls to know whether it actually has a higher risk or complex business concentration within its customer base, the regulators will be critical… as they should be.
So, what are they looking for?
This goes back to the theme we mentioned: Financial institutions actively addressing cannabis banking issues.
Every financial institution, whether it intends to bank direct or indirect MRBs, hemp or CBD should have a Cannabis Banking Program that assesses the inherent risks of doing so, speaks to the controls necessary to effectively manage those risks, and determine whether they are well-positioned, or have a risk-appetite for, providing financial services to the cannabis industry. Conversely, if a financial institution that has no appetite for, or does not reflect sufficient regulatory health to bank cannabis, it must establish effective controls to ensure that position can be maintained.
But, this post is about empowerment. It is about speaking to the regulatory environment in which we find ourselves. It is about providing the perspective that banking marijuana, hemp and CBD CAN be done effectively, safely and soundly. Yes, there is a significant level of infrastructure needed to do so. Yes, it does come with the need for ongoing, strong risk management and control enforcement. Yes, it can be a bit scary. By establishing a Cannabis Banking Program, comprised of a comprehensive risk assessment that drives an equally comprehensive policy, a financial institution can provide financial services across the spectrum of marijuana, hemp and CBD, and undergo regulatory scrutiny with confidence. Moreover, such a program has become a regulatory expectation to support a financial institution’s cannabis position. This is also not a program where a financial institution will set it and forget it. The risk assessment and policy must remain dynamic as legislation evolves, as regulatory perspective changes, and as a financial institution’s position or outlook may shift.
This is an industry that has already proven prolific. This is a time that will be ingrained within our nation’s history. Let’s be remembered as those who championed the issues, established the country’s infrastructure, and set the standard for those who follow.
As a former Federal bank regulator and seasoned consultant, Angela’s knowledge of regulatory compliance, risk management and investment advisory services has established her reputation as a leading resource within the financial consulting industry, spanning consumer protection and anti-money laundering statutes, fraud and cannabis banking issues.
Angela is the Managing Partner and Co-Founder of Sterling Compliance, LLC, a consumer compliance consulting firm based out of Pittsburgh, Pennsylvania. Sterling specializes in consumer protection and anti-money laundering compliance within the community banking industry and enjoys a significant online presence with a client base spanning the coasts.
In December 2019, Angela joined Integrated Compliance Solutions, LLC (ICS) upon the ICS acquisition of Sterling Compliance as an independent operating subsidiary. Angela oversees the firm’s Compliance Strategies division, of which cannabis banking is a significant component. ICS is a financial technology, banking compliance and innovative payments solution provider helping financial institutions with complex solutions. In joining the ICS team, Angela has continued the firm’s mission of bringing its complete SEED-TO-BANK™ solution to financial institutions and cannabis-related businesses throughout the United States, and has expanded the firm’s industry engagement as a well-respected authority on the regulatory and compliance issues surrounding cannabis banking.
Committee Blog: Interstate Cannabis Commerce Will Benefit Public Safety, Consumer Choice, and Patient Access (Part 2)
By Sean Donahoe, Founder and CEO, Sungrown Developments Inc. Member of NCIA’s State Regulations Committee
In Northern California’s legendary cannabis growing region of Mendocino, the elected county sheriff was recently a competitor at a homebrew festival, jovially pouring samples of his “Pretty Sour Powerful Sider” (jokingly referring to the “Public Safety Power Shutoffs” recently implemented by the electricity utility PG&E to prevent wildfires.) While this relaxed scene of neighbors bonding in the wake of shared inconveniences was not exceptional in itself, here, Sheriff Allman was posing for selfies with licensed (but possibly a few unlicensed) cannabis cultivators sharing the liquid bounties of harvest for the benefit of a local nonprofit.
For nearly a decade, the elected officials and staff of Mendocino county have worked together to normalize the local cannabis farmers by providing a pathway for medical cannabis cultivation permits, long before the state established a licensing system. This public policy process brought once-outlaw cannabis growers into conformance with every regulation of modern life: from building code standards to streambed alteration regulations to the quantification of gross receipts for tax collection. Bringing regulators onto these farms has curtailed previous practices that may have threatened consumer safety: pesticide and other chemicals are now tracked and regulated, while every gram can now be tracked back to its very plot of origin (in case of a safety recall or other concerns post-harvest.) This has been unquestionably difficult for and disruptive to many heritage and small farmers, but it has also allowed in these regions for simple scenes of social bonding and neighbors trusting neighbors again, as participants in the illicit sector were normalized into first their local county’s community then into a system of state license and next (hopefully soon) into a web of regulated interstate commerce. The process of bringing every farm into the regulated supply chain is far from complete, of course, and there are still illicit operators producing for consumers in urban areas in the state and beyond.
Rather than dwell on the incomplete success of California’s ongoing efforts to bring order to the world’s largest cannabis marketplace, it is essential to focus on the quality of life benefits from every cannabis operation successfully brought over from the traditional market to the regulated sector. Each licensed operation makes for one more safe workplace, one more source for lab-tested products for consumers and patients, and one more farm abiding by environmental regulations while providing stable employment and economic sustainability in rural communities. Under the previous medical cannabis paradigm, while there was certainly an abundance of responsible operators, there was virtually zero guidance from the state on matters of workplace safety, manufacturing standards, or environmental compliance. We are now several years into a robust legislative and administrative rulemaking process that has established a (mostly) clear set of rules of the road for commercial cannabis activities. It has unquestionably been a bumpy road for many of the legacy farmers to comply with new regulatory standards, but we are nonetheless able to say that there are now thousands of well-regulated cannabis farms in California (and southern Oregon) eager to sell their clean and craft quality products in a hopeful system of interstate commerce.
Has every cannabis farm in California transitioned? Of course not, but neither have the illicit cannabis economies been entirely supplanted by adult-use cannabis retailers in Colorado and Washington. Sensible and sustainable cannabis policy reform is a process, not a simple flipping of a switch from “illegal” to “legal,” and Americans should be realistic about the progressive and iterative nature of this process. This process, like most evolutionary processes, has already experienced several inflection points, transformative moments that noticeably shifted public opinion or opened up new frontiers in policy reform. While the earlier era of medical cannabis state laws certainly created a base of public opinion and laws, it was questionably the passage of adult-use ballot measures in Colorado and Washington which brought onto the global stage and accelerated the awareness that adult consumers could buy cannabis in clean, responsible retail locations rather than furtive or even dangerous transactions in the illicit marketplace
Throughout this policy process, we have established that licensed retail options can be scaled without negatively affecting public safety and are highly efficient competitive enterprises, offering consumers ample product selection and low prices. In both Colorado and Washington states (but also in later states) we have seen imbalances for some time as market forces, regulatory factors and new cultivation capacity coming online have all helped to create price fluctuations, product shortages, and other supply disruptions. These disruptions were not unique to these early states and will likely continue in every market as new in-state regulated options come online in fits and starts (but when interstate commerce becomes possible we should expect significant price fluctuations unlike any seen to date.) During these fiscally trying periods, we have often seen cannabis operators attempt to cut corners on compliance to make ends meet, which can lead to compromised consumer safety and public safety. The goals of consumer availability and cost competitiveness should be foremost in the minds of policymakers crafting cannabis policy reform nationwide, most notably in the anticipated markets of the Northeast. As these next anticipated adult-use states are designing the framework of their retail and distribution systems, strong consideration should be taken on the potential benefits of quickly and effectively scaling their programs by incorporating interstate commerce as soon as (politically) possible.
The Interstate Commerce Conversation
As the serious policy conversations about compliant interstate cannabis commerce begin, it is helpful to study how in our proverbial laboratories of democracy we can see that decreasing retail friction and shifting consumers from the illicit marketplace benefits crime reduction efforts and improves overall public safety. We should also note that retail cannabis sales have continued to grow in Colorado and Washington, even after the initial novelty and the surge of tourism waned, while legal sales have supplanted illicit sales. These early-adopting states have created models that are addressing consumer demand as national interest in cannabis for wellness and adult-use purposes are soaring and the cultural normalizing continues to occur on a global scale. Interest is high, consumer demand is real, and evidence shows that our drug reform policies should be crafted to bring every cannabis consumer transaction into the regulated supply chain in order to fulfill the demand while benefiting from increases in public safety.Interstate commerce could provide not only safer products but also a greater variety of quality and highly competitive offerings. For medical patients and wellness-oriented consumers, interstate commerce may be the only viable means of access for certain formulated cannabis products or cultivars, especially in smaller state markets.
In addition to the above benefits, regulated interstate cannabis commerce system could provide a more robust and differentiated production and distribution network combined with the ability to rapidly scale retail sales and address insufficient cultivation capacity in new adult-use markets.Cannabis consumers are price sensitive and illicit market retail options continue to entice consumers in states with functional adult-use programs such as California (or Canada), where there is an insufficient amount of licensed retail options to address total consumer demand. With the beginning of adult-use sales in Illinois and larger adult-use states yet to come, it is frankly a bit difficult to envision how total consumer demand will be able to be fulfilled in any near term by relying on licensed cannabis cultivated in-state alone.
The Safe Vaping Discussion
While moving to allow interstate commerce will best position licensed operators to compete with the prices available to consumers in the illicit sector, moving towards a borderless system of production and distribution will also increase safety and access for patients and consumers. Most prominent is the recent nationwide discussion on vaping and vaping-related issues, where tainted products and resultant injuries have been found in the unregulated, illicit sector (or in a very few instances from licensed but arguably under-regulated sources.)Notably, NCIA’s Policy Council established a Safe Vaping Task Force to work on these issues and has released a more comprehensive document advocating for the expansion of a regulatory approach for the safe manufacturing and distribution of cannabis products, whether vape cartridges or otherwise.
The issue of vaping extends to broader issues of product safety including educational campaigns, quality assurance, and testing programs, supply chain integrity, track and trace, and other reporting systems, and (when all else fails) a capable and sophisticated product safety recall system and these are all necessary components of a well-regulated marketplace. These consumer safety programs have already been carefully designed and stress-tested in Colorado and California and the insights from these systems and those in other states should be incorporated into the crafting of interstate cannabis policy (which will require significant harmonization of Certificates of Analysis and testing standards, packaging and labeling standards, etc., again all of which will benefit patients and consumers by offering greater predictability and reliability of their preferred products.)
Multi-State Coordination
In various forums, we have begun to see state regulators liaise with each other and we hope to see more coordination in the future and potentially an earnestness in harmonizing standards where statutorily possible. This multi-state coordination on product safety standards would be accelerated as part of the regulatory coordination efforts that are likely necessary for interstate commerce and, again, consumers and patients will benefit from safer cannabis and cannabis products, and we see NCIA as the critical player in this coming national conversation. In conclusion, moving to a system of regulated interstate cannabis commerce will have tangible benefits for the general public, for consumers and patients and I encourage forward-thinking members of the industry to participate and help manifest a system of interstate cannabis commerce with NCIA, its Allied Associations and other industry groups.
After studying Russian affairs and working as a political consultant, Sean Donahoe co-founded the California Cannabis Industry Association. He served as its Deputy Director through 2014 when he transitioned to consulting for investors and operators, communicating with public stakeholders, serving on local government committees, and advising industry trade groups. He holds an MSc in Government from the London School of Economics and is CEO of Sungrown Developments Inc., an advisory firm and holding company in Oakland, California.
Member Blog: How To Build A Successful Hemp CBD Company
The legalization of industrial hemp in December, 2018, has opened the door to a host of new products and processes that have the potential to enhance health and technological innovation while being environmentally sustainable and most importantly, highly profitable.
Entrepreneurs who want to stake their claim in the hemp space face some of the same challenges as others starting a new business, but other challenges are unique. Like anyone starting a business, you must understand your market. Right now hemp’s “low hanging fruit,” cannabidiol (CBD), is gaining popularity. Established brands such as Bluebird Botanicals, Endoca, and CV Sciences – which recorded $48.2 million in revenue for 2018, an increase of 133 percent over the previous year – are taking off.
Growth like this explains why predictions for overall expansion in the CBD market are meteoric, with cannabis industry analysts The Brightfield Group predicting it could hit $22 billion by 2022. But in order to get on that ride you will need to understand CBD consumers, prepare to meet their needs, and plan to expand their awareness of ways your product or service can help them. You will also need capital.
Stand out to investors
Once you have a good idea of the market and demand, you will be ready to start thinking about funding your company. It used to be that a passionate founder with a good pitch deck could attract investors after one meeting, but times have changed. Investors want cold, hard data to back up your claims, and they will want better analysis than your gut feeling, and a larger sample size than your friends and family.
Your pitch needs to not only support your market analysis with data, but differentiate your brand from others competing for the same investor dollars. The business model and differentiation need to encompass:
Revenue source
Where will you sell your product? Options include wholesale, white label, and retail through either online, brick-and-mortar store or a third-party vendor, or a combination of those.
Product category
Will you market your product as a cosmetic, pet supplement, nutraceutical, specialty beverage, functional food or something else? You will need specific information about the market for that product category and what roles CBD can occupy in them.
Product quality
What extraction methods are you using? Is your product purity third-party verified?
Are you using the highest grade of CBD isolate or distillate in your product line?
Product sourcing
Where does your hemp and raw materials come from?
How hands-on are you with your suppliers?
How stringently do you track your product from farm to consumer?
Vertical integration is increasingly seen as the optimal approach to CBD supply chain management. Producers such as Shi Farms in Colorado specialize in vertical integration.
Cannabinoid science:
Are your product and marketing firmly grounded in the best available science supporting the uses of CBD and other cannabinoids?
Product story
Do you have a compelling narrative that explains your personal investment in making the product available to consumers?
Does your marketing comply with FDA standards?
Some things you should not DIY
The issue of FDA compliance deserves special attention and professional support for CBD businesses. It is one of a few areas where hiring a consultant can make the difference between success and failure.
Your outward-facing communications will have to walk a line between including all the required elements without making any claims that violate FDA regulations. Cosmetic and nutraceutical labeling must list all ingredients, while nutraceuticals also need to provide a dietary supplement facts panel. Structure and function claims can be particularly tricky. CBD is not classified as a drug and therefore verbs such as treat, diagnose, prevent and cure are absolutely off limits. The language has to convey that some consumers use CBD in certain ways without employing medical terms or guaranteeing any particular outcomes. You can do your own research on compliance but it is always wiser to hire a consultant who specializes in this area.
As you get past the initial planning and push to get your business started, you will find there’s no substitute for long-term planning. Collecting ongoing data on the purity and potency of your product, the costs of raw materials and effectiveness of your marketing will enable you to make mid-course corrections in your projections so that your business and revenue grow.
Long-term planning based on robust data will ultimately make a huge difference for your business. I predict a failure rate of about 70 percent for CBD companies over the next five years. Whether they are underfunded, lack an effective management structure or are out of compliance with FDA standards, many new businesses won’t be able to compete with major players like Kraft, P&G and Unilever as they enter and begin to dominate in the CBD space. But some of those starting a CBD business now will not only learn how to stay afloat, they will prosper to the point that those major players will come knocking at their doors with generous offers to buy. Build in a pathway for your desired exit strategy and have all of your operating agreements and documents at the ready. If this looks like a possibility, or you want it to become one, you will need top notch, cannabis-savvy representation like McAllister-Garfield in your corner.
Learning and networking
If you want to make a deeper dive into starting or building a CBD or hemp concern, The Hemp Biz Conference is here for you. During symposia around the country you can learn about industry trends in an interactive forum, and get access to experts in discussion and workshop sessions designed for everyone from beginners to established professionals. Scheduled tracks – agriculture, processing, manufacturing, extraction, textiles, biofuels and plastics – allow you to focus your time where it matters most to you and your business. The Hemp Biz symposia attract the hottest hemp companies, investors and entrepreneurs in the industry so you will leave with connections that will help you grow for years to come.
Christie Lunsford, CEO, leads The Hemp Biz Conference’s charge into creating a sustainable hemp industry by bringing together the best experts, entrepreneurs, farmers and scientists in the cannabis space in the Hemp Symposium Series.
Before launching The Hemp Biz Conference in 2018, Christie founded Endocannabinioidology, a consulting firm providing cannabis science, FDA compliance support, technology and education management to businesses and individuals in the cannabis and hemp communities, where she successfully wrote or advised on winning cannabis license applications in several states. She has also overseen operations for a producer of horticultural LED technology, helped formulate and launch the first retail channel of CBD nutraceutical products derived from industrial hemp in the U.S, and was named Cannabis Woman of the Year at the 2015 Cannabis Business Awards. In addition to producing The Hemp Biz Conference’s Hemp Symposium Series she is a regular contributor on the business of hemp for Green Entrepreneur.
Member Blog: ‘Topsy-Turvy’ Is The Name Of The Game In Cannabis
Now you see it. Now you don’t. What’s in compliance today may run afoul tomorrow. And federal government wishes and whims continue to cast a pall over state operations.
In this topsy-turvy environment, cannabis purveyors need to be able to pivot on a dime. Everything from labeling requirements to product track-and-trace regulations can change quickly.
Recent events in Utah illustrate topsy-turvy in action. First, the electorate approved medical marijuana on the ballot last fall. Then, the state legislature stepped in and passed a bill that overhauls the provisions in an effort to tighten up controls. On Valentine’s Day, Fox 31 in Salt Lake City reported that all of Utah’s major health care organizations will show some love, allowing physicians to recommend medical cannabis. This report follows an announcement of another bill being introduced that would tweak the provisions of the just-passed law.
Still with me? OK, there’s more. In late February, Utah’s Daily Herald reported, “The Utah County Planning Commission decided Tuesday to delay a potential recommendation to amend land use ordinances to allow for cannabis production… The delay came at the request of Robert Moore, deputy county attorney, who asked for a decision to be delayed by three months in order to see if additional legislation on medical marijuana comes before the state this legislative session and to give time for the Utah Supreme Court to review a case questioning if the Utah Medical Cannabis Act passed in a special legislative session in 2018 or if the voter-approved Proposition 2 should be current law.”
The same day, Fox 31 reported, “An attorney representing a pair of groups suing the state over the new medical cannabis law is warning cities and counties that Utah is essentially creating a state-run drug cartel.”
Takeaways for cannabis purveyors in other ‘newbie’ states
Obviously, Utah has a lot of sorting out to do before anything gets solidified. However, this roller-coaster sequence of events can serve to educate (and warn) purveyors in other states where cannabis has been legalized to get and stay on top of all the latest twists and turns. Failure to do so can easily catch someone in a compliance shortfall that can threaten or even close down their business.
Get the right people in the right spots on the bus. Big-picture thinkers and cannabis companies go hand-in-hand. While innovative, expansive thinking can be critical to a successful company launch, detail-oriented thinkers are essential to oversee and develop effective policies and follow-through in every major department—including administration, operations, legal, accounting and marketing/branding. In a complex, rapidly-changing industry such as cannabis, being nitpicky is a major asset.
Find resources providing up-to-date compliance and regulation information. One helpful resource is a report entitled, “Cannabis Packaging and Labeling Regulatory Recommendations for States and Nations,” developed by the Council on Responsible Cannabis Regulation and the National Cannabis Industry Association. There also are organizations specializing in compliance and regulation information for municipalities and states. No matter what resources are accessed, it’s always a good idea to confirm information by directly checking applicable municipal and state information centers. This is especially important given the dynamic changes occurring in the cannabis industry.
Designate go-to trusted advisors inside/outside the company to handle various challenges rapidly. At the outset, draw up a list of advisors who can provide expert advice on-the-spot when needed. In some cases, these may be the same people listed in #1 above. In other cases, more specialized resources may be required. For example, you may hire a cannabis-savvy lawyer to develop/oversee your business structure, partnership agreements and the like. Another legal eagle may be brought in to deal with such real estate-related issues as the buying/leasing of property and buildings. Yet another attorney might be on call when compliance or regulation questions arise.
Build in agility. Cover all the bases, but keep them fluid. For example, in the branding world, development of labels and packaging is a cornerstone priority that should be addressed in a thoughtful and in-depth way. But, then what happens if a state regulation altering label disclosures or packaging comes down with a short compliance lead time? You’ve got to be ready to hit the ground running both to comply and make your continued branding efforts all they can be.
Gary Paulin is Director of Sales and Client Services for Lightning Labels, a Denver-based label printer that has been offering state-of-the-art affordable, full-color custom labels and custom stickers of all shapes and sizes to cannabis purveyors for more than a decade. They offer many options for materials and laminates and special effects to achieve digital short-run requirements (50 minimum) on up to 15 million labels, plus Lightning fast delivery. For more information and to place orders online, visit LightningLabels.com. For the latest in packaging news and labeling promotional offers, find Lightning Labels on, Facebook, Instagram, Twitter (@LightningLabels), Pinterest, Google+ and LinkedIn.
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Gary Cohen is the CEO of Cova Software, the fastest growing technology brand in the cannabis industry. Cohen’s focus has been driving the company’s overall strategy, including its vision, go-to-market plan, and strategic development. Since joining the cannabis industry in 2016 and launching Cova commercially in 4q17, Cohen has led Cova to dominate the enterprise sector for dispensary Point of Sale, while forging client relationships with hundreds of single-store retailers across North America.
MC
LaKia Bourne has 20+ years of experience as an accomplished and trusted accounting professional. As a women-owned and minority-owned accounting firm, LaKia has a passion for working with other small businesses and engaging in the local community, and her values drive her overall career goals and mission to uplift businesses and encourage financial competency through reliable accounting services.
by NCIA’s Risk Management and Insurance Committee
Jennifer Spanos is the VP of Product and Vertical Strategy at 
John Kievit is 
Steven Lynn, a California resident since 2011, has dedicated his career to destigmatizing and legitimizing the cannabis industry through technology. Steven started his career in cannabis as the Director of Marketing at IndicaOnline in 2017. He now serves as the Director of Marketing at BLAZE® responsible for driving all marketing strategy, brand development, and lead generation programs. His professional background in early-stage B2B cannabis SaaS startups has made him adept at executing scalable, impactful, and sustainable strategies to achieve exponential growth. Steven received his BA in Communications from the College of Charleston in 2006 and is a seasoned marketing professional with over 10 years of experience working in both the entertainment and canna-tech industries.
Nicole Cosby
Whether you’re looking for cash flow management, business planning, or internal controls, our team is dedicated to helping you achieve peace of mind when it comes to your company’s finances and compliance. We understand that the financial side of your business can be daunting, complicated, time-consuming, and most of all: stressful. You don’t need to go through it alone. Our team is prepared to help you achieve your financial goals. Whether you’re looking to earn more revenue, scale your business or achieve a little peace of mind, you can trust 
Tommy Truong is the Director of Partnerships at 
Matt Finkelstein is a consultant with 
Vice President of ERP Sales, Frank Nisenboum,
As a former Federal bank regulator and seasoned consultant, Angela’s knowledge of regulatory compliance, risk management and investment advisory services has established her reputation as a leading resource within the financial consulting industry, spanning consumer protection and anti-money laundering statutes, fraud and cannabis banking issues. 
After studying Russian affairs and working as a political consultant, Sean Donahoe co-founded the California Cannabis Industry Association. He served as its Deputy Director through 2014 when he transitioned to consulting for investors and operators, communicating with public stakeholders, serving on local government committees, and advising industry trade groups. He holds an MSc in Government from the London School of Economics and is CEO of Sungrown Developments Inc., an advisory firm and holding company in Oakland, California.
