Service Solutions | 9.27.22 | The Devil is in the Details: Claiming Your Employee Retention Credit as a Cannabis Business
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 Tuesday, September 27, 2022 we were joined by the experts from ERT Credit for an exclusive webinar outlining how cannabis businesses can take advantage of The Employee Tax Credit (or ERC) which has currently only been claimed by a small fraction of cannabis businesses, and most importantly, as a payroll tax credit is not subject to Section 280E.
Think your cannabis-related business does not qualify for COVID-19 relief funds worth up to $26,000 per employee.? You’ll leave the session with a roadmap for next steps to determine eligibility and maximize your claim so you don’t miss out on a potentially guaranteed refund worth hundreds of thousands of dollars and in some cases millions.
At the conclusion of the discussion our panel hosted a moderated Q&A session to provide NCIA members an opportunity to interact with leading minds from the cannabis accounting and technology space, join today to contribute to future conversations!
40:46 – Audience Q&A (If your business is still operating – what are the taxes due on the tax credit?)
42:04 – Audience Q&A (I was told that ERC money is not available for the cannabis industry due to 280e. How are you navigating that compared to others trying to provide the same services?)
44:31 – Audience Q&A (Does this apply to cultivation facilities also?)
46:42 – Audience Q&A (What if we apply and don’t receive our money or we are denied the credit?)
48:09 – Audience Q&A (What if my accountant/lawyer says I don’t qualify?)
49:41 – Audience Q&A (How can I find more details on how to navigate the 280e concerns?)
50:58 – Audience Q&A (So if you went out of business before or soon after getting the tax credit you would not have any (or minimal) tax impact from taking the tax credit?)
53:24 – Audience Q&A (Do I have to spend the money on my payroll? Or can I use it towards my other business expenses? Any other restrictions?) 54:26 – Audience Q&A (So is this a credit for my company towards next year or do I get an actual check like a refund?)
If there was ever a year that we all learned the importance of the supply chain and its impact on our daily lives, 2021 was it. For anyone who somehow hasn’t realized the effect, take a look at grocery prices the next time you shop. The cost of dairy, produce, and countless other items all highlight a fragment of the ongoing concern across the supply chain.
Heading into 2022, just about every company is pondering a similar question: How do we mitigate current and potential challenges for the next decade?
How did we get here?
The pandemic shined a light on numerous glaring issues and failures in the current supply chain.
COVID-19 spotlighted an aging infrastructure in a way it had never been before. Life moved us all into the 21st century years ago. Yet, U.S. ports remained stuck behind using software better suited in a museum as a relic rather than a relied upon, integral component. Instead of being put out to pasture, we continue to rely on this tech to handle shipping volumes that fail to align with today’s demand. With outdated, turn-of-the-century software, ports could not address the volume of daily imports.
Compounding the issue are manufacturing and inventory programs with zero flexibility or ready-to-implement fail-safes in case of dire situations like the one we’re in today. Companies with non-redundant sites like single-sourced manufacturing for an entire global production perfectly highlight this problem.
Infrastructure is far from the only significant factor. The pandemic upended just about every forecast possible. Furniture and appliance demand surged as people stayed home. Hard goods and eCommerce helped fuel a packaging demand spike, further impacting aged tech at ports. Meanwhile, the auto sector is expected to plummet. But, demand surged while companies slashed manufacturing orders. Meanwhile, tech development is months behind as it attempts to update critical tech infrastructure and other supply chain components.
Over the past two decades, a race to the bottom on production prices led many to offshore manufacturing. Once considered a viable option is now a significant pain point as stability wanes and tariffs increase. Then there are material shortages that halt production. This predicament is well on display for any goods made using materials like paperboard, resin-based materials, dyes, and adhesives.
The pandemic certainly did much of the damage, but domestic factors worsened matters, like the South Texas winter storms in the United States. Adding to the goods strains is the consolidation of manufacturers, limiting supply options during crucial times. This underlying industry concern kneecapped numerous sectors operating with just a few producers.
However, the most significant impact is the shortage of people. The tragic loss of lives, mandatory isolation orders, and full-site shutdowns limited the people power needed to sustain the marketplace. From ports to factories to transportation, every facet of the chain continues to struggle with a lack of people.
What is the current state?
The current state of affairs presents critical concerns. Like the year before, companies must contend with concerns that are substantial enough on their own. When coupled together, they create historical challenges.
Labor shortages continue to affect production. The Omicron variant has been the latest problem, just as optimism returned to many workplaces and organizations. The workforce dearth has once again slowed or stopped progress. Expect delays even when labor returns to full force.
The circumstances leave us in a dire time. Inflation has run rampant, impacting labor, transportation, substrate, and countless other costs. While the times are tough, we can remedy the problems with the right frame of mind and proper implementation.
A World Not Without Hope
The ample amount of adversity offers its slivers of silver linings. One of the brightest bits of optimism is the versatility of options available. Just about anything could be viable.
Think dynamically. Listen, consider, forecast, and plan for the days and years ahead. Success lies within your team and customers. Consider all opinions when planning your next steps. Knowledge is vital to ensuring that these issues never happen again. With insights gathered, find the software, suppliers, and other needed components to make your supply chain thrive.
Now may be a good time to consider production closer to home. If impossible, make sure that your partners match timelines and production plan milestones before beginning any relationship. Sustainability is another concern that can’t be overlooked, even if it often comes at an additional cost. Its importance often clashes with sourcing consumers and other critical points mentioned here. That said, packaging can and must do what it can to reduce its carbon footprint—source from eco-conscious companies with options for recycled and/or recycled materials, alternative substrates, and other sustainable options whenever possible.
We should expect inflation to continue growing for some time despite substrate cost stabilization expected to help to a degree. As such, ask how prepared your company is for the challenges ahead. Evaluate every process component, from production to packaging to branding. Taking time to account for every possible hurdle ahead should best position your company to keep costs at a minimum while creating sustainable, consumer-friendly products that won’t get held up in ports and additional shipping lanes.
While times are tough, we can progress in the right direction. Now is the time to streamline the production process to develop customer-friendly products that puts sustainability into action. It’s a tall task, but creative thinking and proper implementation will work, benefitting us all in the process.
Elizabeth Corbett, VP of Sales for AE Global, is on a mission to build sustainable packaging & supply chain programs for cannabis and CBD companies which honor their brand identity, drive revenue growth, protect the product and do so cost effectively. “CannaBeth”, as she is fondly known, entered the cannabis industry more than eight years ago after spending the first part of her career developing packaging solutions for significant players in the retail and health & beauty markets such as Starbucks, Tiffany and Estee Lauder. Based in Seattle and Miami, Beth is passionate about finding environmentally responsible and sustainable solutions no matter what the form or substrate.
Committee Blog: Managing Your Workforce During Fall Harvest
It’s that time of year again, the busy fall harvest season. While indoor growers can harvest year-round, the fall can create significant workforce challenges, especially for outdoor producers and processors. Here are three tips to make sure you are ready to go for the fall harvest!
Plan ahead! If you have not already thought through your fall harvest plan, you will want to figure this out immediately. Most cannabis companies need additional workers during harvest season, unless their grow schedule is structured where they are harvesting on a regular basis, depending mostly – if not entirely – on their permanent employees for harvesting, de-leafing, trimming, etc. However, given the increased demand for workers by outdoor growers, even in a normal year, the demand for labor often exceeds the supply, placing added pressure on anyone competing for this talent.
Every fall we receive a rash of calls from producers, who failed to plan ahead, requesting workers that same week, if not the same day. Unfortunately, by this time, nearly all the available labor, especially those with experience and skill, have already been scheduled and committed elsewhere. In rare cases, staffing companies might be able to provide workers if they had another client in the area back out, at the last minute due to a heavily damaged crop or not being ready for harvest at the time they originally projected, however, cannabis growers shouldn’t count on this. A good rule of thumb is to provide at least 2-3 weeks’ notice, minimum, to request your harvest crews during the fall, and the further in advance the better. Many cannabis companies that have struggled in the past with worker shortages during the fall have started locking in their fall staffing as early as spring.
COVID-19 has created an even more significant labor shortage. Before 2020, we saw thousands of workers coming into the United States from other countries to take their ‘vacations’ working on unregulated market farms doing harvest work and trimming and getting paid cash. Due to COVID-19 travel restrictions keeping much of this seasonal labor out of the U.S., the regulated and unregulated market were increasingly forced to compete for the same domestic talent with the unregulated market often winning this battle as they were paying tax-free cash at higher wages, given their relatively lower costs compared to the regulated market. Thus, many cannabis companies ran into situations last year where, unless they were able to pay premium rates for harvest workers, their in-house staff were forced to work a ton of overtime to make up for the shortfall. We hope that in 2021 this won’t be the case, however with COVID-19 numbers rising again, this is something that cannabis companies should plan and budget for just in case.
If your cannabis operations are relatively remote or not within an easily commutable distance from a large population center, you may need to go the extra mile to make it easier for workers and staffing companies to assist you. If nothing else it is essential to take an inventory of nearby resources and be prepared to communicate them easily. For example, if you can’t provide lodging to your seasonal workers, you will want to create a list of local hotels/motels, RV Parks, and campgrounds that offer services. Many of these workers are accustomed to traveling from site to site in RV’s, camping, etc. Create a list of grocery stores, gas stations, and other retail establishments the crews may need to access. If there aren’t any lodging options close to your farm, and you have the means, you might want to consider buying some land nearby and building some basic lodging. We have even seen some cannabis companies open a cafe or restaurant close to their farm when there weren’t any good or healthy options in the area so that workers would have a place to go on their lunch breaks or after work. The more of a positive experience you can provide to these workers, even though they are seasonal, the better. Production will typically be quicker, you may gain a customer and even an ambassador for your product, and that worker may be excited to return for years to come, which will keep you from having to deal with some of the labor shortage issues other producers struggle with.
Have a contingency plan. Many of you already know this, but you should always have a plan B and plan C, maybe even a plan D. 2020 and 21 have definitely been years of fires, hot temperatures, and floods. If air quality is deemed especially poor in your area, due to smoke, many harvest workers won’t be able to work outdoors as worker’s compensation policies won’t cover workers laboring in such conditions and few people will want to. We’ve also noticed an uptick in state governments coming out with restrictions and safety guidelines during times of poor air quality or extreme heat. If you’re in an area that has a fire season, you’ll want to have a plan for workers during this time. Perhaps you will need to have them work indoors when the air quality is poor, focusing on things like bucking, trimming, and packaging; then back outside to continue the harvest when conditions allow.
Given the increase in COVID-19 cases, you’ll definitely want to have SOPs and contingency plans in place in the event your crew is exposed to COVID-19. To be proactive, you should also take precautions to protect workers from exposure before it occurs including having masks and hand sanitizer supplies on hand in abundance. Contingency plans could include having a partnership with a staffing firm to provide workers for your fall harvest or offering overtime and bonus incentives for your regular workers to pick up the slack, if necessary. If you’re working with a staffing company, most crews of harvest workers will have a team lead who is there to assist with any HR-related issues that might come up (i.e., sick workers, injury, etc.). However, if for some reason there is not a team lead assigned for your crew, you’ll want to make sure that the workers have a point of contact at your company for any HR-related issues that come up.
Last but not least, if you’re looking for great, experienced harvest talent, especially when it comes to trimming, you will need to budget for the kind of talent you want. With the most talented crews, you’ll likely need to pay some form of a retainer upfront as many of them have trimmed more seasons than adult-use has been around and have not always been paid for their work. Last year, we typically saw trimmers making $15-$25/hour. This was before bonuses. Companies who want to incentivize things like speed and quality increasingly offer bonuses for the quantity and quality of output. This has resulted in the best workers making nearly $50/hour!
The Godmother of Cannabis Industry Recruiting, Kara Bradford, MBA, MM, is Co-Founder & CEO of Viridian Staffing. Founded in 2013 as the first professional, full-service staffing, recruiting & HR consulting firm in the Cannabis industry, Viridian Staffing has led the way in providing temporary, temp to hire, direct placement & HR outsourcing services. Kara has been an HR professional, specializing in Talent Acquisition, Talent Management, Workforce Planning, Employer Branding, Compliance, Federal/State Employment Laws, and Organizational Design for over 15 years. Her career has spanned multiple Fortune 100 companies & start-ups in a wide variety of industries. More importantly, she has more experience recruiting in the cannabis industry than any other Recruiter globally. Kara has an MBA in Human Resources & Organizational Behavior and is LinkedIn Recruiter Certified. Kara is active in many organizations, including NCIA, The Cannabis Alliance, Women of Weed, etc., and was the Founding Chair of the NCIA’s Human Resources Committee.
Committee Blog: Successful Retail Outcomes of SAFE Banking
By NCIA’s Retail Committee
Have you ever wondered where or how a cannabis retail business banks? You should know that it’s complicated because of federal prohibition. So what do you do? Some are finding workarounds and loopholes, others are able to obtain services with smaller financial institutions for exorbitant costs, while many others struggle to maintain an expensive, risky, and dangerous cash-only ecosystem.
The 2020 elections set the creation of four new regulated state cannabis markets in motion, and four more state legislatures followed suit in the first half of 2021, making the last year arguably one of the most consequential and momentous periods for the cannabis industry and policy reform.
However, cannabis is still illegal at the federal level, classified as a Schedule I substance under the Controlled Substances Act, despite state-level regulated cannabis markets in more than half the country. This prevents banks from doing business with cannabis companies because of fear of prosecution or reputational risk, as these businesses aren’t viewed as legal under outdated federal laws.
The cannabis industry is optimistic about the future, though, thanks to an increasing interest in cannabis, public safety, and economic development in Congress. Lawmakers in both chambers are actively debating comprehensive legislation to remove cannabis from the schedule of controlled substances and regulate it federally while repairing some of the harms caused by prohibition, but there are also incremental reforms in play that have a track record of success in the House as well as bipartisan support. Chief among them is the Secure and Fair Enforcement (SAFE) Banking Act, which would provide safe harbor for financial institutions that wish to work with state-legal cannabis businesses and allow them to provide services to the industry without fear of prosecution. This legislation originally passed the House in 2019 and was the first piece of standalone cannabis policy reform legislation ever to receive a vote or be approved by a full chamber vote.
Since then, cannabis banking has been approved in the House three more times in various forms, mostly recently when it passed the SAFE Banking Act again – and with record bipartisan support – earlier this year. The bill is now awaiting consideration in the Senate, but has yet to be taken up by the Senate Banking Committee.
So, what does the SAFE Banking Act mean for retail cannabis businesses?
Loans, capital markets, and credit card processing are common interests for cannabis companies. Access to traditional lending is particularly important for small businesses that usually lack connections to angel investors and venture capital. However, some of the benefits of this legislation are of special interest to cannabis retailers. Check out what some of the Retail Committee members are considering to be important aspects of broadened access to banking and financial services:
Safety
“As a retail cannabis business operator, safety is of our top priorities as it directly affects our staff, our patrons, and our bottom line,” said Larina Scofield, director of retail operations at Lucy Sky Cannabis Boutique dispensary chain in Colorado and vice-chair of NCIA’s Retail Committee. “We are required to operate as a predominantly cash business in a high-risk industry that can sometimes lead to criminal targeting; this can put not only our business at risk but also the potential individuals on-site if a targeted crime were to take place.
“There is also no doubt that operating a cannabis business is costly, due in part to the fact that we do not receive the same benefits and protections that other businesses have; cannabis companies are also subject to higher fees in order to get similar services, if those services are available at all. Lucy Sky is fortunate enough to have banking and armored services, as well as a cashless ATM service to allow for safer money handling, but this does not come without a price… a high price. Our company pays top dollar every year in order to have banking and secured payment delivery (something that is not seen in traditional businesses), in order to provide safety for our business and to the individuals who frequent our facilities.
“SAFE Banking would mitigate that and allow for retail cannabis companies to operate without having to “constantly look over their shoulders” so to speak. It would provide an enormous sense of security in an already high-risk business, it would allow for small business owners to receive proper funding to allow for safer operations, and it is truly crucial in the progression of the industry as a whole.”
Less Cash on Premise
“Less cash during COVID-19 is always a plus. The goal is to limit contact, and we all know cash is constantly being passed from person to person. There are plenty of studies highlighting how many germs really are on physical cash. Researchers found plenty of questionable microbes on $1 bills in a more recent study. In a world where we are all concerned about our physical health, the time is now to reduce physical cash in cannabis businesses. Or at least, give people the choice to go cashless if they want to. Let’s also not forget the security benefits of carrying less cash on the premises”, said Byron Bogaard, CEO of Highway 33, a cannabis dispensary in Crows Landing, California, and chairperson of NCIA’s Retail Committee.
Contactless Delivery for Retail
“Golden State Greens had a spike in deliveries during the COVID pandemic but were still forced to collect cash and signatures from customers. When online orders can process card transactions we can make a true contactless delivery where both payment and signature are managed from the customer’s device. This will increase the safety of our drivers by maintaining safe distancing practices and allow new types of deliveries to drop boxes or to customers’ homes similar to Amazon,” said Gary Strahle, chief growth officer for California dispensary Golden State Greens.
Beyond these major issues, there are a number of potential outcomes that could impact retailers as well.
Revamping the relationship between cannabis businesses and banks will likely trigger higher competition for banking services, resulting in lower fees. This would clearly benefit small businesses but could also have an impact on the frequency and nature of mergers and acquisitions in the cannabis space.
Regulatory frameworks will certainly change, and outstanding litigations will most definitely become more complex. Chargebacks from credit transactions will be a constant problem, due to the level of surveillance and data collection they will more easily be disputed.
Better access to banking also positions technology companies for success, as there will be a high demand for mobile wallets, online ordering, and automatic recurring memberships. We can’t predict everything, and there might be more hurdles to cross than we realize, but the technologically-agile retailer may benefit most. Studies show that most of the Top Fortune 500 Companies use software platforms such as Salesforceto manage their enterprise, however many of the canna-specific solutions are missing much of the integration and scalability needed to immediately handle broadly increased access to the banking system.
Speak your voice.
The SAFE Banking Act is critical to the cannabis industry’s success, and your voice will tip the scales. Reach out to your members of Congress, especially your Senators, and tell them what safe banking means to you as a cannabis retailer. Remember, policy needs to support logic over emotion. Emotions are important, but remind Senators of the logic behind implementing safe banking solutions for cannabis businesses:
Reducing the risk of robbery & theft with less cash on the premises
Supporting the demand cannabis businesses receive, which in turn supports the local and national economy and helps minimize the unregulated market
Reduce pathogen transmission by limiting physical cash transaction
If your senator already supports the SAFE Banking Act, please politely ask them to prioritize this legislation in the current session.
An Important Announcement About NCIA’s Lobby Days
While the NCIA team was hoping to welcome all of our members to Washington, D.C. this spring for our 10th Annual Cannabis Industry Lobby Days, we have made the difficult yet necessary decision of postponing the event until further notice due to the COVID-19 pandemic.
This was not a decision made lightly, as our annual fly-in is an integral part of our government relations efforts on Capitol Hill. However, with congressional buildings being closed to the public, new virus variants, and continued community spread, we believe this is the smartest and safest decision for our members, elected officials, and their staff.
That being said, the NCIA government relations team continues to virtually lobby and “meet” with various stakeholders, coalitions, and congressional personnel to further cannabis policy reform every day, thanks to the financial support of our members. We are working hard to reintroduce priority bills, include the SAFE Banking Act in the next pandemic relief package, and are helping to craft new, exciting, progressive legislation that focuses on de-scheduling cannabis and creating a thriving, diverse, and equitable industry.
Stay tuned via our newsletter, website, and NCIA Connect to learn more about NCIA’s Lobby Days and what’s next. We can’t wait to host all of you back in our nation’s capital, but in the meantime, please stay safe and stay healthy!
Member Blog: Four States Legalized Cannabis in November – Here’s What That Means for the Industry
Voters in New Jersey, Arizona, South Dakota, and Montana legalized adult-use cannabis sales during November’s election. So, what comes next?
Last month, Americans in four states voted to legalize adult-use cannabis.
If you’re an adult over 21 in Arizona, New Jersey, South Dakota, or Montana, theoretically, you’ll be able to consume and purchase cannabis legally in 2021.
To many Americans, the end of cannabis prohibition in these states looks like a sudden act of voter mobilization. But industry insiders know it took years of work by activists, business people, and lawmakers to make legalization possible.
Before adults can legally purchase and consume cannabis, lawmakers in each state must outline rules and regulations, and dispensaries must go through intense licensing processes before opening their doors to the public.
The process won’t happen overnight.
In some newly legal states, it could take close to a year to iron out the details. And in the past, it’s taken even longer.
Take Massachusetts, for example. Voters cast their ballots in favor of legalization in 2016, but the first dispensary didn’t open until 2018.
Maine’s citizens also voted in support of legal weed in 2016, but it took four years for the first dispensary to open. The first two retailers – SeaWeed and Theory Wellness – opened on October 8 of this year.
“It has taken four years to move from referendum to retail sales since Mainers narrowly approved the legalization of recreational cannabis at the ballot box in 2016. Legislative rewrites, gubernatorial vetoes, a change in state administration, and then the impact of COVID-19 pandemic have combined to make Maine’s rollout the slowest in U.S. history.” – Portland Press Herald
Lawmakers in New Jersey are trying to speed things up. Democratic Senator Nick Scutari wants to move quickly to pass legislation modeled off a 2019 legal cannabis bill he sponsored. Still, legislators are fighting over the details. New Jersey’s Medical Marijuana licensing policies force applicants to pay large sums to compete for a limited number of licenses, allowing big businesses with deep pockets and holdings in other legal states to make millions.
Some New Jersey lawmakers are trying to keep the same from happening when adult-use dispensaries open their doors by prioritizing local businesses.
Arizona lawmakers anticipate legal cannabis sales to begin as early as March. The state plans to prioritize licenses for owners “from communities disproportionately impacted by the enforcement of previous marijuana laws.” Arizona’s 123 medical marijuana dispensaries will have the first opportunities to apply for adult-use licenses in January after the Arizona Department of Health Services writes the rules.
Entrepreneurs in South Dakota and Montana are ready to apply for dispensary licenses, but they, too, will have to wait.
In South Dakota, lawmakers say dispensaries will be open and selling legal adult-use cannabis by July 1. In Montana, people should be able to legally purchase cannabis on October 1, barring any bumps in the road.
Have we reached a tipping point?
The public’s view of cannabis is changing. One in three Americans now live in a state with legal weed, and, according to a recent Gallup poll, 68% of Americans support federal cannabis legalization. So, have we reached a tipping point?
That’s hard to say.
Thirty-six states now have a legal medical cannabis system. When sales begin in Arizona, New Jersey, South Dakota, and Montana, more than twenty states will have fully legalized cannabis. And while federal cannabis reform might be a defining aspect of the incoming administration’s legacy, legalization is mostly dependent on congress, and it’s still unclear which party will control the Senate next year.
Democratic leaders have pledged to end federal cannabis prohibition. If the Democratic party wins Senate control, full legalization is almost a certainty. But if Republicans maintain their Senate majority, the Republican party’s past approach to cannabis doesn’t indicate their leaders are ready to support far-reaching reform. Still, federal cannabis legalization isn’t outside the realm of possibility, even with a Republican-controlled Senate.
Only time will tell.
And again, regardless of what happens politically, it’s obvious America’s opinion of cannabis isn’t what it once was.
Oprah asked former President Obama if he and Michelle indulged in “pizza, pot, or alcohol” on election night in a recent televised interview. When a television icon casually asks a former President if he smoked weed with the former first lady, you know attitudes are changing.
Could federal cannabis legalization be the key to healing our COVID-ravaged economy?
This year, COVID-19 slowed the progress of cannabis legalization for individual states, but the pandemic could help push federal legalization forward next year. Here’s why.
A federally legal cannabis industry would accelerate America’s economic recovery.
The pandemic has had a catastrophic impact on many industries, and while a lot of employees will return to work, many jobs will be forever lost. The longer it takes for people to find employment, the longer it will take for the economy to recover.
The end of federal cannabis prohibition would create thousands of new jobs and reverse the pandemic’s adverse economic impact.
Here’s a point to consider: according to estimates from New Frontier Data, America’s legal cannabis market could be worth nearly $30 billion by 2025 – and that’s without federal legalization. If government officials choose to end federal prohibition next year, the estimates will increase dramatically.
For cannabis dispensaries, cultivators, cannabis-adjacent businesses (like cannabis marketing agencies), and American citizens, a nationwide end to prohibition would be life-changing.
But again, what the immediate future holds is anyone’s guess.
Aaron Rosenbluth is Hybrid Marketing Co‘s Content Director, and he loves to write blogs. He’s written so many blogs that he’s lost count. And beyond his skills as a copywriter and storyteller, he’s an obsessive reader and researcher. Aaron writes on subjects ranging from cannabis to collaboration, social equity to HR software, interior design to cybersecurity. His words attract, engage, educate, and convert. Btw, Aaron hates the phrase “content is king” (even though content is king – and queen).
Hybrid Marketing Co is a Denver-based branding and marketing agency that specializes in building custom strategies that supercharge growth and drive revenue. Working with brands and businesses across the U.S. and Canada, Hybrid’s partners run the full-spectrum of the cannabis world including dispensaries, manufacturers, cultivators, and ancillary businesses. Visit hybridmarketingco.com to learn more about the Hybrid approach.
It’s autumn, and that means where I live, the temperatures have dropped from an insufferable 110 to a pleasant 85 degrees. In other parts of the country, leaves are turning color, the nights have turned chilly, and change is in the air. And all of this has me wondering, what happened to the summer?
This was the summer that wasn’t. With the pandemic, activities were curtailed, vacations were canceled, and nothing seemed normal. Like many companies, we adjusted our workflow to morph into a combination of virtual and in-person, and we implemented new sanitary and social distancing protocols. Cannabis was deemed essential, so with a few adjustments, we were able to carry on business as usual. And this got me thinking about how much we have to be able to adapt in order to survive and thrive.
One of the things I most enjoy in life is giving back to others. I’ve had a fair amount of success in my career and have learned a thing or two, and now I love passing along that knowledge and helping the younger generation get a foothold and better navigate their own pathway through the world of business.
And of all the things I’ve learned throughout my career, the one that has helped the most, especially through this complex and challenging time, is the ability to be flexible.
No, I’m not taking up yoga, although that’s probably a good idea. I am referring to being flexible in business.
When we are young and the whole world is in front of us, we think that all things are possible. The road ahead is uncluttered with roadblocks and there are no speed limits.
As we mature, we realize that life will throw a few obstacles at you, and a key component to success is how well you are able to overcome these challenges and keep moving forward.
The one thing that is constant in business is change, and without flexibility, failure is almost certain.
Think of the American companies that could not adapt to changing circumstances: Retailers like Kmart, Sears, and many others, have not been able to compete in the new world of online commerce and are all but gone. But Walmart continues to refine its online strategy and recently reported that e-commerce sales are up 74%. Target, another retailer that understands how to change with a changing world, reports online sales revenue will jump 24 percent this quarter. These two companies have embraced flexibility.
Borders Books is another giant that couldn’t adapt to a changing marketplace. While consumers were switching to e-books, Borders kept building new brick and mortar stores and focused on growing its CD and DVD department – clearly out of step with the changing times.
Not so long ago, Blockbuster was the place to go to rent movies. The company could have become a leader in digital entertainment but only made a last-minute and unsuccessful attempt to transition to the new platform. Today, they are gone.
The fact is, there are countless examples of companies that have shuttered because they could not adapt to changing times.
In the cannabis industry, change comes at a rapid pace. Laws and regulations are in almost constant flux, and if you are not prepared to quickly pivot and change directions, you will be left behind.
From overly aggressive expansion to stockpiling potentially unsellable inventory to not keeping enough capital on hand to handle those “rainy days,” there is a myriad of problems that can seemingly come out of the blue and dramatically impact a cannabis company’s ability to function.
I’ve seen this with my own eyes, far too many times.
In today’s world, and especially in the cannabis industry, it is vital to look ahead and maintain flexibility. Because before you know it, it will be spring and the world will be different… once again.
Pamela Donner is COO of High Point Jewelry, and is an experienced C-level corporate executive, with an impressive history of growing companies, navigating successful business turnarounds, launching new products, and implementing structural organization changes to reduce costs and maximize profits.
She is currently COO of multiple companies in the legal cannabis and CBD industries, including
Gel Cap Concepts, LLC – a manufacturer of cannabinoid-infused products; the Uncle Herbs, Naked Vape, and Desert Azee brands; and High Point Jewelry – the world’s first luxury cannabis-inspired jewelry company. She is also a partner in a CBD retail store and is COO of a popular dispensary.
Donner was named the 12th Most Powerful Woman in the Cannabis Industry by Cannabis Business Executive Magazine, and was listed as one of America’s Finest Entrepreneurs by Business Management News.
Pam resides in Scottsdale, Arizona with her husband, Glenn Murray.
Member Blog: The Conservative Argument for Banking and 280E Reform
Why philanthropy can be the most effective weapon in the fight for banking and 280E reform
In a recent announcement by the IRS, they may allow deductions through Section 471, but it is still unclear this impact as of this writing is still unclear, so with that said, I am proposing this argument because of the impact needed TODAY to help in the economic recovery effort, given it is an election year, as well.
Before I begin, please do not construe my argument as a Republican argument for legalization. When I say conservative, I am speaking from a purely fundamental belief and values perspective, not a contemporary political ideology. There is hypocrisy on both sides and I recognize this fact.
Having a nonprofit background, most of my life has been spent hovering on the political lines, mostly policy, not parties. Liberals are traditionally more aligned with causes than conservatives, although conservatives have traditionally been more fiscally supportive of charitable causes. Why are conservatives more fiscally supportive of charitable causes? Conservative values.
The most undervalued weapon in the fight for legalization
In the fight for legalization, there appears to be a definite challenge from conservatives.
I came into this industry four years ago and noticed a disconnect between the arguments from the industry and the conservative response. Although support is growing from conservatives, most of the arguments being discussed for legalization seem to be falling on deaf ears.
Why is that? It is because the current arguments for legalization are being fed to conservatives in a language which they do not understand and are hearing as a direct challenge to their values.
The values and language of the right are fundamentally different from the left in most ways. One value which is, in my opinion, grossly undervalued by the industry is philanthropy.
Timing is everything
The health and economic ramifications of COVID-19 have caused us to look at the government and our nonprofit sector for help. The political discourse of our governments, from local to federal, unfortunately, is not helping to meet the needs of individuals or communities and thus someone has to step up. Something I haven’t heard many conversations about is our community-based nonprofits and how they are working to address the needs around COVID-19 and the economic challenges COVID-19 has manifested. Nonprofits, which are on the front line of meeting communities’ needs, from animals to veterans and every population in between, are fighting a battle from a deficit position.
The COVID-19 pandemic has cut into nonprofits’ resources while increasing demand for their services.
According to the Stanford Social Innovation Review’s “Giving With Impact Podcast,” our community nonprofits, especially 501(c)(3) nonprofits, are being “…asked to do more with less money and reduced staff while taking on an expanding client population, and all of this at the same time that revenues from services have dried up and donations from their traditional fundraising activities have declined. Some have had to lay off staff and cut salaries and others have had to cut programs.” This is according to Amir Pasic, the Eugene R. Tempel Dean at the Lilly Family School of Philanthropy at Indiana University and a professor of philanthropic studies. He also highlights that although disasters cause a spike in giving, which the pandemic did, in a recession, which seems to be a by-product of the political response to COVID-19, he states, “…we see the opposite effect… It took many years, several years, for individual giving, in particular, to recover. So in recessions giving does go down, simply because the resources that we have available go down, as well.”
Amir also states in the podcast that “…over 60% of nonprofits are anticipating significant decreases in terms of their fundraising ability. And I think many of them will be in crisis further, depending, in part, also, in terms of how federal help continues or does not continue going forward… So there is certainly a sense of crisis and pressure for many nonprofits because their services are increasingly… many of them in the human services, increasingly in need, and yet there is the sense that their sources of revenue are going to be under severe pressure at the same time.”
In the same podcast, Mary Jovanovich, Senior Manager for Relationship Management at Schwab Charitable, states that clients involved with their donor-advised fund are actually giving 50% more at this time. Looking at this in the most simplistic way, those who can give more are giving more, but giving is being done by fewer people and thus still creating a deficit.
Together we CANNA make a difference!
Of course, those companies and people who are doing extremely well are the usual suspects. But what about a flourishing industry? One which is new and growing, and has been growing through a pandemic? An industry that is doing better than most industries and has the reach and means to impact the communities which they serve and beyond? What would be holding them back from coming to the rescue of the communities they serve and ultimately helping the entire nation?
Well, not to put too fine a point on it, but taxes!
If you are a company with an effective tax rate of between 60 and 70%, you might need to hold on to your profit in order to make sure you and your employees survive in case something else is looming on the horizon. Say an election?
Imagine a time when the cannabis community comes together to elevate those nonprofits which are providing the most impact on our economic and social recovery. The world is watching and in awe of the support being provided to tens of thousands of deserving nonprofit 501c3’s and the Senate is watching as thousands of the nonprofits in their states are participating, which is a statement that they are willing to accept support from the cannabis industry. This is the way you sway minds and hearts.
The Conservative Argument for 280E Reform
Conservatives believe in free markets and thus less regulation, in the belief that the growth of companies and the economy will thrive and ultimately self-regulate as much as it can with limited governmental intervention. This needs to be applied to the cannabis industry as well. But not just for the reasons you may think. 280E reform needs to take place NOW so that philanthropy can be elevated and help address COVID-19 and economic recovery challenges.
The effective tax rate is high specifically due to the IRS code 280E, which does not allow cannabis companies to write off typical business expenses, things like marketing, depreciation on equipment, and other expenses including charitable donations to 501c3 nonprofits! Just imagine what could be done if a cannabis company, many of which are already giving without the tax advantage, was given a tax incentive to donate? Everyone understands the taxes imposed by the states and municipalities for the legal purchase drive the cost of cannabis up. So the margins are fairly thin when compared to that of other companies that do not have to abide by 280E. 280E is government regulation. Conservatives tend to be for free markets. If, as we all know, even my fundamentalist Christian friends know, that cannabis will be federally legal eventually, why not take this opportunity to deregulate this industry allowing it to assist in addressing community resource deficits at a time when it is needed most? This argument also addresses the fundamental hierarchy, which conservatives believe should be the path of assistance, self, family, church, community, local government, and finally state government, in that order.
I do not mention the federal government, because another value of conservatism is small government and that the federal government is there to protect the inalienable rights of humans as well as the right to property. Traditional conservatives believe in a helping hand, but only a temporary one as they understand many might not have all the support systems in place mentioned previously.
So the argument for 280E reform, in the context of nonprofits and helping with the health and economic crises stemming for COVID-19, addresses the conservative values of human rights, property rights, individual responsibility, free markets, lower taxes, and deregulation of businesses.
The Conservative Argument for Banking Reform
Now, imagine that 280E was reformed or no longer applicable to LEGAL cannabis companies. There is still a problem. Even if 280E was rescinded for the cannabis industry, banks may still not allow them the same banking services because it would in effect still be federally illegal. If this is the case, even if a company chose to donate to a willing charity, the charity would fall under these very same banking laws and thus might not be able to deposit funds from the cannabis industry into their bank accounts, running a risk that their accounts could still be closed for accepting money from a federally illegal activity. So truly, banking and 280E reform are not just a cannabis industry issue, but a nonprofit sector issue, which needs to be addressed sooner than later!
Now, we all know many charities will still not accept the funds offered from cannabis companies due to many factors, however, many of those most impacted by the pandemic and economic decline, such as those focused on food, housing, homelessness, veterans, mental health, senior citizens, and others, could benefit from receiving funds from cannabis companies as their own resources are diminishing. Therefore, the fight for our nation’s recovery needs to include banking and 280E reform for an industry which can make a difference for many!
Because TOGETHER WE CANNA MAKE A DIFFERENCE (If given the opportunity)!
Founder of Corporate Compassion, LLC and DBA CannaMakeADifference, Kevin J White is a social entrepreneur, nonprofit evangelist, volunteer activist, community engagement advocate, tennis player, golfer, BUCKEYE, and Avid shoe wearer.Kevin began his journey into social entrepreneurship after a 20+ year career in the nonprofit sector. Having started his career as a direct care counselor for at-risk children he advanced through the nonprofit sector, eventually moving to Colorado for a job with a major animal welfare nonprofit, overseeing 4 departments and over 100 staff and volunteers, eventually creating his own nonprofit 501(c)(3) public charity. With a strong background in nonprofit management and resource management, he began his cannabis journey through his Colorado-based, 501c3 nonprofit, having to identify the benefits and challenges of accepting support from the cannabis industry. He realized that there were some challenges for both sectors and decided to further his social entrepreneurship by consulting with cannabis companies looking to strengthen and develop their cause-marketing and philanthropic goals. This was the birth of CannaMakeADifference.
CannaMakeADifference is a strategic consulting company created to assist purpose-driven cannabis companies with meeting their cause-marketing and philanthropic goals. He has co-authored two white-papers, one for cannabis companies and one for nonprofits, highlighting the benefits and challenges of working with each other.
Kevin also hosts a podcast called Together We CANNA Make A Difference which highlights philanthropy in the industry and companies making a difference from the cannabis sector. You can download the podcast on most major podcast platforms including Google Podcasts and Apple Podcasts.
A Third Round of SAFE Banking, HEROES 2.0 Unveiled
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
Photo By CannabisCamera.com
It may seem like a while since you got an update on the SAFE Banking Act, but I have some exciting news to share with you!
Yesterday, House Democrats unveiled “HEROES 2.0” which is their latest COVID-19 relief package. If you’ll recall, back in May, the House also passed the initial HEROES Act, which included the text of H.R. 1595, the SAFE Banking Act.
Since HEROES passed the House in May, NCIA has been hard at work (from home!) talking to House and Senate leadership, as well as other key Senate offices about the need to pass this legislation and solve the cannabis banking conundrum. Unfortunately, those talks have been stalled for months as congressional leadership and White House officials struggle to make a deal.
Eager to return home in October with a victory to show, many moderates on both sides of the aisle have been stressing the importance of passing another relief package. As the language was just unveiled late yesterday evening, it’s still unclear how the Senate will react to the bill, and of course, the bill still has to clear the House of Representatives.
You might remember that just days before the first HEROES Act was passed in May, NCIA led ten cannabis advocacy and industry organizations in sending a letter to congressional leadership urging lawmakers to include SAFE in the next pandemic relief package. If the new HEROES 2.0 passes the House, it will mark the third time that the full body has approved the SAFE Banking language.
The language included in both packages is identical to the House-approved version of the bill and would make it easier for financial institutions to work with cannabis businesses that are in compliance with state law, as well as help address serious public health and safety concerns caused by operating in predominantly cash-only environments. The bill would also assist with the financial and practical hardships that are facing cannabis entrepreneurs of color as a result of a lack of access to capital from traditional lending institutions.
Make sure you stay engaged and continue to tell your lawmakers that you are a cannabis voter and that these issues are important to you! Contact your Senators today and ask that they support SAFE Banking as a necessary piece of legislation that can help the tens of thousands of cannabis workers stay healthy by allowing our industry access to legitimate banking and end our cash-only operations.
Want to make sure you hear the latest about what’s happening in cannabis policy? Follow NCIA on social media and be sure to share important information and resources as we release them with your networks, because we’re going to need all of us in this together!
The most important thing anyone can do to make sure SAFE Banking and other important reforms are realized in Congress is to ensure that their cannabis business is a member of NCIA. If you are not yet a member, please support our work by joining today. If you already are a member, thank you for making our advocacy work possible.
MORE Act Headed For Vote, SAFE Banking Still In Play
by Morgan Fox, NCIA’s Director of Media Relations
We asked, you answered, and your efforts are seeing results!
Over the past months, our Government Relations team in Washington, D.C. has been hard at work gathering support in Congress for the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act, and many of our members responded to the call to contact their lawmakers to urge them to support the legislation and bring it to a floor vote in the House. Well, our mutual work is paying off!
Last week, House Majority Whip James Clyburn (D-SC) announced that the MORE Act would be called for the vote! This was confirmed Monday as taking place during the week of September 21.
This legislation would remove cannabis from the Controlled Substances Act and do away with the continuing conflict between states with modern cannabis laws and the federal government. It would also expunge federal cannabis convictions, remove barriers to research, eliminate the current problems with the 280E tax code and lack of access to banking, promote more diverse participation in the cannabis industry, and establish funds to help undo the disparate harms caused by prohibition.
Make no mistake: this vote will be historic. This will be the first time that a bill to end cannabis prohibition has come up for a full vote in either chamber of Congress, and the results of the vote could determine the path of cannabis policy reform efforts for years to come.
This means we have just three weeks to drum up as much support as possible and show our elected officials where the vast majority of Americans stand on cannabis.
If your representatives are not among the 87 current cosponsors of the MORE Act, please contact them and urge them to join in showing their support for this momentous and necessary bill.
Meanwhile, our efforts to maintain momentum for cannabis banking reform have continued throughout the negotiations of the next pandemic relief bill. Despite a somewhat contentious public debate over the size and scope of the stimulus funds in general, hope is still alive for the SAFE Banking Act provision to be included in the final legislation if Congress can come to some agreements on the numerous other issues at stake.
What is not up for debate is that SAFE Banking is an absolutely necessary part of COVID-19 relief. This measure will improve public health and safety by enabling more social distancing and decreasing cannabis businesses’ reliance on cash transactions which can spread contagions and make them a target for crime. Most importantly, it will help thousands of small businesses – with hundreds of thousands of employees across the country – survive these difficult times while providing uninterrupted healthcare services. It doesn’t get more COVID-relevant than that.
While it is still uncertain when or how the House and Senate will arrive at a compromise for pandemic relief, we don’t have much time before the elections divert most of their attention.
Keep an eye out for updates on ways you can help get SAFE Banking passed this year.
We couldn’t do this work without the support and assistance of our valued members. If you are not yet a member, please support our work byjoining today. If you already are a member, thank you for making our advocacy work possible.
Member Blog: Building A Medical Cannabis Dispensary During The COVID-19 Pandemic
In late January 2020, Grow America Builders started construction on a new medical cannabis dispensary in Elizabeth, New Jersey, just across the river from Manhattan. It was scheduled to be a 12-week project. And then COVID-19 happened.
Every construction project has its own challenges and problems, but we never had to complete a project under those conditions.
The coronavirus pandemic hit the area fast and furious. Cases doubled by the day, stay at home mandates were put into effect, and there we were, in the middle of construction of a dispensary with a strict state-imposed deadline.
Most cannabis companies are given a state-imposed deadline to complete their dispensary or risk losing the license. As the chaos surrounding the virus was intensifying, the state of New Jersey was silent on whether or not there would be a time extension. We had no choice but to push ahead.
Hurdles, Speed Bumps, and Roadblocks
The first hurdle we faced was abiding by the new regulations. The two primary directives were that all workers must wear masks, and all entrances had to have a washing station with hot water or hand sanitizer. Every construction contractor has masks, but the second part was more of a challenge. As everyone remembers, hand sanitizer was a rare commodity in those first few weeks of COVID-19. If you had a jug of hand sanitizer you may as well have had a jug of gold bullion. Our project manager used the first of many favors and begged our plumber to come out on a Sunday to plumb a temporary sink so that we’d be operational by Monday morning.
The next problem was getting workers to the job site. Immediately, there was confusion as to who was allowed to work and who wasn’t. Some cities allowed essential work to continue, but others shut everything down except for medical personnel. Our guys were getting pulled over by law enforcement, and told that unless they were working at a hospital they would have to turn back. It was very confusing; even though construction was allowed in Elizabeth, it might not have been allowed in a neighboring town.
We lost subcontractors left and right. We assured our guys that construction was allowed on our project, but they didn’t want to risk getting continually pulled over. And then there were those who understandably didn’t want to endanger their health. The situation forced us to make modifications on the fly. We plowed ahead, finding alternate contractors and paying extra just to get bodies to the job.
It was about a month out from our deadline when we hit the biggest speed bump. One of the more critical elements of the project was a wall of interior glass separating the reception area from the sales counter. We wouldn’t get the occupancy permit without it. As soon as we were ready for the glass wall, we were told that eight members of the installation crew were out with COVID-19. They had been working on another job at which they were exposed to a bricklayer who had the disease. Regardless, the glass wasn’t even ready because the shop had closed down.
In late March, as we were frantically dealing with the glass crisis, we received an email from the city that stated all construction was to immediately cease and the building department was closed indefinitely. Internally, at Grow America Builders, this was henceforth known as “The Email.”
We had no indication that this was coming, despite the fact we had just had an inspection. The inspector probably didn’t know himself. We had about three weeks of construction remaining and roughly three weeks until the deadline. This left us with no room for error. We couldn’t afford a stoppage. We were spinning our wheels; how could we convince the city to let us finish our project when they’d shut down all other construction? It wasn’t long before the state released a list of “essential businesses” that could remain open. We scoured that list until we found what we were looking for: “medicinal cannabis dispensary.”
Were We Essential?
In a recent article on Marketwatch.com, Randal Meyer, executive director of the Global Alliance for Cannabis Commerce, recognized this and said, “There is a good reason for cannabis [retailers] to be treated like pharmacies. The basis is medical.” In the same article, it was reported that California Gov. Gavin Newsom decided that dispensaries should be treated something like pharmacies. Every governor in a medically legal state followed suit.
As long-time advocates of cannabis, we were always on the side of “legalize it.” But since working in the cannabis industry, we’ve seen the cancer patients, the veterans suffering with PTSD and the epileptics who literally depend on cannabis on a daily basis. It wasn’t news to us that medicinal cannabis would be deemed essential. It was good to know that this now seemed to be the consensus.
We started making calls to the building department and arguing to anyone who would listen that if a medical cannabis dispensary is considered essential, then the construction of one should be as well. The sooner we could get the dispensary built; the sooner people could have access to their medicine.
Finish Line
About 48 hours later, we received verbal approval to continue working, and about a week after that the building department opened back up with limited hours. At this point we had a good routine established; we kept the electricians away from the plumbers, the plumbers away from the millworkers and the painters only worked nights and weekends. Glass was finally being fabricated and our final inspection was scheduled. We were ready.
On the morning of final inspections, our one item of concern was that the inspector wouldn’t be happy about walking around the glass installers who were still finishing up. The issue became moot because the inspector never showed up. He had fallen ill the night before our final inspection, and since he was apparently the only inspector who could pass us for occupancy, we had to wait until he could return to work.
Nobody knew when that would be. What we did know was that the state inspector was scheduled for the following day. This was new territory; we never had a state inspector come out for their inspection before receiving city inspections. To our relief, the state inspector still did their inspection and the dispensary received state approval prior to receiving occupancy from the city. About 10 days later, the building inspector came out and approved us for occupancy, and days later, the dispensary was open for business.
There were a million little things that we usually take for granted that were made that much more challenging under the shadow of COVID-19. It gives us great pride to know that we built that medical dispensary amidst the pandemic in the hardest-hit part of the country and that patients are finding it easier to gain relief in Elizabeth, NJ.
David Fettner is a managing partner of Grow America Builders, a national design-build construction company focused solely on the cannabis industry. Along with his partner, Mike Kaulentis, Grow America brings over twenty years of versatile construction experience, offering customers an end to end experience from concept through architecture, design and turnkey construction.
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: 7 Dispensary-Killing Mistakes And How To Avoid Them
In the retail cannabis industry, there’s no conventional roadmap to success — at least not yet. Pioneering businesses must create their own strategies and systems through trial and error, all while coping with restrictive, ever-changing regulations and shifting market trends.
But as we enter the second decade of legalization, the landscape is changing. Cannabis entrepreneurs are learning from the last five years of industry growth and drawing on what worked for other retailers.
At Cova, we’ve partnered with more than 800 retailers to implement business operation systems through our cannabis POS software. We’ve seen retailers succeed, expanding into multiple markets with dozens of stores. And we’ve seen other retailers struggle and fold.
So, what makes the difference between success and the long, downward spiral into “retail fail?” What are the cannabis retail mistakes that kill market entrants? Through working with so many companies, we’ve discovered some of the secrets to cannabis retail success — and uncovered the nasty reasons for common failures. You’ll find them all in our new book, “Why Some Cannabis Retailers Fail… and the Secrets of Those Who Succeed.”
Here in this article, we document the biggest dispensary-killing mistakes that we’ve observed over the last five years. Don’t fall victim to these errors! Keep reading…
Dispensary Mistake #1: Financial Mismanagement
Most retailers — successful or otherwise — understand the importance of financial management, and they stay on point with their finances, or so it may seem. They keep orderly books and watchful eyes on their cash flow.
Yet what sustains a cannabis retail store financially is forecasting and preparation. A dispensary with an uber-tight budget might look like a booming business when it’s actually vulnerable to a variety of external risks — risks like global pandemics.
COVID-19 interrupted sales for many retailers while at the same time necessitating new technologies and infrastructure. Online ordering was suddenly a must-have POS integration, and delivery services — which were considered a questionable experiment just months before — were immediately necessary to stay competitive in many markets.
Likewise, the start-stop nature of legalization can create unexpected exposure, especially in new markets. When regulators hesitate to enact legislation and permit sales, retailers are left sitting on expensive real estate — sans revenue.
It’s best to set aside two years of operating capital if possible or maintain access to that amount of financing. Everything in cannabis takes longer than expected. Successful retailers recognize that fact and prepare accordingly.
Mistake #2: A Cloudy Vision for the Future
Successful retailers have a crystal-clear vision for the company they want to build and what they want to offer customers. When asked, these folks have quick answers to questions like “what are your companies goals” or “what are your companies values”?
Some retail operations fail to realize that they don’t have a clear vision. Individual stakeholders may have different values and assume others feel the same. If that’s the case, the business is pulled in different directions and has trouble making progress to any one goal. Internal conflicts slow decision making, which is critical for effective operations.
Be clear on your values and vision. Common values include profitability, serving medical patients, or simply living the cannabis lifestyle. Whatever your values, make sure they’re documented in a plan and shared with the rest of your team.
Mistake #3: Problems with Authority
In the days of prohibition, successful cannabis “retailers” made sure to avoid the law. Now, retailers embrace regulations and comply with every last rule — without cutting a single corner.
Successful retailers often designate a compliance supervisor. That person can manage seed-to-sale reporting, compliance logistics, and how your stores meet regulations on a day-to-day basis. They also nurture your relationship with regulators and ensure you’re seen as one of the “good guys.”
Many features of a cannabis-specialized POS support regulatory compliance. Technologies like ID-scanning and POS/security integrations keep your front of house compliant, while seed-to-sale reporting meets regulatory requirements on the back end. Moreover, they eliminate human error — one of the biggest causes of violations.
Mistake #4: A Poorly Designed Customer Experience
Sometimes, retailers struggle to step into their customers’ shoes. They can’t see their own brand from the customer perspective, and they don’t understand why they’re poorly received by the market.
Each point of contact with your customer is an opportunity to deliver a good experience. Taken together, they add up to the customer experience. These touchpoints include your advertising, social media, store aesthetics, parking, online ordering system, and the type of customer service you provide.
For your customers to have a coherent experience of your brand, every touchpoint of your operation must be consistent. Whether your store caters to wealthy Millennials or aging Baby Boomers, it’s important that the quality of their interactions with your company are consistent. An upscale dispensary won’t have a filthy exit area or a bad website; likewise, a store that focuses on value pricing won’t have fancy bathroom fixtures.
Mistake #5: Mismanaging HR and PR
Good retailers have great relationships. They treat their employees and communities well — and are treated well in return! Failing retailers, on the other hand, often let bad employees spoil their customer experience, or they find themselves at odds with their community and neighbors.
When it comes to HR, good retailers actively cultivate their staff — and that means weeding out the undesirables. They know that their brand critically depends on their budtenders so they train and treat them well. But, when it’s necessary, they also release those who steal, cause customer service complaints, or show up late (or intoxicated).
When it comes to PR, successful retailers are engaged in their communities through active outreach. In emerging cannabis markets, communities usually need some reassurance that cannabis medicines aren’t the evil they may have imagined them to be. So, if you’re struggling for acceptance in your location, you could consider reaching out to medical professionals, clergy, and law enforcement with an offer of cannabis education. Often, it just takes a meet-and-greet to humanize your dispensary and set fears at ease.
Mistake #6: Operational Chaos
The Wild West of cannabis can be chaotic even in the best-run businesses. That makes it even more important to limit internal disorder and run a tight ship.
Successful retailers often have team members who are experienced in other industries and have excellent business operations skills. They analyze their sales reports and constantly refine what works. Even when things are going well, they experiment with different inventory items and suppliers, and they look for ways to reduce costs.
Technology can help tame the chaos of cannabis by automating many tasks that cause human error. Moreover, tech can save a lot of time — and payroll hours. When your cannabis POS and inventory management system integrate with your regulatory reporting system and have automated features, you save a ton of time and money.
Mistake #7: Not Using Data
The future of cannabis retail is data-driven. Like in other industries, successful cannabis retailers — the ones who expand to dozens of locations across multiple markets — are mining data to improve their business operations and customer service.
A good example is a loyalty program. These programs keep customers coming back, usually by using a points-based rewards system that mines data. It’s easy to track who buys which products, in what quantities, and at what frequency. And because you have the customers’ contact info, you can directly market to them with personalized promotions. To go one step further, you can implement a clienteling program and display the customer’s purchase history to your budtenders on your POS tablets. That way, they can offer personalized recommendations for a better customer experience.
Benchmark data is increasingly relevant to the cannabis industry too. With benchmark data, retailers can assess their performance against industry norms and address opportunity areas that may be holding them back. It illuminates industry trends and shifts in consumer preferences and, by providing an outlook, helps companies better plan for the future. As the industry evolves, companies will rely more and more on benchmark data firms to provide the intel for better decisions.
Successful Retailers Keep Learning
Across the board, the best retailers seek to improve. If you’re ready to step up your operation — or enter the market successfully — you might want to check out Cova’s ebook “Why Some Cannabis Retailers Fail… and the Secrets of Those Who Succeed.”
The book can be downloaded here, and contains the dispensary tips that we’ve learned from working hand-in-hand with more than 800 retailers. You’ll discover additional cannabis retail mistakes as well the tactics that work for the most prominent retailers. Happy reading!
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.
The “Helpers” In The Cannabis Industry – Responding to COVID-19
As the entire world continues to navigate through the devastating COVID-19 pandemic, it can sometimes be difficult to see the silver lining. A beloved public television figure known as Mister Rogers famously told the story of how his mother urged him while watching “scary things in the news,” to “…look for the helpers. You will always find people who are helping.”
This sentiment rings true for the cannabis industry here in the United States, as cannabis has been declared an “essential business” even during these initial, and most severe, phases of the shutdown. And in recent days and weeks, we are seeing how the cannabis industry itself has stepped up to become “helpers” in various ways, ranging from fundraising efforts to manufacturing hand sanitizer for the community.
As we get through these difficult times together, one day at a time, let’s take a moment to celebrate the efforts of these NCIA members helping to make our world a better place.
Donations Of Supplies And Dollars
Seattle-area company Canna Brand Solutions, a custom packaging supplier and CCEL Vape hardware distributor, has donated 10,000 KN95 masks to local hospitals Providence Everett and Virginia Mason.
They’ve been fortunate to continue serving their adult-use and medical cannabis manufacturing partners who are deemed essential businesses. Through their strong relationships with manufacturers in China, they were able to procure the masks.
Canna Brand Solutions’ CEO Daniel Allen shared, “During this challenging time, we can think of no better way to serve our community than support the people working to keep us safe and healthy.”
Good Chemistry, a Colorado-based dispensary, donated $50,000 and masks. Read more in The Westword.
Kind Colorado is participating in the CDC (Cannabis Doing Good) Gives fundraising campaign.
Cannabis Doing Good (CDG) found nonprofit partners and fellow cannabis collaborators doing incredible work to support the hungry, the unhoused, medical providers caring for our sick, and our frontline workers at dispensaries and restaurants. Together – they created a platform for the cannabis community to contribute.
Many nonprofits are wary to accept cannabis dollars for a host of reasons. However, through relationship development, trust, and transparency, CDG has found 3 community treasures that are willing to work with them. Addressing hunger, Metro Caring, addressing the unhoused, Urban Peak and – one from our very own industry, Friends In Weed, supporting budtenders and the restaurant industry.
CDG Gives: Donations as small as $10 and as large as $5000 are accepted. If this is successful – CDG plans to launch a national campaign so that our sector can contribute on a larger scale. Any amount of participation is welcome.
Technology Perks
Leafbuyer, the cannabis technology company, is giving free texting and loyalty to help non-cannabis businesses get back on their feet!
Because marijuana dispensaries have been considered “essential businesses,” some cannabis businesses have not been hit as hard as other small businesses that have had to shut their doors or scale back. Leafbuyer Technologies, Inc., which serves hundreds of dispensaries, is offering up to $750,000 in free texting and loyalty to 500 small businesses in five cities hit hardest by the coronavirus. Learn more.
Switching Gears: Hand Sanitizer
The Galley is Producing Hand Sanitizer
In early April, The Galley of Santa Rosa, California, joined a wave of cannabis companies’ efforts to support the urgent need for supplies brought on by the COVID-19 pandemic. Channeling resources at their state-of-the-art manufacturing and production facility, a first run of “Stop & Sanitize” will include 25,000 units for distribution to hospitals, retail shops, grocery, and drug stores. The Galley has been built to FDA and CDPH standards and is capable of meeting high demands in multiple cannabis product categories. Using operational expertise and a cutting edge facility, the company will provide bottles of hand sanitizer to retailers in need.
Annie Holman, CMO of The Galley, shares, “It’s our civic duty to do what we can to save lives. Our “Stop & Sanitize” hand sanitizer is made with great care in a sterilized setting and we want to contribute in some way to help people & our community in this crisis.”
Director of Operations Cheriene Griffith comments on manufacturing practices stating, “We have followed the strict FDA temporary guidelines for this purpose and our plant to ensure the product is safe.”
CGA Packaging of Santa Rosa will provide donations of labels and packaging for the “Stop & Sanitize” product. Wherefour, a local Enterprise Resource Planning (ERP) technology company, will donate services to support expedited production.
Anresco Labs began manufacturing ethanol-based hand cleansing solutions.
The company’s intention is to donate as much of this material as possible to those most in need. For each bottle purchased, an equivalent bottle will be donated to a non-profit organization.
At a time when we need it most, it’s uplifting and encouraging in these dark times to see the cannabis industry stepping up and giving back to a community in need, and these values are part of what our industry represents: Community. Health. Well-being. Innovation. And generosity.
As we come together to solve new problems and face new challenges, we’re also grateful for the various educational blogs and other resources with advice and expertise regarding COVID-19 that NCIA members have contributed during this time.
If you are an NCIA member that has given back to the community in response to the COVID-19 crisis, we want to hear about it! Email me your story at Bethany@TheCannabisIndustry.Org.
Now that COVID-19 shelter-in-place orders have eased restrictions for businesses to re-open across the country, employees and employers alike will have questions about returning to workplaces. Each city, county, and state will have its own specific requirements as to when and how you can re-open your business so you should be sure to check your own regional and municipal requirements. Whether you are getting ready to re-open or have been operating, we provide some FAQ’s to help facilitate a safe and compliant operation for your cannabis business in this new COVID-19 era.
Do my employees have to come in?
The short answer is yes, with caveats. You have the right to request that your employees return to work where the local rules allow for it. Please keep in mind that your re-opening must comply with local guidelines in order for you to require your employees to return to work. However, simply notifying them to return to work is only the start of the process. If they qualify for certain leaves, they can take that. Remember that the new Families First Coronavirus Response Act (FFCRA) will be effective until December 31, 2020. If they require accommodations, these need to be considered. Otherwise, if an employee has no special consideration and you need them in order to operate, you can take action if they refuse to return.
The practical reality is that many people are hesitant and afraid to return to work, especially without knowing how they will be protected. Most employers are being flexible about when and how they are bringing employees back to the workplace, especially if employees have been successful with working from home, have childcare issues, or are in a vulnerable population. If you are creating a workplace protection plan (see FAQ #2), consider sharing that plan in advance with your employees to ease their minds and make sure everyone knows what to do when they return to work.
Always remember, there is a difference between someone saying that they don’t want to return to work because they are generally afraid and someone saying specifically “I’m afraid to come back because I am immunocompromised.” And remember that an employee does not need to specifically ask for an accommodation. Simply advising that they are immunocompromised triggers your requirement to engage in the interactive process, which could result in modified hours, a special mask, moving a workspace, continued telecommuting, different job duties, or a leave of absence.
How can you keep employees safe?
With a pathogen as contagious and lethal as the coronavirus that causes COVID-19, employees will rightly want to know how they will be protected. To reassure employees, create a workplace protection plan that addresses the identification and isolation of sick employees, social distancing, workplace hygiene, and workplace cleaning. Share all safety steps that are being taken to maintain a safe work environment with your employees. Of course, each workplace is unique and will require different policies tailored to their specific sites.
General policies you should consider adopting include enforced safe distancing policies, temperature and/or daily question screenings, continued education on the importance of frequent hand-washing, cleaning and sanitizing of workspaces, minimal face touching, staying home when sick and self-monitoring of symptoms. Some examples to help maintain a safe worksite include having ample hand sanitizers available throughout the worksite, keeping office doors closed, wearing appropriate face coverings, marking off the 6-foot spacing with tape or other indicators, designating hallways and stairways as one-way, propping open doors to eliminate the need to touch handles, adding Plexiglas barriers at workspaces. Employers may also consider closing common areas or limiting the number of people who may use such spaces at a time.
Does the company have the right to ask about employee health history and take temperatures?
Yes. Employers are allowed to ask about coronavirus-related symptoms and take the temperatures of employees under guidance from the Equal Employment Opportunity Commission (EEOC), and some states now require it. The EEOC also permits employers to mandate that employees be tested for the virus before entering the workplace under certain circumstances, such as known exposure to someone already infected by the virus.
Testing should be administered in the least invasive way possible, like utilizing temperature guns or forehead temperatures. Testing should take place at the earliest possible opportunity at the workplace, to protect employees who have made it through already. Consider staggering start times, so that lines do not form. If a medical professional or person with medical training is available, have them administer the temperatures. If somebody with medical training is not available or onsite, the company should consider whether managers or HR employees may be trained to administer and read the test results.
If temperature taking at the workplace is mandated, the time spent being tested and waiting for a test should be considered part of the workday, and the process should be well thought out to eliminate crowding. If an employer requires the temperature be taken at home before coming in to work, the employer should consider allotting a few minutes on employees’ time cards for doing so. Consideration must also be given to providing notice to employees of the temperature screening process, data being collected and kept (if any) and the consequences for failing a screening. Please note that any data collected must be kept securely and separate from employees’ personnel files.
If an employee is sent home after screening, can employers require temperature testing or a doctor’s note to confirm they are no longer infected?
Yes. If someone has been sent home due to symptoms, administering a temperature test before allowing the employee to return to work is appropriate as the CDC recommends individuals be fever-free for at least 24 hours to ensure they have recovered. The CDC also recommends that anyone who recently had close contact with a person with COVID-19 should stay home for 14 days. The CDC, therefore, recommends that potentially exposed employees who do not have symptoms should remain home for 14 days. In such situations, please refer back to the FFCRA for requirements regarding paid leave.
Additionally, the EEOC has clarified that the ADA permits employers to require employees returning to work to provide a doctor’s note stating they are fit for duty because the inquiry would not be disability-related and/or because confirming that an employee is no longer contagious is a legitimate business necessity. The EEOC notes, however, that “doctors and other health care professionals may be too busy during and immediately after a pandemic outbreak to provide fitness-for-duty documentation. Therefore, new approaches may be necessary, such as reliance on local clinics to provide a form, a stamp, or an e-mail to certify that an individual does not have the pandemic virus.”
Can employers require employees to wear masks or other personal protective equipment?
Yes. The Centers for Disease Control and Prevention recommends the use of “cloth face coverings to slow the spread of the virus and help people who may have the virus and do not know it from transmitting it to others.” Many employers are making face coverings part of the work uniform, especially for jobs that require physical proximity. Some states and localities have required face coverings in order for businesses to re-open. Be sure to check your specific region for your own requirements. However, keep in mind that employers may be required to either provide employees with masks or other personal protective equipment or reimburse them for the expense if required to do their jobs.
Also consider whether or not to require your customers to wear masks. There may or may not be a local requirement to do so, but customers are an additional COVID-19 vector that should be considered when preparing for your employees to return. Just like employers may deny service to customers without a shirt or shoes, they can deny service to customers without a facemask.
What happens if an employee gets sick with COVID-19? What happens if someone in an employee’s family gets sick with COVID-19 and the employee is the caregiver?
Employers need to understand state laws and federal programs which have been enacted to deal with this pandemic. The FFCRA provides paid sick leave for people affected by COVID-19, as well as paid emergency family leave under certain circumstances including when the employee’s child care is unavailable for reasons relating to COVID-19 or when the employee must care for someone subject to a quarantine order or advised by a healthcare provider to self-quarantine. The United States Department of Labor has issued a helpful summary of FFCRA.
What if a co-worker gets sick?
Privacy rights must be maintained, but employers must also maintain a safe workplace and the law allows for them to do so. If temperature screening reveals a fever, that employee should be immediately sent home with return-to-work instructions. The employer should follow up with the employee regarding who they worked with, all the locations they worked and any other information to be able to notify all individuals who the employee came into contact with and comply with the most current local, state, and federal public health recommendations. If an employee calls in sick specifically with COVID-19, the employer should do the same. Actions may include closing the worksite, doing a deep cleaning, and/or requiring employees to work from home for a period of time. If deep cleaning is called for, the CDC recommends hiring professionals.
Under no circumstances should sick employees be identified by name. Notification to affected employees must not reveal any personal health-related information of an employee.
Member Blog: While You Are At Home (Part 2) – Time To Prepare For Achieving GMP Certification
In our last article, we discussed the benefits of Good Manufacturing Practices as a means to increase productivity, efficiency, and to drive accountability within an organization. With cannabis and hemp businesses negatively impacted by the ongoing COVID-19 pandemic, tight budgets are even tighter and existing room for errors are tighter than ever. As we begin to carefully rise out of the pandemic, failing to address recurring errors and inefficiencies will be catastrophic. In this follow up article, we dive into a few key systems that make up a GMP facility that you can get started on regardless of whether you are at home or on-site.
Internal (Self) Auditing
Even the most thorough and diligent people make mistakes or forget something from time to time. When you have a business that requires multiple people to make it run, the chances of a mistake increase exponentially. Left unchecked, this can result in catastrophic issues such as inventory reconciliation issues, customer dissatisfaction, product nonconformities, recalls, and even lawsuits. An internal audit program utilizes checklists to periodically conduct independent reviews of all operational areas at predefined intervals. Non-conformances are identified, and corrective action plans are implemented. This best practice is not only a GMP requirement but drives continuous improvement within your organization, ensuring:
List out all functional areas
Generate a matrix to establish the frequency of auditing for each functional area (we recommend every functional area be audited at least once per year – you can spread the auditing workload out over a calendar year rather than doing a full business audit once a year).
Conduct reviews of relevant procedures, documents, and records within those areas
Document the findings (including non-conformities)
Develop corrective action plans with the functional area manager to reconcile these non-conformities
Establish a timeline for closeout
Verify the effectiveness of the corrective action by conducting a spot audit 30-days later
Supplier Management
Did you encounter new challenges with the ability of your existing suppliers to provide you with the quality and timeliness of your raw materials, parts, or ingredients for your operation? Supplier management is a key component of a GMP program and ensures that you are able to deliver on your promises to the final client, be it the customer/patient, or another business in the supply chain. Items to include in a supplier management program include:
A Vendor Qualification Form
Quality Agreements
Right to Audit
Terms and conditions regarding product quality (specifications), and % of on-time performance
Documentation – upon delivery and retained over time
Review your existing contracts and supplier program. Don’t have a formal program in place? Get one started now based on existing relationships and their frameworks, and enjoy the benefits of this program as the economy slowly reopens.
Document Control
Do you have a list of all procedures, forms, and record books? Are they all stored in one binder in the Compliance office or do personnel have access via an electronic Document Management System. How do you ensure when a revision to a document is made that the old one is removed from circulation and not accidentally used by an employee? Document control is a pesky activity that many see as an administrative burden. However, discovering that a new formulation recipe was not being followed by a few employees because they were still using an outdated copy of the procedure for the last 3 months will justify any administrative burden and then some. Fortunately, being the year 2020, affordable electronic systems exist to streamline the process of effectively documenting and communicating all changes to relevant personnel, keeping your business compliant and operating efficiently.
Cleaning and Sanitation Validation
It is likely you increased your cleaning and sanitation regiment in light of COVID-19. How will you know when it is appropriate to scale back to pre-COVID regimens? Do you have any evidence that your prior cleaning and sanitation procedure was effective? Many companies are surprised to hear that their procedures are grossly ineffective. In one example, a company required personnel to wear Crocs in the ‘clean’ production areas. They also wore copious amounts of PPE (fresh lab gown and pants, hair nets, face shields) any time they went into a cultivation room. However, they suffered from significant pest outbreaks that seemed to spread from room-to-room with ease. They even had sticky mats outside of every room. The problem? The Crocs! A simple ATP test revealed bioburden levels that would make a college football port-o-potty seem clean. They were able to reduce their PPE levels by reorganizing workflows and periodically disinfecting the crocs, and their pest outbreaks disappeared within 4 weeks!
The cost – a few hundred dollars in testing for pathogens every week as part of their cleaning and sanitation program. By validating their results (running multiple tests and coming up with the same non-detect result) they were confident that their processes were effective (or as we call it in the GMP world – Validated).
Risk Management and Business Continuity
This final one is not an explicit GMP requirement, but, when built into your overall Quality System can provide you with quantifiable benefits. One of the other business disruptions that became evident in the COVID-19 era was how many companies did not have an effective Workplace Crisis Management Plan in place. Along with the GMP audit process it is recommended to review and update business continuity plans. What was learned during COVID-19? Where are gaps in the chain of communication, processes, and policies? How can we improve our training programs? Taking time to improve and adapt operating procedures will continue to build trust and effectiveness in your business.
Merril Gilbert, Co-Founder and CEO of Trace Trustand A True Dose™ and hGMP™ the first universal independent certification programs for dose accuracy in legal Cannabis and Hemp derived ingestible products. Always at the forefront of emerging trends on the future of food, technology, health and wellness, she leverages 25 years of experience of creative development, operations and investment for everything food and beverage. Current Chair of the NCIA Education Committee.
David Vaillencourt, CEO of The GMP Collective. David and his team at The GMP Collective bring decades of pharmaceutical and food industry best practices to cannabis and hemp. He holds a Master’s Degree, is a Certified Food Systems Auditor and brings a decade of experience in various governmental scientific work. David supports the industry in many ways, including serving as an Officer on ASTM International’s D37 Cannabis Standards Development Committee, participation in NCIA’s Facility Design Committee, and has also developed cannabis training content for college courses.
From The Hill: Lawsuit to Challenge Industry Exclusion from SBA COVID-19 Relief Revving Up
For many businesses struggling during the COVID-19 induced shutdown, assistance from the Small Business Administration (SBA) through the Paycheck Protection Program (PPP) is the difference between lifeline and economic ruin. But for thousands of professionals serving state-legal cannabis businesses, including non-profits like NCIA and innumerable small businesses alike, access to PPP money remains elusive. A group of lawyers is in the process of developing a legal challenge to this unjust treatment.
The SBA Policy Notice on April 3, 2018, precludes any company that has received anyrevenue from a marijuana business from receiving SBA assistance, including service providers like lawyers, accountants, or consultants which provide counsel to thousands of legitimate cannabis businesses around the country. This SBA guidance has prevented many firms from applying for PPP loans and casts doubt as to whether firms that received loans but have done work for cannabis clients will have their loans revoked.
A coalition of law firms led by Yetter Coleman LLP is seeking to raise $150,000 for a legal defense fund to strike down the guidance. The lead plaintiff will likely be a law firm whose PPP application was denied because of this rule. If successful, the challenge would benefit the industry going forward by removing the “Indirect Marijuana Business” guidance from SBA’s eligibility determinations. But time is of the essence with the PPP program winding down and the forgiveness rules are already likely being drafted.
In a recent letter to Treasury Secretary Mnuchin and SBA Administrator Jovita Carranza, the American Bar Association (ABA) requested the SBA to clarify eligibility under the business loan program to allow access to the Coronavirus Aid, Relief, and Economic Security (CARES Act) funds through the PPP for lawyers and law firms that provide services to cannabis businesses operating legally under applicable state laws. According to the ABA, of the 1.3 million attorneys practicing in the U.S. in 2019, approximately 78% are in jurisdictions where marijuana sales are permissible under state law. Under the current guidance, the ABA is concerned that many of these lawyers and their firms could be unfairly disqualified from receiving PPP assistance.
“The ABA supports amending federal law to ensure that lawyers do not face the threat of criminal charges when they represent clients in states that have legalized marijuana,” the June 5 letter states. “Even before those changes are made to federal law, lawyers should also not be penalized for providing legal services to cannabis-related businesses that comply with state laws.”
In a March 22, 2020, Twitter post in response to a Washington-based cannabis business owner, the SBA publicly confirmed that cannabis businesses are not able to access the SBA funded programs even though cannabis businesses are as equally harmed by the coronavirus pandemic as other law-abiding, tax-paying small business operators. To date, the SBA has not formally addressed the eligibility of cannabis businesses for the broader Paycheck Protection Program.
Back in March, several industry and advocacy groups, including NCIA, issued a letter to congressional leaders seeking to limit restrictions and allow cannabis businesses to obtain the same relief available to other legitimate industries. Among other things, the letter cites the unfairness of ineligibility for SBA relief for cannabis businesses given their obligations to follow federal employer requirements and the disproportionate impact ineligibility has on small businesses.
The legal U.S. cannabis industry is projected to top $20 billion in annual sales in 2020 and now employs nearly 250,000 workers. One would think access to SBA loans that support businesses in keeping this significant workforce employed during the coronavirus crisis would be an economic priority for policymakers in Washington DC. Time will tell if this goal becomes a reality.
If you are an ancillary business interested in either donating to the legal fund or willing to offer your professional support, please email Shane Pennington of Yetter Coleman LLP at spennington@yettercoleman.com.
Webinar Recording: Managing Novel Risks During The COVID-19 Crisis (Part 2)
Watch this webinar recording to learn more about managing novel risks during the COVID-19 Crisis.
A conversation with industry legal and financial experts discussing how cannabis operators can mitigate the financial risks presented by coronavirus.
Get actionable advice and insights regarding how to manage your financial risk and avoid pitfalls.
Topics addressed include:
Managing finances in a business deemed “essential”.
Navigating the legal, financial nuances of assistance programs.
Federal and State Financial assistance programs.
What aspects of these programs can cannabis businesses utilize?
Legal ramifications and implications of applying for assistance.
CARES Act, upcoming changes to SAFE Banking, and what they mean to you.
Frequently misinterpreted language in 280E.
What coronavirus teaches us about the import of proactive financial risk management.
The panel:
Summer Jenkins, CLCS, Senior Product Manager of Cannasure Insurance Services, LLC (Moderator)
Christopher Davis, Executive Director of the International Cannabis Bar Association (INCBA)
Michelle Rutter Friberg, Deputy Director of Government Relations at NCIA
Kevin Haller, CPA, Principal of Akene Consulting LLC
NCIA Today: May 2020 Episode – HEROES Act, #CannabisIsEssential, and New Fireside Chats for NCIA Members
Host Bethany Moore, NCIA’s Communications Manager and host of NCIA’s weekly Podcast ‘NCIA’s Cannabis Industry Voice‘ brings you an in-depth look at what is happening across the country in federal cannabis policy reform and with NCIA.
From the top, Bethany discusses the NCIA #CannabisIsEssential movement, coordinating efforts between our communications, public policy, and government relations teams. We have been hard at work, exploring avenues for the legal cannabis industry to access federal COVID relief benefits, like including SAFE Banking language in the recent HEROES Act.
We check in with NCIA Deputy Director of Public Policy, Rachel Kurtz, to hear some of the recent highlights from our Allied Associations Program. Fortunately, most states have deemed cannabis as essential, and our state associations are working in their areas to make relief options, or commerce opportunities, easier to reach.
Kim Kovacs, President of the Arcview Group, checks in with Bethany to discuss the relaunch of their Women’s Investors Network. The cannabis industry leads on women in C-suite and leadership roles, but that doesn’t mean we can be complacent. ArcView has been offering regular webinars, and other digital programming options, for women energetic about entering the space. The next will be looking at the science behind the plant, join the conversation!
We’ll see you next month for NCIA Today!
Committee Blog: Employee Privacy Guidelines In A Time Of COVID-19
By NCIA’s Human Resources Committee
Privacy Guidelines
As employers across the country bring back their employees, coronavirus risks remain top of mind. These concerns are important to ensure both the safety of their employees and the ability of their businesses to remain open. No one wants their employees to experience a spike in infections, or to subsequently close down as a result. However, protecting employees and businesses from COVID-19 is not as simple as asking an employee if they are sick. Federal and state laws restrict the type of medical information an employer can require an employee to share, even during the pandemic.
Under the Federal Americans with Disabilities Act (“ADA”) and the California Fair Employment and Housing Act (“FEHA”), medical inquiries are generally not allowed unless they are job-related and consistent with business necessity. Under this standard, medical inquiries are allowed if the employee poses a “direct threat” to him/herself or others because of a medical condition. FEHA regulations provide that factors to be considered when determining the merits of the direct threat defense include, but are not limited to:
the duration of the risk;
the nature and severity of the potential harm;
the likelihood that potential harm will occur; and
the imminence of the potential harm.
FEHA regulations say that the analysis of these factors should be “based on a reasonable medical judgment that relies on the most current medical knowledge and/or on the best available objective evidence.”
Unfortunately, this leaves the answer to whether employers may make medical inquiries or take temperatures “it depends.” Ultimately it becomes a business/risk tolerance decision. Asking employees questions about their medical condition and taking their temperatures may be more defensible if there has been documented exposure to COVID-19 in the workplace or a high rate of contagion in the community.
The answer will also depend on what the Centers for Disease Control (“CDC”) determines. If the CDC makes a determination that COVID-19 is significantly more severe than the seasonal flu, it could pose a “direct threat.” Under the ADA, a direct threat is “a significant risk of substantial harm to the health or safety of the individual or others that cannot be eliminated or reduced by reasonable accommodation.” When the CDC advises testing, employers will have better standing to require it. CDC guidance is available here.
The Equal Employment Opportunity Commission has also issued specific COVID-19 guidance. The EEOC has advised employers that they may ask all employees who physically enter the workplace if they: (i) have COVID-19; (ii) have been tested for COVID-19; or (iii) are experiencing symptoms associated with COVID-19. Employers may also check the temperatures of employees entering the workplace. If an employee refuses to answer or refuses to submit to a temperature check, the employer may refuse to permit him or her to enter the workplace. However, employers should reassure refusing employees that the questions are simply designed to ensure workplace safety.
Employers may then single out individual employees for temperature checks or questioning only if the employer has a reasonable belief, based on objective evidence, that the employee has COVID-19 or symptoms associated with COVID-19. Employers may also ask employees if they have had contact with anyone who has been diagnosed with COVID-19 or who has symptoms of COVID-19.
If a manager learns that an employee has COVID-19 or symptoms associated with COVID-19, the manager may disclose this information to which employees are necessary to take action consistent with CDC guidance. As a general rule, employers should try to limit the number of necessary employees” who know the employee’s identity. Everyone informed of the employee’s identity should be told to keep the information confidential. This includes telling others that an employee may be absent or working from home, but not explaining why.
If employers do decide to take temps, there are multiple additional issues to consider: who will do the testing? What training? Will nonexempt employees be paid for their time undergoing testing? What will the employer do if the employee refuses? What information is recorded? All of these questions should be addressed in advance, and the answers should err on the side of caution. Tests should be simple, as non-invasive as possible, and as little data should be recorded as possible. Data for each employee should be recorded separately; an employer should not compile a single list of employees and their temperatures. An employer could, however, maintain a record of a single employees’ temperature of time. In other words, a single piece of paper could track an individual employee’s temperature history, but not the entire workforce’s temperature history.
In summary, employers must be careful to ensure their employees’ privacy rights remain respected and protected as they return to work. Employers may take reasonable precautions to ensure infected and at-risk individuals do not work, but must be careful in the questions they ask and the manner in which they record and keep the information. If a diagnosis is confirmed, employers must also be careful about who that information is shared with. Everyone wants a safe workplace; employers must simply keep in mind that a safe workplace is one that ensures an employee’s physical safety as well as their privacy.
NCIA’s Human Resources Committee is comprised of human resource practitioners devoted to bringing best practices to the cannabis industry. Their focus is educating and bringing awareness to misclassification of employees, promoting guidelines for employee safety, clarification on wage and hour issues in the industry and creating checklists to being a legitimate employer.
Allied Association Blog: Cannabis Policy Beyond Our Borders
NCIA’s Allied Associations Program (“AAP”) facilitates cooperation between NCIA and Allied Associations and the sharing of resources for the mutual benefit of our respective memberships and the cannabis industry more broadly. The AAP provides the means for the leaders and staff of NCIA and Allied Associations to learn from, work with, and support each other.
SUPREME COURT APPROVES SECOND EXTENSION TO REGULATE CANNABIS IN MEXICO
Due to the work suspensions caused by the COVID-19 outbreak, the Mexican Senate requested the Supreme Court of Justice of the Nation for an extension of the deadline to legislate in favor of cannabis regulation. This extension is the second that has been granted; the first was petitioned after the deadline expired in October 2019 and was extended to April 30 of this year. The Supreme Court had granted this extension as a unique and exceptional situation in October 2019, appealing to the complexity of the issue.
USERS DEMAND REOPENING CANNABIS CLUBS IN SPAIN
Associations such as the Patients’ Union for Cannabis Regulation (UPRC) demand that the Spanish government allows reopening these clubs, and that cannabis be considered as an essential good for the life of these patients, as countries like the United States have done. For comparison, other businesses such as tobacco and alcohol sales have been considered essential in this country. The state of alarm has generated measures that cut off the somewhat regulated routes that exist in Spain to acquire cannabis, as is the case with cannabis clubs. These organizations allowed access to medical cannabis to about 200,000 – 500,000 people in total.
CANNABIS INDUSTRY AMID THE PANDEMIC.
The health crisis derived from the COVID-19 pandemic has disrupted all economic sectors on a global scale. The cannabis industry is not an exception and has had to adapt to new circumstances. You can find a list of policies in countries where cannabis is legal currently. According to the market research conducted by Prohibition Partners, most consumers in Europe and North America will tend to maintain or increase their cannabis purchases in the coming months (March to June).
Erick Ponce is President of the GPIC. He has worked for 16 uninterrupted years in the healthcare sector, both private and public (specializing in government sales), where he has dedicated to promoting the individualization of drugs and medications and, with this, the reevaluation of the roles played by physicians, pharmacists, and chemists.
In 2017, with Artcan as an investor, he created ICAN, with the goal of opening cannabis operations in LATAM, as well as creating a network of technical, operational and commercial infrastructure while promoting education, information, collaboration and certification of cannabis and it’s derivatives for applications in therapeutics and wellness. In 2019 he was chosen as the spokesperson for the “Grupo Promotor de la Industria del Cannabis.”
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.
Committee Blog: Cannabis and COVID-19 – A Legal Perspective
As the COVID-19 pandemic continues to alter the day-to-day lives of humans across the globe in an unprecedented fashion, industries have made considerable adjustments to maintain their operations while protecting the health and safety of the workforce and the public. While some industries have had to cease operations to comply with “stay-at-home” orders, most states regulating cannabis have deemed cannabis essential, allowing cannabis businesses to continue operations during the COVID-19 quarantine period. The fact that cannabis was deemed essential in states such as California, Colorado, Illinois, and Michigan, demonstrates a major shift in public perception of cannabis and its utility. While challenges remain as they do for all industries, the cannabis industry appears poised to withstand the pandemic and to solidify its role in the economy.
Despite being deemed essential, adult-use cannabis sales have begun decreasing in states such as California, Colorado, and Nevada. Washington, however, reported record sales in April highlighting the diversity of legal markets throughout the United States. States that derive considerable sales for cannabis tourism like Nevada and California may see losses due to travel restrictions and mandatory self-quarantine periods. Although early sales reports suggest that the industry is equipped to weather this crisis, April sales only reflect the market one month into the pandemic that is likely to extend through the summer and potentially into next year. Thus, much remains unknown about the industry’s potential to stave off the impacts of an increasingly likely economic recession. Still, reports show that demand for cannabis remains strong and could potentially increase as the nation grapples with the significant financial and emotional duress associated with the pandemic.
States have taken proactive measures to ensure that patients and customers may safely access cannabis. States including California and Nevada have issued official guidance on best practices for cannabis businesses to observe to mitigate the spread of infection and preserve and promote public health. This guidance has largely prioritized the reduction of person-to-person interaction and adherence to heightened sanitation and hygiene protocols. Best practices for reducing person-to-person interaction include conducting sales by pick-up or delivery where possible, reducing the number of individuals allowed at the dispensary at any one time, and controlling the flow of visits to reduce the potential for exposure. Retailers have used space indicators like chalk, tape, and stanchions to demarcate 6-feet of separation between customers standing in line. Best practices for maximizing sanitation and hygiene include the promotion of contact-free systems such as tap-and-pay payment technology where possible, and the removal of handheld menus, tablets, and iPads, and aroma jars from dispensary surfaces. Retailers are advised to clean and sanitize commonly touched surfaces on a routine basis and to provide hand sanitizer to all employees and patrons in conspicuous locations to encourage frequent sanitization. Additionally, employers are required to monitor their employees’ health and hygiene practices. Employers should require any employer showing a COVID-19 related symptom to stay home from work.
While some businesses can rely on federal stimulus programs such as SBA loans for COVID-19 related relief, cannabis businesses cannot. Despite being equally harmed by the pandemic as other law-abiding, tax-paying small business operators, cannabis operators are ineligible for such funding because the cultivation and sale of cannabis remains illegal under federal law. While cannabis businesses are not currently eligible for federal relief programs, it appears that cannabis businesses may be eligible to defer the deposit and payment of their share of Social Security tax.
Nonetheless, as further proof of the growing bipartisan support for cannabis, multiple senators and congress members have requested that future COVID-19 relief packages include accessibility for cannabis businesses. One of the main reasons cited has been the cannabis industry being deemed “essential,” thereby allowing it to provide much-needed support to various states’ economies.
While the details of a post-COVID-19 world remain to be seen, one thing is clear – cannabis will continue to play a growing and important role in the U.S. economy.
Sahar Ayinehsazian is an attorney in Vicente Sederberg‘s Los Angeles office, where she focuses on corporate transactions, cannabis banking, and regulations. With her specialized knowledge, Sahar helped to establish and currently co-leads Vicente Sederberg’s Banking and Financial Services Department. As a member of the National Cannabis Industry Association’s Banking Access Committee, Sahar also works on strategy and educational advocacy to enable state-licensed businesses to obtain accounts at depository institutions.
Kelsey Middleton is a Regulatory Specialist in Vicente Sederberg’s Los Angeles office, where she focuses on licensing and regulatory compliance. Kelsey is responsible for assisting a dynamic range of cannabis clients in obtaining state and local cannabis licenses, permits and approvals, and navigating the complex and rapidly evolving regulatory landscape of the cannabis industry. She routinely helps clients prepare the requisite applications and documentation for state and local licensing and permits, and facilitates communications with cannabis industry regulators to promote efficiency and compliance throughout the licensing process.
Prior to joining VS, Kelsey interned at the Los Angeles Department of Cannabis Regulation where she analyzed proposed cannabis legislation and approaches for enhancing the efficacy of cannabis social equity programs.
Kelsey obtained her Juris Doctor from the UCLA School of Law, where she was the Co-Founder and Co-President of the Cannabis Law Association, and External Relations Chair of the Black Law Students Association.
Webinar Recording: Good Manufacturing Practices in the Age of COVID-19
Tune in to this webinar recording from Wednesday, April 15, 2020. As the realizations of the Coronavirus sink in, one thing is certain – cannabis companies need to be leveraging good manufacturing practices, otherwise known as GMPs. GMPs are the practices required in order to conform to the guidelines recommended by the Food and Drug Administration (FDA). The FDA is the public health agency in the United States that controls the authorization and licensing of the manufacture and sale of food and beverages, cosmetics, pharmaceutical products, dietary supplements, and medical devices. While many companies in cannabis are already following these guidelines, some are not.
This panel explores the GMPs themselves, how companies can become compliant, how GMPs can be amplified to make certain that we are preventing the spread of COVID-19, and whether there are extra precautions that should be taken to keep cannabis consumers safe.
Panelists:
Andrew Kline, Director of Public Policy National Cannabis Industry Association
Haley Brandsgard, Senior Quality and Compliance Manager Mary’s Brands
Alena Rodriguez, Managing Director Rm3 Labs
Trevor Morones, Founder Control Point
Jen Komerda, Quality Assurance Manager Wana Brands
Pushing For SAFE Banking In The Next Coronavirus Relief Package
by Michelle Rutter Friberg, NCIA’s Deputy Director of Government Relations
For years, NCIA has been lobbying for the SAFE Banking Act. Now, as we adjust to our “new normal,” we are trying to make lemonade out of the lemons we’ve been given and see if some provisions of the SAFE Banking Act can be attached to the next coronavirus relief package.
To that end, last week ten cannabis advocacy and industry organizations sent a letter to congressional leadership urging lawmakers to include the Secure and Fair Enforcement (SAFE) Banking Act or similar language in the next pandemic relief package which would create a safe harbor for banks and other financial services providers to work with cannabis and ancillary businesses that are in compliance with state law.
Signatories included Americans for Safe Access, Global Alliance for Cannabis Commerce, Marijuana Policy Project, Minority Cannabis Business Association, National Association of Cannabis Businesses, National Cannabis Industry Association, National Cannabis Roundtable, National Organization for the Reform of Marijuana Laws, Policy Center for Public Health and Safety, and Safe and Responsible Banking Alliance.
The coalition wrote,
“In 2019, it is estimated that sales of cannabis in the United States topped $12 billion– the vast majority of which were cash transactions. Previously, this situation created an unnecessary public safety risk and undue safety burden on state and local tax and licensing authorities who must receive and process large cash payments. Now, as recent reports show that viruses can live on cash for up to 17 days, the public safety concerns of this cash-only system compound. The lack of access to financial institutions places industry workers, government employees, and the public at-large at risk as banknotes circulate from consumers and patients to businesses to government.”
Even the lead sponsors of the SAFE Banking Act weighed in. Senate lead Sen. Jeff Merkley (D-OR) told NCIA, “Locking legal businesses out of traditional banking services—leaving them with no option but to operate exclusively in cash—has long put workers in danger. And now in the face of this pandemic, it’s making it increasingly difficult for these businesses to keep their workers and customers safe while they fight to stay afloat. The SAFE Banking Act is more important than ever to these businesses and the families who rely on them, and I’m committed to doing everything I can to get it passed.”
Congressman Ed Perlmutter (D-CO) also weighed in, stating, “Cannabis businesses and their employees already face a significant public safety risk without access to the banking system, and the COVID-19 crisis has only exacerbated this risk with these essential businesses having to move their cash-only transactions outside the store. At the same time, many of these businesses are facing disruptions in their supply chain and in normal operations and they should be eligible for relief just like any other legal, legitimate business during this pandemic. I will continue to push for inclusion of the SAFE Banking Act or other forms of relief for this industry in the next package.”
The next coronavirus relief package is set to be unveiled any day. Here at NCIA, we remain cautiously optimistic that our concerns have been heard and will be addressed. Regardless, we continue to call, email, and video message with congressional offices and remain dedicated to providing relief for our industry.
Member Blog: Suggestions For Cannabis Economy Leaders As We Navigate the COVID-19 Crisis
As COVID-19 swept across the globe, shutting down countries, there was an unexpected side effect taking place in the cannabis economy. Many cannabis companies that may have made hiring or operational errors have used the pandemic as an opportunity for correction even as they are staying open and deemed an essential service. Companies who over-hired based on “what if” scenarios of possible growth have used this to exit or furlough unexpecting employees with little to no explanation why.
Working in the cannabis executive recruitment space for several years (and being in the people business for decades), this is heartbreaking to see and hear. New hires should be based on new and real business needs grounded in data and facts instead of staffing up because a company is hoping for amazing growth. Companies using this pandemic as a correction must be more transparent and human in their actions. Acknowledge and realize some employees are losing their jobs (sometimes after stellar performance reviews) with little to no severance and little explanation. However, we all can learn from this experience and make some changes to how we operate moving forward.
Treat people as you would like to be treated.
The impact of a bad employee exit has a trickle-down effect. There’s a lot more good to come from understanding that former employees, along with their family members, friends, and colleagues, are all potential consumers, investors, and future employees. The (relative) smallness of our cannabis economy should be further inspiration to behave accordingly towards others during this time of crisis. When an employee is let go in an unprofessional manner, it impacts the morale of those employees who are still with the company. Relationships matter. We’re not saying that there isn’t a need to let people go and make organizational changes; you’re still running a business. Look for ways to make an unpleasant experience more positive. Furlough some people instead of flat out laying them off, and then communicate a lot with them during the time they spend in that holding pattern for you. Evaluate performance over salary when deciding on cutbacks. Consider bringing in an Industrial Psychologist to speak with your remaining employees who are probably suffering emotionally and thinking they’re next on the chopping block. Offer more perks to show that you care. Reach out to those individuals who are no longer with the company and see how they’re doing. Offer to pay for resume writing services or actively connect them to career support services or recruiters.
Invest in a strategic HR or Human Capital position.
You need a dedicated strategic HR leader in your organization to help guide your company vs. simply hiring an HR body to keep you out of a courtroom and to keep your files organized! This is a critical role, often overlooked by young and growing companies. Employees are the most valuable (and only appreciating) asset in an organization, and they can make or break an organization. Companies spend a lot of time and money on M&A diligence, vetting strategic partnerships, etc. However, many miss putting the same consideration into their human capital management. Hiring, training, and retaining best-in-class talent provides some of the best ROI for any organization, and that requires an individual (or entire department) dedicated to the recruitment, onboarding, training, continuous employee relations activities, and ultimately increasing employee happiness and effectiveness.
Evaluate Everything
Every company is looking to save money and improve their operations. Take this time to evaluate your current operational partners critically. Are you paying too much in additional fees? Are you getting the ROI you expect? Use this time to interview and seek out new partners who might be a better fit. What are the pillars of your culture? Is your leadership team the right mix? Do you have the right people on board to steer you toward the culture and future you hope for? Who do you want to attract to the organization? You may need to take some time to reflect and make some adjustments to the culture or team members to build the company you aspire to be.
Moving forward, companies who survive this can come out on the other side with better processes for employee hiring, onboarding, training, management, and retention. Many of us are in this business for the love and respect of the cannabis plant. Cannabis is a great connector of people, and this is an opportunity for us all to shift our operations to pay tribute to that fact and to improve our human relations processes.
Bryan Passman is a father, a husband, a trailblazer, and Co-founder and CEO of Hunter + Esquire. My professional background before launching H+E was entirely in retained executive search for 18 years in MedTech/Pharma (15 yrs) and Food and Adult Beverage CPG (3 yrs). My deep knowledge of those highly regulated and nuanced industries has helped H+E significantly understand the needs and wants of our cannabis clients. My deep and genuine networks within those industries have helped us deliver that rare talent “unicorn” our clients desire to fit their particular needs. My client-first approach helps us provide a very customized, white-glove, headhunter treatment to client and candidate.
Protected: Webinar Recording: Fireside Chats – Staying Politically Engaged in the Age of Coronavirus
Webinar Recording: Communications Strategy During Times of Crisis and COVID-19
In case you missed it, watch this webinar recording from April 8. With the cannabis industry customer acquisition and service models disrupted by the pandemic, it’s critical to understand that what you do today will affect your business now and have a large impact on your future. Adjusting communications to focus on brand and strengthening bonds with existing customers will help you minimize damage and promote future growth.
In this webinar, crisis experts Jeanine Moss (Chair of NCIA’s Marketing and Advertising Committee) and Nicole DeMeo of Outfront Solutions will outline immediate and practical steps you can take to address crises before, during, and after they’ve occurred. They will provide specific recommendations for the cannabis value chain including cultivators, manufacturers, distributors, retailers, and ancillary businesses. Learn how to build trust and brand loyalty in times of crisis with customers, employees, directors, shareholders, and vendors so you come through with a strong platform for growth and knowing you’ve done all that you can for your stakeholders.
Webinar Recording: #CannaBizSummit Speaker Series – Hacker-Proof Your Remote Operations
In case you missed it, watch this webinar recording from Monday, April 27. As companies reacted to the workplace changes COVID-19 required, many cannabis companies made rapid decisions to work-from-home, added curbside pickup, and enhanced delivery services. These decisions lead to additional security risks, and with hackers targeting companies more aggressively, these risks must be addressed to ensure business continuity.
In this webinar, GeekTek CEO/CTO Eric Schlissel and his guest Sophos Cyber Security subject matter expert Joey Ellison will discuss the current state of remote work, what to expect in the future and how to improve your organization’s security posture, moving from reactive to proactive protection. Intended for a non-technical audience, attendees will leave with clear next steps to improve their cybersecurity with minimal effort.
Speakers Include:
Eric Schlissel, CEO & CTO
GeekTek
Joey Ellison, Sr. Cyber Security Engineer
Sophos
Member Blog: Cannabis Dispensaries Are Essential Businesses – Transforming How Cannabis Businesses Operate
The COVID-19 pandemic has drastically changed how businesses operate and how people interact with one another. For many individuals, one of the greatest changes is living under “shelter-in-place” orders. The restrictions put in place have resulted in the closure of businesses that just a few weeks ago, many of us assumed would be open. The impact of COVID-19 on the cannabis industry has been dramatic, and the regulations and designations put in place over the past six weeks have altered the way cannabusinesses interact with their patients, as well as the way they are perceived as part of the larger healthcare conversation. The increasing adoption of technology solutions will continue to define the evolution of the industry long after the COVID-19 crisis has passed.
Dispensaries As Essential Businesses
Shelter-in-place has expanded across the country at a similar rate to the virus itself. When officials from states like California and Colorado issued these orders, cannabis dispensaries were initially not designated as an essential business. Due to public outcry, however, these initial orders were reversed. Dispensaries were classified essential and critical, joining other vital businesses like grocery stores, pharmacies, banks, and gas stations.
This distinction of dispensaries — medical, recreational, or both, depending on the state — as an essential business reflects how the cannabis industry and retailers are evolving to become a key part of the health infrastructure. Medical marijuana is a $5 billion industry with around 2,000 retailers serving more than two million patients nationwide. Among them are patients fighting cancer and using cannabis to manage their symptoms, veterans working to manage post-traumatic stress syndrome and those being treated for severe forms of epilepsy, Dravet syndrome, and Lennox-Gastaut syndrome. For patients like these, the cannabis industry plays an important role in their day-to-day health.
According to our research, cannabis sales have increased by 19.2% during the COVID-19 pandemic. Additionally, between March 11 and March 31, online ordering increased by 355%, delivery sales went up by 280% and pickup orders increased by 118%.
Modernizing the Cannabis Industry’s Way of Distribution
As demand continues to grow, cannabis dispensaries must adapt and adjust their operations in order to be compliant with the CDC’s guidelines for social distancing. For some business owners, this can be challenging, as historically, most cannabis dispensaries have sold and delivered product in-person and in-store with cash payments. In this “old way” of doing business, budtenders played an important role in helping customers, as they are trained to listen and discuss the most suitable products for each individual.
The reality of today’s world is forcing a shift in how businesses operate, moving from the traditional “in-person” model and embracing digital transformation for online menus, ordering, and delivery. Dispensary owners need to ask themselves: how with the aid of technology can they differentiate their products, and how can they engage and educate new and existing customers? As an essential business, how can cannabis dispensaries embrace the “new ways” of operating?
Through the integrated use of technology, business owners can keep up with the changing landscape to connect and engage with customers through:
Offering online video budtender consultations to replace in-person meetings
Providing online menus with robust product descriptions, improved merchandising, and bundled offerings around specific themes such as ‘sleep’ or ‘calming’
Developing targeted email and text messaging campaigns customized for individual customers to educate them on new product information
Guaranteeing secure, electronic payments
While industries across the board are embracing digital transformation, the cannabis industry now has an opportunity to fast-track its way there – and in time, this is what will enable cannabis business owners to thrive while protecting the health and safety of the community.
Nina Simosko serves as Chief Revenue Officer for Akerna, a global regulatory compliance technology company in the cannabis space. Akerna’s companies and investments also include MJ Freeway, Ample Organics, Last Call Analytics, Leaf Data Systems®, solo sciences, and ZolTrain.
With more than 20 years of technology industry experience, she has spearheaded strategic innovation initiatives for global Fortune 100 companies including Oracle, SAP, and most recently, NTT Group. Nina oversees both Akerna and MJ Freeway’s revenue generation streams, builds strategies to drive revenue growth, and plays a pivotal role in aligning revenue generation processes across the Akerna organization
Previously, Nina was President and CEO of NTT Innovation Institute Inc. (NTTi3), the prestigious Silicon Valley-based innovation center for NTT Group, one of the world’s largest ICT companies. Prior to NTT i3, Nina was responsible for leading the creation and execution of Nike Technology strategy, planning and operations world-wide. At SAP, she was the Senior Vice President of SAP’s Global Premier Customer Network (PCN) where she led both the PCN Center of Excellence and SAP’s Global Executive Advisory Board. During her eight-year tenure, she was a part of SAP’s Global Ecosystem & Partner Group which was charged with continuing to build and enable an open ecosystem of software, service and technology partners together with SAP’s communities of innovation.
Ms. Simosko currently sits on the Advisory board at Santa.io, AppOrchid and Reflektion and she has also been a member of the advisory boards at Appcelerator and Taulia.
The changes around ordering, delivery, payment, patient education and promotion are here to stay. With more than 70 integrated partners, MJ Platform offers clients the advanced technology solutions that are becoming increasingly important to the industry as we work through these challenging times, and that will define the future of cannabis in the months and years to come.
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Elizabeth Corbett, VP of Sales for 
By Kara Bradford, 
The Godmother of Cannabis Industry Recruiting, Kara Bradford, MBA, MM, is Co-Founder & CEO of 
By NCIA’s Retail Committee
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Pamela Donner is COO of 
Every construction project has its own challenges and problems, but we never had to complete a project under those conditions.
As the entire world continues to navigate through the devastating COVID-19 pandemic, it can sometimes be difficult to see the silver lining. A beloved public television figure known as Mister Rogers famously told the story of how his mother urged him while watching “scary things in the news,” to “…look for the helpers. You will always find people who are helping.” 
Merril Gilbert, Co-Founder and CEO of 
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Sahar Ayinehsazian is an attorney in Vicente Sederberg‘s Los Angeles office, where she focuses on corporate transactions, cannabis banking, and regulations. With her specialized knowledge, Sahar helped to establish and currently co-leads Vicente Sederberg’s Banking and Financial Services Department. As a member of the National Cannabis Industry Association’s Banking Access Committee, Sahar also works on strategy and educational advocacy to enable state-licensed businesses to obtain accounts at depository institutions.
Kelsey Middleton is a Regulatory Specialist in Vicente Sederberg’s Los Angeles office, where she focuses on licensing and regulatory compliance. Kelsey is responsible for assisting a dynamic range of cannabis clients in obtaining state and local cannabis licenses, permits and approvals, and navigating the complex and rapidly evolving regulatory landscape of the cannabis industry. She routinely helps clients prepare the requisite applications and documentation for state and local licensing and permits, and facilitates communications with cannabis industry regulators to promote efficiency and compliance throughout the licensing process.
Bryan Passman is a father, a husband, a trailblazer, and Co-founder and CEO of 
Nina Simosko serves as Chief Revenue Officer for