Cultivating Community in a City Near You: Announcing NCIA’s 2023 Event Calendar
It’s been a year of big change for NCIA. As we come to the end of 2022, we want to take a moment to send a message to our members and supporters about these changes, and most importantly, get excited for what’s next for the future of NCIA events.
The End of An Era
The events industry has faced unforeseen challenges these last couple of years, and NCIA was not isolated from these issues. Outside of needing to postpone our large tradeshows until late 2021, we also had to postpone a whole calendar of approximately 40+ events nationwide which was our primary way of connecting our community and meeting with our members face to face. Our team overcame these challenges by building our expansive digital presence and online events program to continue to provide education and exposure opportunities to our members, however this did still require a significant pivot in organizational strategy. Due to the residual hardships brought by the pandemic, we learned earlier this year that the Cannabis Business Summit & Expo was not going to be able to be produced on the scale or quality that we or our members had come to expect throughout the years. So, in tandem with our previous tradeshow co-producers, we made the difficult decision to dissolve our existing partnership and accepted an offer from them to acquire our tradeshow portfolio. For those who have been attending our tradeshows since 2014, we can’t thank you enough for your participation in those events and making them so impactful for the industry. There are too many good memories to revisit, and hope you take a moment to remember some of your personal highlights throughout the years as we look forward to coming together for new events in 2023.
Looking Ahead to 2023
For now, we will be taking a hiatus from the tradeshow space. This will allow our team to refocus our efforts into other impactful networking and educational opportunities. We’re excited to get back to our roots and focus our efforts on intentional and innovative gatherings that connect Main Street cannabis businesses with each other and with NCIA’s advocacy efforts.
We’ve listened to the feedback from our members, and know that in-person networking remains essential to building your business and growing your network. In these uncertain economic times, every dollar spent and any time away from your business impacts your bottom line. As the leading cannabis trade association representing small-business owners, we’re committed to making the investment to meet our members where they are, and to continue facilitating experiences where our members can make key connections with fellow business owners. Moving into 2023, we’re reinvigorating our events program starting with our regional Industry Social and Cannabis Caucus event series, leading into the cannabis industry’s biggest policy and advocacy event of the year: NCIA’s 11th Annual Cannabis Industry Lobby Days.
We invite you to move forward with us as we enter a new chapter in our history. Without further ado, we are excited to announce the lineup of events for the first half of 2023!
Join NCIA to Take Advantage of Complimentary Tickets
As always, NCIA members receive complimentary access to all of these events based on membership level. Looking to have an expanded presence at each event? Consider upgrading your membership today in order to include your entire team or prospective clients.
Huge thanks to the initial sponsors of these events which have made a significant investment in NCIA’s community building efforts moving into 2023! Learn more about each of these pioneering businesses helping drive our mission forward and reach out to schedule a meeting with their team surrounding the upcoming events.
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Support These Events Through Sponsorship
Has your company had trouble breaking through the noise on a crowded expo floor this past year? Is your brand looking for quality B2B connections with market leaders? Want to play a larger role and align your business with NCIA’s community building and educational efforts?
Consider one of our affordable sponsorship packages, starting for as low as $500, which will allow you to reach thousands of leading cannabis businesses while supporting NCIA’s advocacy work on behalf of small cannabis businesses. Contact our team at sponsorship@thecannabisindustry.org to learn more.
We can’t thank our community enough for the continued support of NCIA and our events. We look forward to seeing you, in person, next year!
Committee Blog: ‘Corporate to Cannabis Crossover’ – An Interview with Portland’s Cannabis Czar, Dasheeda Dawson
by Elise Serbaroli of Strimo, interview conducted May 2021
Elise Serbaroli is a member of the NCIA’s State Regulations Committee, “Informing Local Governments” subcommittee, which aims to bridge knowledge gaps between operators and regulators in the cannabis industry. This is done through interviews with current cannabis regulators in various U.S. states, sharing best practices and lessons learned.
Dasheeda Dawson is a cannabis regulator in Oregon and co-founder of the Cannabis Regulators of Color Coalition (CRCC). As cannabis czar for the City of Portland, she is the highest government official overseeing and advising on cannabis regulation for the municipality. Ms. Dawson brings an incredible breadth of experience to the cannabis space. A self-proclaimed “corporate to cannabis crossover”, she is perfectly positioned to navigate and lead the complexity that is the legal cannabis industry. Before becoming a best-selling author (“How to Succeed in the Cannabis Industry”), she held leadership roles at Victoria’s Secret and Target. Her career is built off of a solid educational foundation, including a Princeton degree (Molecular Biology & African-American studies) and an MBA from Rutgers.
Can you tell us how you got into the cannabis industry?
For the five years prior to formally getting into the industry, I was what you would call a “closeted cannabis consumer/patient.” I have early signs of MS and my mom was actually the one that insisted I give it a try. At the time, I was working at Target in Minnesota. Cannabis was my saving grace for maintaining productivity and overall capabilities. My mom passed away unexpectedly in 2016 and it jolted me out of the standard corporate trajectory I had been on. I ended up moving to Arizona and became a medical cannabis patient there, jumping into the advocacy side of the industry. Arizona legalized adult-use this past November!
From Target to Cannabis Czar! Did you always plan on becoming a regulator?
Certainly not! Straight out of the gate, I got a lot of work as a consultant in the industry, using everything that I had done in my corporate career, including business strategy and supply chain management. I had owned everything for my categories at Target and when you’re the business owner, you lead and oversee the entire cross-functional team. I applied that to the cannabis space as quickly as I could, working for a lot of clients and gaining an entrepreneurial education from working with large cannabis enterprise clients, small operators, multi-state operators, Native American tribes, even government. I gained the truest sense of how NOT to do it. In a corporate role, you usually write a report about what you have learned, insights, etc., and then you move forward. My workbook, now in its 3rd edition, was really built off of those lessons learned.
When COVID hit, my book tour was abruptly stopped overnight! At the same time, I was selected to become the Cannabis Program Supervisor for the City of Portland. I was only the third Black woman at the time to be selected to oversee a cannabis regulatory office. I believe that now there are more, but women and people of color are scarce in these positions. Most of the regulators are white men, many of whom come from another regulatory agency, like liquor or law enforcement. In order to assure that cannabis regulation is equity-centered, you need people at the table that will center equity. This last year has been amazing. I have a lot of runway and support to be exactly who I am, which is the Weed Head (TM). I refuse to be anything else and I’m in a bureau that allows me to do that.
What exactly is a cannabis czar?
On the state level, the Oregon Liquor Control Commission is currently passing legislation to become the Oregon Liquor AND CANNABIS Commission (OLCC), primarily because cannabis is providing substantial revenue for the state. Most of those people are liquor regulators, and they have organized a sub-group, focused only on cannabis. It started off with four people and now there are 50!
As Portland’s cannabis czar, I am a municipality leader, similar to Cat Packer in Los Angeles, and operate independently of the OLCC. Portland represents approximately 40% of the total cannabis revenue for the state and I oversee the entire cannabis program, including regulatory, licensing, compliance, community impact, and equity initiatives for Portland’s medical and adult-use programs.
In the city of Portland, cannabis regulation and oversight was placed in the Office of Community and Civic Life, as opposed to in the Office of Finance and Revenue or the Office of Business Development Services, which is where they license other businesses. This placement is partly due to the idea at the time that the cannabis industry was going to be disruptive to the community. Many individuals were worried about safety for communities. Our office has been trying to decrease the stigma and canna-phobia around the plant, offering education and equity initiatives. We were the first city to have community reinvestment grants tied to our cannabis tax revenue. These grants are administered through the SEED (Social Equity and Educational Development) Initiatives and grant fund.
CRCC and CannRa are two independent organizations, which happened to both launch at the same time. This caused some confusion in the industry. They are not mutually exclusive memberships! In fact, two of our founding members are also founding members of CannRa. The regulators roundtable was the predecessor of CannRa and that association aggregates insights and learnings state by state. The Oregon Liquor Control Commission (state-level) is a member of CannRa.
CRCC centers equity and support of legalization, while also aggregating insights and learnings state by state. If you are a regulator of color, at the state or local level, it makes sense to join the Cannabis Regulators of Color Coalition. We know that legalization is a requirement to start to undo the harm done through the war on drugs.
Centering equity involves re-thinking how we regulate this industry. One challenge is getting people to realize that this is a regulatory agency, like any other government regulatory agency. The Department of Motor Vehicles (DMV), a regulatory agency, gives out licenses and adjusts to assure that no group is precluded from access (adjusting for wheelchairs, visual and hearing impairments, etc.). Yet, in cannabis, we are regulating the industry without dealing with the inequities in the industry. Some of these inequities are directly linked to the historical prohibition of cannabis and the war on drugs, which we define as the racially-biased enforcement of cannabis prohibition.
Supporting equity also includes gender inequities, economic inequities, and disability inequities, to mention a few, that will positively impact everyone in the industry, including and especially patients themselves. Exclusionary practices would not be tolerated if it was an agency like the DMV. With cannabis, we are over-regulating the industry and excluding many people from participating, which is to the detriment of the market and the community. CRCC is focused on equity-centered regulation for the cannabis industry.
What is one thing that you would like to see in the legislation for cannabis businesses at the federal level?
Well, there’s a misconception about the size of companies in this industry. As an industry, we have to be careful about supporting legislation that only benefits large corporations. More than 75% of cannabis businesses have annual revenue of $2 million or less. Compared to small businesses in other industries, for example, in agriculture ($6 million or less) and retail ($14 million or less), cannabis businesses are very small, so everyone needs to push for legislation to benefit these small businesses in whatever regulatory framework is set up on a federal level. This is one step in leading the industry towards a more equitable path.
One aspect of inequity is how cannabis businesses of different sizes are treated. On average, very small cannabis companies have an after-tax rate of 70%, so when you’re going to the table for the regulatory framework, push back on the tax structure, push back on mechanisms that are inherently disadvantageous to small businesses. Surprisingly or not, most Black, Indigenous, or Latinx businesses are also small businesses, so you are positively impacting racial equity.
If you, as a cannabis business, think you’re a big fish, trust me, Big Tobacco, Big Alcohol, Big Pharma, Big CPG (“consumer packaged goods”) – Target has $70 billion in annual revenue – are coming, so a big fish in this cannabis pond is setting itself up to be eaten by much bigger fish and bigger sharks. If we leave back doors open for the larger cannabis businesses, we’re leaving that same back door open for a Walmart or an Amazon. Large corporations are already investigating and supporting cannabis. They plan years in advance for large takeovers and once it starts, it’s a stampede of well-financed, organized strategic efforts.
At a state level, the industry and those who want to support the industry, need to be careful to not overtax the small businesses and to vote to provide a framework of support mechanisms for small cannabis businesses.
What are some examples of frameworks that support or negatively impact small cannabis businesses?
Some of the early legalization efforts required vertical integration. Because of the way the state and local jurisdictions are regulating and taxing, forcing vertical integration is not a small-business-friendly approach to licensing. This was the case in some earlier states, but we’re also seeing newer states like Georgia taking this approach.
By breaking up the licensing into different parts of the supply chain (like California), you open up possibilities for smaller businesses to operate. If the state is giving out micro-business licenses, there should also be a track to grow into a larger size so that there is no ceiling on those businesses’ growth prospects. For example, in New Jersey, advocates fought to amend provisions that failed to create a way to sell out of a micro-license for a growth event.
Everybody has a different opinion depending on which economist you talk to about how you tax up and down the supply chain. I’d like to see states have tiered tax by production weight. Once you start doing it by the percentage of THC, you’re negatively impacting businesses and patients. It’s meant to be a deterrent and is an example of the government intending to overregulate in an area that it doesn’t fully understand. But usually, those penalties wind up impacting the smaller craft businesses. Too many people are assuming that consumption in the adult-use market is just for recreational purposes, but there are plenty of small niche operators aimed at a specific medical community and they are producing small batches, for example, with high THC, but their clientele may be negatively impacted, simply as a function of the way the tax law was written.
Thanks, Dasheeda, for taking the time to speak with us! If readers want to get involved in changing legislation and connecting with regulators, where should they start?
It’s certainly a long and hard process when dealing with big issues and change. For operators, NCIA is a good place to start. There is also the M4MM and the MCBA. Folks should really try to connect with the local- and state-relevant organizations. Building and operating in coalitions can be very powerful. On a national level, be sure that any group you are part of is actually going to D.C. and is having conversations with the legislators, because at the end of the day, whether it’s cannabis or any other business, you need to be involved with influencing the policies that impact your industry. Everything starts with the law and civic engagement.
Elise Serbaroli leads Global Business Development at Strimo, where she provides cannabis businesses with software solutions around inventory management, cost accounting, QA, and compliance. She’s back in the USA after over a decade of experience in Spain, Germany, Switzerland and Ecuador.
Understanding the importance of efficiency, scalability, and profitability, Elise created solutions to financial and legal processes for the R&D team at CPW, a joint venture of two of the world’s largest food companies, Nestlé & General Mills. As a systems coordinator, she gained a deep appreciation for food safety, GMPs and regulatory compliance. Her supply chain software experience builds off of her Business Development role at Tradeshift, the world’s largest network for digital B2B payments.
#IAmTheCannabisIndustry: Joseph Hopkins, The Greener Side
Joseph Hopkins, with his wife Chelsea, owns and operates The Greener Side, a dispensary in Eugene, OR. As some of the original entrepreneurs to open a dispensary in the state of Oregon, their story of being raided by federal authorities shows how resilient one needs to be in the cannabis industry. Hear their story in this video feature.
Committee Blog: Ending The Ban On Interstate Commerce (Part 1)
Oversupply and shortages, high prices and lack of choice for patients and consumers, illicit markets, tainted products, and the inability to access banking and capital all plague the burgeoning cannabis industry. While cannabis advocates and industry leaders are working on each of these problems, there is one solution that would ease the burden on all of them. Allowing for interstate trade between states with legal cannabis markets would improve each of these issues while supporting the individual solutions to each that the industry has been working on. This is the first post in a series that explores the benefits and barriers to setting up a legal framework for interstate trade, even before wholesale legalization at the federal level.
Since the beginning of legal, adult-use cannabis, when Colorado and Washington passed the first ballot measure allowing for adult-use, the industry was guided by the Cole Memo, which laid out the parameters for the federal government staying out of the states’ cannabis experiments. Among other things, the Cole memo stated that the DEA could crackdown on cannabis moving from states with well-regulated systems to states that do not allow cannabis. This statement has been interpreted conservatively to mean that no cannabis should cross state lines for any reason, ever, based on the fact that at the federal level, cannabis is still a Schedule I drug under the Controlled Substances Act.
Today, there are 10 states which have legalized adult-use, another 19 which allow for medical use, and six more which allow the use of CBD products only. Many of these states share borders, and producer states could serve several nearby markets without ever entering a state that does not allow cannabis in any form. Furthermore, the Cole Memo, which was rescinded by Jeff Sessions in 2018, has not been replaced by any guidance whatsoever. This means that each U.S. Attorney’s office is free to set their own enforcement priorities around state-legal cannabis activities, and there is no official overriding policy at the DOJ on interstate trade between states with medical or adult use. Corresponding guidance from FinCEN, however, remains in effect and similarly discourages the transfer of cannabis between states.
Cannabis markets vary widely from state to state with regard to the underlying market dynamics and challenges that they face. Some states produce too much while other states experience shortages. Meanwhile, new states pass legislation or have voter initiatives that allow medical or adult-use every year without any infrastructure in place to supply that state’s demand. In each new legal market, the vast majority of demand had long been met through illicit market supply, and generally from outside of the state’s boundaries.
The artificial boundaries around cannabis markets have far-reaching impacts for local economies, patient access, illicit market activity, and social equity. Later posts in this series will take a deep dive into each of these issues, and in this post, we will look at how this has impacted states, the industry, and consumers so far.
Lessons Learned:
Washington State chose to take the strictest possible reading of the Cole Memo, and insist that not only must cannabis not cross state lines but also sources of funding must come from within the state. Combined with their high capitalization requirement for licenses, the result was a disaster from an equity standpoint: only wealthy and well-connected individuals in the state (which are overwhelmingly white males) were able to even attempt a license. This decision was based substantially on the fact that interstate trade was not allowed.
In Oregon, which has an ideal growing climate and a long tradition of exporting cannabis (albeit in the illicit market), the artificial boundaries created by the ban on interstate trade lead to a massive oversupply for its small population, which crippled the industry and tanked many small businesses. Despite the fact that Oregonians consume more cannabis per capita than any state, their climate and culture have led to growing massive quantities of world-class cannabis that cannot reach patients and consumers, even in neighboring states that might have under-supply issues. The result is that hundreds of small, mom-and-pop shops and family farms have gone out of business, eradicating millions of dollars of local capital, and accelerating mass consolidation of the industry into the hands of a few foreign corporations. Meanwhile, in medical markets like Illinois and Michigan, patients have had sporadic access to quality cannabis-based medicines.
When Nevada originally launched, due to the influence of local liquor distributors, it was almost impossible to get products to market, and the state’s dispensaries sold out on the first day of sales. After ironing out some of the kinks, sales are going strong, but the practice of growing thirsty plants indoors in the desert is of dubious value when the same plant can be grown with a fraction of the inputs in northern California and southern Oregon.
California’s legal system is a perfect example of how over-regulation fuels illicit market activity. Because of the structure of their regulatory framework and high taxes, the state is served by only 800 licensed dispensaries, whose prices are double and triple those found on the illicit market for similar products. This has led to the emergence of thousands of “pop-up” or unlicensed dispensaries, selling untested products tax-free in a thriving illicit market. The booming illicit market in California has also led to massive wholesale markets of hardware, branded packaging, and flavoring and cutting agents (all technically legal) to supply the illegal operators with everything they need to look legitimate. This is a major contributing factor to the wide-spread vaping related illness cases popping up all over the country, as many illicit market operators purchase their supplies in downtown Los Angeles.
The ban on interstate trade promises to continue to create new and novel problems as well. If New York, the 4th most populous state in the union, legalized adult-use (which seems likely in the near future), and interstate trade were still banned, it would require a massive investment, on the order of billions of dollars, to create enough indoor and greenhouse grow facilities to supply the demand created by its 19 million inhabitants. The recent legalization of hemp under the last Farm Bill has created a number of legal dilemmas as well, as some individual states that do not recognize any difference between hemp and cannabis flower have seized products and arrested individuals taking hemp legally grown in one state to a market where it is legal to sell.
Some suggest that these issues will be sorted in local markets, and in each state individually this approach might seem to make sense. When you add these problems together, though, a much more elegant, efficient, and obvious solution emerges: let states that have always exported cannabis send it to states that have always imported it. A set of different and seemingly unconnected problems become each other’s solutions.
Historically, people across the country have consumed cannabis, and the vast majority of it was grown in a few locations that are particularly well-suited to the plant. It is highly likely that a fully-matured nationwide legal market (one which must account for not only interstate, but also international competition) will ultimately be best served by the same general market dynamics. The only question is: how long will we allow the artificial market boundaries around each state to decimate local capital, curb access for patients and consumers, encourage investments that are attractive short-term but disastrous long-term, and prop up the illegal markets that pose a public health risk?
Interstate trade between states that allow some form of legal cannabis would provide much-needed relief on a number of fronts for cannabis businesses, and could be structured in such a way to support social equity efforts. With a little guidance on enforcement and thoughtful programs and agreements between states, there is a path to legal interstate commerce even before cannabis is removed from the Controlled Substances Act. The state of Oregon has already passed legislation allowing for the export and import of cannabis products provided that the Federal Government allows it. This could be either through legislation such as the proposed Blumenauer/Widen State Cannabis Commerce Act, or though DOJ enforcement guidance (whether from the Attorney General or the relevant local U.S. Attorney’s). There are multiple paths that can lead to the end of banned interstate trade, and it seems increasingly inevitable that we will see legal cannabis trade across state borders in the near future. For most operators in the cannabis industry, and for all patients and consumers, this will be a good thing, and can’t come soon enough.
Gabriel Cross is a Founder and CEO at Odyssey Distribution, LLC, a distributor for locally-owned craft cannabis producers and processors in Oregon. Gabe worked in the sustainable building industry for a decade before starting Odyssey and brings his experience with sustainability and systems thinking to his work in the cannabis industry. Odyssey manages logistics, sales and marketing for boutique producers so they can focus on creating great craft cannabis products for the Oregon market.
Five Reasons Why NCIA’s Industry Socials Were A Huge Success
At the end of 2018, NCIA’s events team looked ahead at how to make our line-up of 2019 events even better and respond to an increasingly popular demand for more networking opportunities. As a team we dreamed up how to make a B2B networking series that was not only delivered maximum ROI, but was super fun and fit the cannabis industry culture.
Ultimately, we devised what might be the magic elixir of networking events. Artsy venues, delicious drinks and food, live local music, old-school Nintendo, giant Jenga and Connect Four. We even threw in a raffle-wheel contest to win limited edition NCIA merchandise. The result? NCIA’s January Industry Socials were a total hit. Although there are many, here are the top five reasons why NCIA’s Industry Socials were a huge success.
1. Impressive Attendees
Throughout January, Industry Socials kicked off with a West Coast Tour in Seattle, WA, Portland, OR, Las Vegas, NV, Salt Lake City, UT and Phoenix, AZ. We were excited (and a bit nervous) about the turn-out for the Utah Industry Social in Salt Lake City, since the exciting passage of Utah’s Proposition 2 happened only a few months before the event. As NCIA’s Aaron Smith remarked “we’re excited to bring our world-class industry events to new markets like Utah, and later this year in Missouri, North Dakota, and Texas!”
Overall, January’s Industry Socials turned out about 500 impressive cannabis industry professionals and advocates, representing 250 current NCIA member companies! Even better? We saw more than 75 attendees in the brand new Utah market!
2. Incredible Feedback
The post-event survey results are in and they are stellar! The majority of survey respondents reported that they would highly recommend the event series to a friend or colleague.
More than 50% of survey respondents said they made between 11-20 new contacts at the event and that at least three of these contacts were potential sales deals.
When asked what the biggest return on investment of the event was attendees stated:
“Getting to know our local business community.”
“The low key but targeted exposure in our local market.”
“Continued relationship building and network expansion.”
“We gained a lot of insight into the industry and where we fit as a company… the insights we gained were invaluable.”
“Foot in the door to get involved in rule making and learning about the application process in Utah.”
Kyle Rooney from Have A Heart, Sustaining Members with adult-use dispensaries in four states, says that “attending NCIA’s new Industry Socials is a chance to network in a more personal and low-key environment. National conferences are great, but these events provide a platform to talk to people in the regions that you want to connect with.”
RizePoint, who became members of NCIA just a week before the event in Salt Lake City, attended with several team members. Ed McGarr, RizePoint’s Vice President of Sales and Marketing says, “We began working with cannabis companies last year to advise on food safety, quality control and management for adult-use and medical cannabis edible products. NCIA’s Industry Socials provide a forum for us to connect with the industry and learn from them, as well as gain new business contacts. The event was priceless relative to networking and establishing ourselves further in the cannabis industry. It was refreshing that NCIA helped to establish the networking opportunities in a new, emerging market like Utah.”
3. Innovative Networking and Entertainment
Introducing a retro arcade station including Super Mario and PAC-MAN at our Industry Socials was the brilliant idea of our events team. Now that we know how fun it was, we’re seriously considering having it as an NCIA event standard.
But seriously, we now know that a cash bar is not the only way of lubricating conversation and community building. Adding fun games like Nintendo, giant Jenga and Connect Four is another way cannabis industry professionals can “connect” in an authentic, fun, and meaningful way. If more networking happened while playing a competitive game of PAC-MAN, the business world would be a much better place.
Additionally, at every event we had talented local DJ sets and interactive activities like a raffle-wheel and Polls Everywhere with cannabis industry trivia. As a value-added complimentary activity at our Nevada Industry Social, attendees had the opportunity to participate in two private tours of the world’s only immersive cannabis museum, Cannabition!
4. Our Sponsors and Partners
From helping us spread the word, to investing in NCIA’s Industry Socials, none of these amazing events could have happened without the help of our sponsors and partners.
Lastly, a huge thank you to our promotional partners: Growers Network, Cannabis Collaborative Conference, Utah Patients Coalition, Epilepsy Association of Utah, Marijuana Policy Project and TRUCE Utah.
5. Setting the Stage for 2019 Events
To kick off 2019 with a successful inaugural event series sets the stage for an incredible year of NCIA events. We are looking forward to hosting the next tour of Industry Socials in new cities and markets again in April and August.
But, you don’t have to wait until April to attend more NCIA events. NCIA’s March Cannabis Caucus series is kicking off soon, followed by the most impactful cannabis industry advocacy event of the year – NCIA’s 9th Annual Cannabis Industry Lobby Days.
Lastly, thank you to our nearly 2,000 member-businesses and to all event attendees for supporting NCIA’s mission. NCIA’s event revenues support the work we are doing to lobby at the federal level on your behalf on Capitol Hill and to build public support for the cannabis industry.
If you were at the January Industry Socials, be sure to check out our Facebook album and tag yourself!
Member Blog: Advice for Surviving and Thriving in the New Era of Legal Cannabis From Those Who Have Climbed The Mountain (Part 1)
The challenges facing companies pioneering a new industry where each state deals with its own issues are numerous. The importance of strategic business planning and the ability to predict future problems are essential to survival.Colorado, Washington, and Oregon have each dealt with their unique issues and challenges but there are also common problems that every cannabis business experiences: burdensome regulation, unfair taxation, and banking prohibition to name a few. Building your company and brand is dependent on your ability to maneuver your company through the obstacles that will arise in your state market while also planning for a future of legal interstate commerce through a change in federal policy. To place your company in a position to be successful, you should understand the past to predict the future.
Quick Summary of Cannabis History
The history of cannabis is long and distorted, however a few basic points of what brought us to the current state of federal prohibition and individual state markets should be noted for context.
Cannabis use as medicine dates back to 2700 BC in China, and has been used throughout history. In 1850, it was added to the U.S. Pharmacopeia. Prior to state and then Federal prohibition, cannabis was an elixir/tincture used in many common household cough/cold syrups and other medications for stomach-aches, asthma, depression, and many others. In the 1930s, cannabis was regulated as a drug in all states, and in 1937, the passing of the Marihuana Tax Act regulated it federally. Then in 1970, the Controlled Substances Act determined cannabis to be a Schedule 1 drug meaning it has no medical benefit and a high risk for abuse. From 1970 to 1996 the manufacture, use, or possession of cannabis was illegal in all fifty states.
CALIFORNIA
In 1996, California became the first state to legalize the medical use of cannabis through Proposition 215. California was the first domino to fall and further background of the early days of California medical cannabis will be addressed in later blogs in this series focusing on California. Over the next twenty years, 37 states have joined California with medically legal cannabis, and nine states have passed and implemented legal “recreational” (now referred to as “adult use”) cannabis programs.
OREGON
Oregon was the second state to pass medical cannabis in 1998 and that was the start of this author’s journey through the cannabis industry. Prior to 1998, Oregon had been a bastion of black market cannabis cultivation due to its climate and wide open spaces especially in rural southern and eastern Oregon. After 1998, the state “protections” offered by medical cannabis state law allowed the cultivation industry to flourish. However, as opposed to California the state was more focused on growing weed and selling it around the country rather than setting up a distribution system to the medical patients of Oregon. This led to some of the early challenges of the medical cannabis program in Oregon. At this time, the Oregon population was relatively small compared to the state’s cannabis production. Oregon was on its way to being one of the largest cannabis producers in the country. But because cannabis was so easily accessible there was little effort put into a healthy distribution system to Oregon patients. Most patients either grew for themselves or had a designated “grower” and that is where I started in the industry.
OREGON: FORMATION OF RETAIL ESTABLISHMENTS
As a nurse who had self medicated with cannabis for ADHD, I began growing for patients because I wanted to provide others with access to the amazing health benefits of cannabis. This was the common way most patients accessed their cannabis. There were no dispensaries when the program started and patients who didn’t have a grower were relegated to barter trade types of acquisition. In 2005, the Oregon Legislature allowed growers to be reimbursed for the cost of production and in 2010, the first dispensaries began to pop up. However, it wasn’t until 2012 that legal retail entities were allowed. This lack of a retail access point for patients was one of the first impediments to the program and allowed states like Colorado and California to take the mantel on progress of a robust program of medical cannabis distribution.
COLORADO
In 2000, Colorado became the sixth state to allow medical cannabis with Amendment 20. Its medical program remained low key until 2010 when the Colorado Medical Marijuana Code was created, which provided for licensing of production and retail establishments. This change was a giant step to the progress of cannabis legalization.
Colorado followed the early model presented in California and began implementing licensed retail establishments for card carrying medical cannabis patients. Retails stores began to flourish and this laid the groundwork for the establishment of the Adult Use program. In 2012, Colorado became the first state to legalize what was originally referred to as recreational cannabis now called “Adult Use” cannabis, which allowed the sales of cannabis to all adults aged twenty-one and older and the boom began. Colorado’s medical program developed into a rapidly growing Adult Use system and with the new federal guidance of the Cole Memo in 2013 canna-businesses began growing rapidly.
COLORADO: SEED TO SALE TRACKING
The primary language of the Cole Memo highlights a “robust tracking system” of all products produced and sold. The Cole Memo did not provide protections for cannabis businesses but provided guidance that helped assure businesses of some safety from federal interference. With the advent and implementation of a tracking system we could now be assured of where products came from and be able to track them back to their origin.
COLORADO: LAB TESTING
Once tracking was in place, lab testing for the safety of the consumer came to the forefront of industry progress. This was one of the first problems Colorado realized it had with its blossoming industry. As opposed to Oregon which required all products sold through its immature dispensary system since 2012, Colorado had not required lab testing of all its products until 2016 after several large quarantines and destruction of unsafe contaminated products. Many Colorado producers struggled with new pesticide regulations and was an early sticking point to growth of the industry. Over the first years of Adult Use cannabis program, Colorado struggled with the infancy of a brand new industry and how to regulate it and consequently, businesses suffered.
Other early challenges that the first legal state dealt with were allowable dosages and changes to dosing, as well packaging changes and the look of products, specifically how or if the products were attractive or marketed to children. The obstacles of a new industry most directly affect the businesses and their bottom lines. These are important points to consider when strategizing your business model and planning for inevitable changes to regulations. The time spent preparing for a system that will change will go a long way to ensuring for success.
WASHINGTON
Now let’s talk about Washington.
Washington was the third state to approve medical cannabis but had problems with implementation due to legislative issues. As multiple pieces of legislation were offered, adopted, and repealed, the lack of clarity prevented the medical cannabis industry from launching. Washington passed its adult use cannabis program at the same time as Colorado in 2012. In Washington, the two major obstacles the industry faced were licensing issues and taxes. A previously existing strong medical program in Colorado allowed for a seamless transition to an adult use program, but that was not present in Washington and this added to difficulties with implementing an adult use program.
Because the industry was just getting off the ground, both states relied on their medical programs as a foundation to the adult use. However, Washington’s medical program was murky and disorganized which lead to complications, Washington also limited licenses and put unfair taxes on the industry. These two factors aided in keeping the black market as the primary driver of the industry, rather than pulling people or businesses into a controlled, tracked, and regulated system.
280E TAX CODE
This provides a nice segue to one of the challenges all cannabis business face: unfair taxes in the 280E tax code. Internal Revenue Code section 280E specifically denies a deduction or credit for any expense in a business consisting of trafficking in illegal drugs “prohibited by Federal law or the law of any State in which such trade or business is conducted” which translates to only “Cost of Goods Sold” as the only deductible expenses. This means administrative costs, executive salaries, marketing and advertising, banking fees, etc., are non-deductible expenses for any cannabis business and subjects them to much higher taxes as most normal business deductions are prohibited. This challenge is one all cannabis businesses deal with and must be factored into financial modeling.
BANKING
While we are on the the subject of taxes and non-allowable deductions, banking is the other major challenge all cannabis businesses face. Due to federal policy around an illegal substance, FDIC insured institutions force canna-businesses to operate in all cash for fear of prosecution under racketeering and money laundering laws. There are a handful of financial institutions, credit unions, or state banks that offer “Enhanced Monitoring Accounts” for cannabis companies. However, they are highly priced and rare. The average cannabis bank account is likely to run $1,000.00 a month, just to have access to banking services, not including additional fees. This $12,000 a year budget line item, while not only expensive, is not a tax write-off per 280E tax code.
One can quickly see from just these two major hurdles or challenges to the industry, normal operations can be difficult. These obstacles are not to be taken lightly; they can be addressed but it must be factored into operating procedures, financial planning/budgeting, and strategic vision.
NOW BACK TO STATE SPECIFIC ISSUES
As Washington and Colorado dealt with its issues, Oregon voted to approve “Adult Use” cannabis in 2014. Using Colorado and Washington as a guide, Oregon implemented their system with more deliberation and vision based on what had been experienced in the first two states. But as was seen with the unique challenges in the first two states, Oregon encountered an entirely different set of problems. Oregon currently faces a massive oversupply problem which has affected all facets of business across the industry. In normal business and supply and demand economics, if an area is oversupplied, business move their products to where the demand is higher or the supply is lower. However, cannabis remains a federally illegal product and therefore interstate commerce remains illegal.
Oregon’s unique problem originated from two main issues:
Oregon had already established itself as a cultivation mecca
The regulatory authority decided against a cap on licenses
This lack of license caps has allowed the number of licensees to explode and thereby allowed the oversupply issue to occur and continue to grow. As stated, this is not a problem exclusive to cultivator/producers. Because of a 75% drop in value, cannabis attorneys, electricians, HVAC, security companies and other ancillary businesses are not getting paid. The oversupplied market and decreased revenue has reverberated across the industry and driven otherwise thriving companies into bankruptcy.
As you can see, each state deals with its unique challenges when implementing its Adult Use cannabis program, while we all deal with some issues that affect us all. The key to thriving… or surviving is to prepare your company to deal with the current challenges shared by us all and predict the challenges that your business will face in your state while preparation is taken for a national and international market.
James Schwartz RN, BSN, LNC, is an experienced medical legal consultant and CEO of CascadeHigh Organics with 20 years experience cultivating legal cannabis. James is a self-described organic minimalist cultivating in the most sustainable manner. James believes in clean cannabis and its use as a wellness drug. His Oregon licensed cultivation, Cascade High, has been featured in Dope Magazine and on the cover of Oregon Leaf’s Sustainability issue (March ‘18). James was featured as the Inaugural Stoner Owner by OR Leaf in Dec 2018. He has articles published by Dope Magazine about Cannabusiness and the Pharmaceutical Industry (May 2017), as well as a medical cannabis article in the Jan. 2019 Healthcare issue of OR Leaf. James is currently on the NCIA Cannabis Cultivation Committee and has presented Cannabis topics to multiple audiences at conferences including Cannabis Science Conference, PDX Hempfest, Cannabiz Convention, CBD Expo and Webinar series, Cannabis Collaborative Conference(CCC), Cannabis Nurse Conference, NCIA and educational industry mixers. His business, legal, medical, and agricultural knowledge provides a unique perspective on the industry. James has lobbied for Cannabis on both the national and state level with Oregon Cannabis Association and is a fierce advocate for the plant and all who use it.
Member Blog: Tackling Oregon’s Cannabis Oversupply Problem
When Oregon’s recreational marijuana program launched in 2016, the state chose not to limit the number of cultivation licenses that would be awarded. It also opted not to limit the amount of cannabis that each licensed cultivator could grow. Over the first 12 months of adult-use sales, the state issued licenses and expanded the industry.
Things were going fairly smoothly until the 2017 cannabis harvest brought in more than 1 million pounds of cannabis. For a state with just 4.1 million residents who purchased one-third of that amount in 2016, it became clear quite quickly that Oregon’s cultivators had grown more cannabis than the state’s retailers could sell. As a result, prices for legal marijuana dropped.
Unfortunately, the state didn’t learn from its mistake and the 2018 harvest brought 5% more cannabis than what was harvested in 2017. An even bigger surplus caused prices to plummet further, and many licensed growers were forced to go out of business or sell their licenses to larger companies with deeper pockets at extremely deep discounts. Those big companies could withstand price drops while smaller licensees cannot.
One of the biggest problems Oregon faces as a result of its cannabis oversupply problem is exactly the opposite of what its lawmakers wanted to happen when the recreational marijuana program was developed – many growers returned to the black market where they could still sell cannabis for a profit.
Possible Solutions to Cannabis Oversupply
As prices continued to fall and the cannabis oversupply problem continued to grow, suggested solutions came from multiple sources. Three options rose to the top as the most commonly cited. First, Oregon could cap the number of cultivation licenses it granted. With a large number of applications waiting to be reviewed and licenses to be granted, the problem with growing too much marijuana was poised to get even worse.
Both Washington and Colorado had some success solving their cannabis oversupply problems when they stopped awarding new licenses. In 2017, Washington had a 60% larger supply of cannabis than it did in 2017, which caused marijuana prices to fall in 2018. Business owners were very vocal about the need for changes to the state’s canopy limits and cultivation facility sizes. The state decided to stop issuing new cultivator licenses to solve the problem.
As the graph from the Cannabiz Media License Database shows, the number of active cultivation licenses in both Washington and Colorado varied by only 1% between January 1, 2018 and December 31, 2018. Contrast that to Oregon where the number of licenses grew by more than 26% during the same time period.
The Oregon Liquor Control Commission (OLCC) argues that only the state’s legislature can create a cap on the number of licenses issued in Oregon, but it did stop reviewing applications and issuing licenses in June 2018. While the OLCC claims the reason is because it had a large backlog of applications, it can also be assumed that the moratorium on issuing new licenses would help to quell the surging supply of cannabis in the state.
The second possible solution to the cannabis oversupply problem in Oregon is to reduce the canopy size for each license. In April 2018, Oregon modified cultivation licensing rules so new cultivators would have more limited canopy space for immature plants than existing cultivators.
The third suggested solution is to do nothing and let the market adjust and correct itself. For the most part, this appears to be the approach that Oregon is taking. While it did implement a rule in 2018 that required cultivators to notify the state of their harvests, which could bring an inspector to verify that the cultivator is adhering to cultivation rules, the state’s cultivators are still in a wait-and-see situation.
What’s Next in Oregon?
The OLCC has been doing research related to its oversupply problem and is expected to present its findings to the Oregon legislature this year. Many people assume placing caps on cultivation licenses will be on the table during those discussions.
In the near future, Oregon’s lawmakers will need to develop a strategy to deal with the oversupply problem, and it will likely include a combination of the suggested solutions. For example, a license or canopy cap and improving accessibility to marijuana products combined with allowing some consolidation to happen in the market should help to curb the oversupply problem.
Susan Gunelius, Lead Analyst for Cannabiz Media and author of Marijuana Licensing Reference Guide: 2017 Edition, is also President & CEO of KeySplash Creative, Inc., a marketing communications company offering, copywriting, content marketing, email marketing, social media marketing, and strategic branding services. She spent the first half of her 25-year career directing marketing programs for AT&T and HSBC. Today, her clients include household brands like Citigroup, Cox Communications, Intuit, and more as well as small businesses around the world. Susan has written 11 marketing-related books, including the highly popular Content Marketing for Dummies, 30-Minute Social Media Marketing, Kick-ass Copywriting in 10 Easy Steps, The Ultimate Guide to Email Marketing, and she is a popular marketing and branding keynote speaker. She is also a Certified Career Coach and Founder and Editor in Chief of Women on Business, an award-winning blog for business women. Susan holds a B.S. in marketing and an M.B.A in management and strategy.
Member Spotlight: Phylos Bioscience
This month, NCIA highlights Phylos Bioscience based in Portland, Oregon. Co-founder and CEO Mowgli Holmes is a molecular and evolutionary biologist and was a National Research Service Award Fellow from Columbia University. He is a founding board member of the Cannabis Safety Institute and the Open Cannabis Project, and is Chair of the Oregon State Cannabis Research Task Force.
Phylos Bioscience
Member Since:
May 2015
Business Category:
Analytical Testing Laboratory
Tell me a bit about your background and why you launched your company?
In 2013, the industry was just starting to blow up, but it had basically zero science. There was a really clear need for a company focused on studying the cannabis genome — one that would be able to make genetic tools available to the industry.
But I think it just so happened that I was one of the very few scientists at the time who was between jobs, and had a background in genetics, roots in Oregon, and an unashamed enthusiasm for weed. I was the right mix of New York and Oregon at the right time. Or the right mix of geneticist and hippie.
Most scientists are still too freaked out by cannabis to dive in. Isn’t that silly?
What unique value does your company offer to the cannabis industry?
Our team of scientists has the expertise to leverage genomic data into products and technology that growers really need. But what’s most unique about Phylos is that we have a genomic database of different cannabis varieties that is significantly larger than any other. It took years to collect it, and it took the help of the American Museum of Natural History, as well as a huge amount of trust-building in the industry. This database is the foundation of everything we do, and it would be very hard for anyone else to recreate anything like it.
Cannabis companies have a unique responsibility to shape this growing industry to be socially responsible and advocate for it to be treated fairly. How does your company help work toward that goal for the greater good of the cannabis industry?
We actually do a ton of “activist” stuff. We started a nonprofit to drive rational safety testing guidelines (Cannabis Safety Institute). We started another one to block big corporations from patenting cannabis varieties (Open Cannabis Project). And for more than a year I hung around the state capital constantly, helping to write the laws and rules that structure the Oregon industry, and serving as the Chair of the Oregon State Cannabis Research Task Force. We drafted laws that helped small growers, and laws that supported cannabis research, and we wrote the study that led to Oregon’s strict pesticide testing rules.
In general we’ve just let ourselves get dragged into this very politicized industry, and tried to fight for the idea that legalization should mean that the people who started this industry should be legalized, not replaced.
What kind of challenges do you face in the industry and what solutions would you like to see?
We’re lucky because we’ve always found ways to do our work while still staying federally legal. So obviously the whole industry needs banking, 280E relief, protection from the federal government, etc. But Phylos doesn’t directly need any of that — we just need it because we want the industry to be strong and sustainable. The biggest problem for us is the lack of research, and the federal government’s continuing unwillingness to make real cannabis research possible. And actually that’s one thing that could be fixed easily if there was just the will to do it in D.C.
Why did you join NCIA? What’s the best part about being a member?
Well, the conferences are some of the best out there. And there’s a real sense that instead of them just being another commercial conference, they’re actually run by an organization that is fighting for the industry, and taking on the hard challenges of federal lobbying and so on. I’m also on the NCIA Scientific Advisory Committee, and it’s great to see the commitment throughout the organization to working for things (like reasonable testing regulations) that the whole industry needs in order to function.
Member Spotlight: Yerba Buena Farms
In this month’s member spotlight, we check in with the team at Yerba Buena Farms, based in Oregon. Yerba Buena was recently named one of the top 100 green companies to work for in Oregon. Operations Manager Laura Rivero tells us more about their company and the way they manage their staff through self-care “wellness days” and volunteering for charitable organizations.
Yerba Buena Farms
Cannabis Industry Sector:
Cannabis Cultivation
NCIA Member Member Since:
May 2017
Tell us a bit about your background and why you launched your company?
We launched YB with the intention of bringing a holistic approach to the cannabis business. These include fair labor practices, research and innovation, organic practices, sustainability, and bringing a diverse group of people together to achieve a common goal.
What unique value does your company offer to the cannabis industry?
Our company is focused on consistency and quality in both our product and business practices while maintaining full compliance and integrity. We are helping to set standards across the board, elevating the cannabis industry as a whole and inspiring others.
Cannabis companies have a unique responsibility to shape this growing industry to be socially responsible and advocate for it to be treated fairly. How does your company help work toward that goal for the greater good of the cannabis industry?
We do the right thing every day and with every decision. It is not always about the bottom line and the ability to cultivate a socially responsible organization is a key benchmark in our organization. We have been recognized in every sector of the industry and beyond for exemplary practices, and we are committed to pushing the envelope to increase the standards for other businesses, regardless of their industry. We were the first (and so far only) cannabis company to make the 100 Best Green Workplaces in Oregon, placing 9th, and shining a light on this industry as a potential leader in sustainable business practices.
We participate in organizations that are helping push forward positive change and standards, such as the Cannabis Certification Council (CCC), which is dedicated to setting national organic and fair labor standards for cannabis, the Oregon Cannabis Association (OCA), which is dedicated to protecting the cannabis industry on local, state, and federal levels, and we are part of the Resource Innovation Institute (RII), which leads in sustainable design and resource efficiency for the cannabis industry.
In addition to participating in other organizations that are making a difference, we understand that it all truly starts within our own organization. We are committed to paying our employees a family wage and provide excellent health benefits that are covered 100% by the company. We have monthly wellness days to promote self-care and teach personal wellness strategies, as well as regular get-togethers and team building events. Our team volunteers with many charitable organizations in order to give back to our community in a more meaningful and interactive way. We provide in-depth training to all of our employees on all areas of cannabis in order to increase the ambassadorship of our company. We take the opportunity and responsibility to be leaders in this industry and help to shape it to become a legitimate and respected part of the national economy, reducing the unfounded stigma, and allowing cannabis to change the world for the better.
What kind of challenges do you face in the industry and what solutions would you like to see?
Access to information both internally and externally. The industry does not have modern operating systems to adequately manage the business of cannabis production, forcing us to create our own solutions internally at great expense. Externally, banking and taxation are two areas where YB would like to see national solutions.
Why did you join NCIA? What’s the best part about being a member?
We joined NCIA because of the work accomplished and in progress on a national and state level. NCIA has represented this plant for years, and we are excited to support these efforts. The information provided by the NCIA regarding market trends, pricing, state-specific data, etc., is incredibly valuable.
NCIA’s member spotlight for the month of February takes us to Oregon, where we speak with Sam Chapman, co-founder of New Economy Consulting, a political and business consulting firm for the legal cannabis industry. Sam’s background includes consulting for statewide political campaigns, small business development and media relations, as well as direct involvement as a lobbyist for drug policy reform at the local, state, and federal levels. Having Sam in the room at an NCIA event always raises the dialogue with his insight and expertise, and we’re glad to have him as part of the NCIA community.
Cannabis Industry Sector:
Regulatory Compliance and Consulting
NCIA Member Since:
December 2013
Who does New Economy Consulting work with?
NEC provides a range of services and support to cannabis entrepreneurs, investors, and local governments. We specialize in drafting state license applications, writing and navigating local regulations, screening compliant real estate, regulatory compliance support, and political advocacy.
The New Economy Consulting Team
How do you serve your clients?
On behalf of our clients, NEC handles all aspects of licensure for retail, wholesale, production, and processing facilities. We provide clients with a holistic approach, encompassing services from locating and screening compliant property, to compliant buildout design and supervision, to local and state compliance inspection support.
What makes NEC unique?
NEC is unique in that our business consulting services are directly informed by our active political lobbying. Our researchers maintain a finger on the daily pulse of regulatory movement in the industry at both the state and local level. We strategically deploy our proprietary research in support of our client’s business ventures. An example of where NEC goes above and beyond for clients is in tracking the local regulations of over 90 Oregon counties and cities. This body of research allows NEC to quickly and confidently screen property and determine that property’s compliance with current and expected rules and regulations.
Sam Chapman, NEC co-founder
What has been NEC’s largest impact on the Oregon cannabis industry?
Before I co-founded NEC, I helped write and pass HB 3460, which legalized and regulated medical dispensaries in Oregon. NEC has successfully championed many pro-industry causes including raising more than $30,000 in support of Measure 91, legalizing the adult use of cannabis.
What should clients know before contacting NEC?
NEC is a boutique firm with a strong commitment to our clients. We choose our client and partner relationships with care. Our ideal client is well-capitalized, with business experience inside and out of the cannabis industry, has a clear vision of their project goals, and shares in our vision of creating and maintaining an industry to be proud of. We take great pride in contributing to the new marijuana economy while simultaneously supporting and shaping social justice reforms at the state, local, and federal level.
You work primarily in Oregon, which is an evolving landscape when it comes to marijuana policy and regulations. Can you briefly summarize the important regulatory frameworks that exist for business owners, and what changes are on the horizon for this market?
The Oregon Legislative Committee on Marijuana Legalization is considering many changes to the existing recreational program, including the potential removal of the residency requirements for recreational licenses. The committee has historically been hesitant to allow out-of-state majority ownership of Oregon marijuana businesses. However, many committee members have recently expressed that they now view residency requirements as a barrier for local business to raise much-needed capital.
While there is no guarantee that the current residency requirements will be eliminated, NEC has already begun to identify current and future market opportunities available to out-of-state business owners and investors.
Why did you join NCIA?
NEC enthusiastically joined NCIA as a member in 2013 and supports NCIA’s strategic lobbying at the federal level and especially their focus on our industry’s need for banking reform and 280E tax solutions. We strongly feel that the National Cannabis Industry Association is the tip of the spear when it comes to fighting for the federal reforms that affect all marijuana businesses on a daily basis.
by Michelle Rutter, Government Relations Coordinator
This year is arguably the most crucial yet for the burgeoning cannabis industry, especially as it relates to policy. Although NCIA primarily advocates for cannabis reform at the federal level, what happens in each individual state is vital to the stances Members of Congress take on our issues.
Members of Congress care deeply about issues that directly affect their specific state or district. It’s imperative that more states enact cannabis reform legislation so that more Members have a vested interest in protecting their constituents. While cannabis reform is sweeping the nation at an almost unprecedented rate, it takes time for politicians in Washington, D.C., to catch up with public opinion back home. If all of the federal lawmakers representing just the 15 states mentioned below were to vote positively on pro-cannabis legislation, it would add up to more than 180 Representatives and nearly 30 Senators.
Take a look below and see what’s coming up next in 2016. Remember that by becoming a member of NCIA, you are adding your voice to the coordinated and unified campaign at the federal level to allow cannabis businesses access to financial services, fix tax section 280E, and ultimately end federal cannabis prohibition.
The United States of Cannabis
Arizona activists remain ahead of schedule and have nearly gathered the 150,000 signatures needed to put the state’s Campaign to Regulate Marijuana Like Alcohol initiative on the November 2016 ballot. (The campaign ultimately aims to collect 230,000 in order to insure against signature drop-off.) It’s estimated that Arizona’s adult-use market could be worth up to $480 million.
With a multi-billion-dollar cannabis industry in California alone, passing an adult-use legalization initiative in the state is vital to ending federal prohibition. The most prominent full retail initiative gathering signatures for the November 2016 election is the Adult Use of Marijuana Act, which is backed by billionaire Sean Parker and the Marijuana Policy Project.
Legalize Maine and the Marijuana Policy Project have joined forces to legalize adult-use cannabis in 2016. Legalize Maine has already collected 80,000 signatures. Only 61,000 signatures are necessary to place the measure on a statewide ballot, but the organization’s goal is 95,000, to insure against drop-off. The deadline to submit signatures is February 1st.
Last August, a pair of cannabis advocacy groups separately filed paperwork to get adult-use legalization on the 2016 ballot in Massachusetts. The state recently confirmed that a measure to legalize recreational cannabis next year has enough valid signatures to force the legislature to consider the measure. If the legislature decides to pass, then the campaign will have to collect another 10,792 signatures to formally make the November ballot.
There’s no question that adult-use legalization will be on the ballot this year in Nevada. Initiative Petition 1, which would tax and regulate marijuana similarly to alcohol, has been certified for the 2016 ballot. Backers had previously collected nearly 200,000 signatures to either force legislators to enact their initiative or put it on the ballot. When state lawmakers abstained from voting on the issue, the measure was automatically forwarded to this year’s ballot for a popular vote.
In Florida, the group United for Care received clearance from the state Supreme Court for a 2016 ballot measure that would legalize medical marijuana. The group nearly succeeded in legalizing medical marijuana in 2014, garnering 58% of the vote but falling barely short of the state’s constitutionally mandated 60% margin needed to pass,
The nation’s capital continues to debate cannabis. In December’s federal budget bill, the taxation and regulation of marijuana in Washington, D.C., was blocked by Congress again, though possessing and gifting cannabis remains legal in the city.
This month, Hawaii will begin accepting applications for medical cannabis businesses. The bill signed into law last summer opens the door for up to 16 dispensaries on the islands.
It was recently announced that Illinois saw approximately $1.7 million in medical cannabis sales during November and December of 2015. There are already petitions being circulated in the state that would expand the law’s qualifying conditions.
Maryland will award cannabis cultivation, processing, and dispensary licenses this summer. Industry advocates were pleased with the amount of interest the state’s program garnered: more than 1,000 applications were submitted.
Officials in Michigan have approved language for three different adult-use cannabis legalization initiatives for the 2016 ballot. In order to have the best chance of passing, it’s important for these groups to coalesce behind one initiative.
At the end of 2015, New Hampshire began issuing medical marijuana cards to qualifying patients. It’s expected that the state will open medical dispensaries in 2016.
After a long and arduous journey, New York’s medical cannabis program became operational this month. The cannabis industry expects the program and the law’s qualifying conditions to expand this year.
In the first week of 2016, Oregon began accepting adult-use cannabis business license applications. The state has no limit on how many licenses they will decide to award.
Vermont may become the first state to legalize adult-use cannabis through the legislative process in 2016. The proposed bill would allow for up to 86 storefronts and five different business license types.
Bonus: Election 2016 – Yes, We Canna
As we all know, a new president will be elected this November, and with that a new administration will assume power next January. It is very crucial that Congress pass more pro-cannabis legislation before then.
It’s probable that Attorney General Loretta Lynch will be replaced in 2016 or early 2017. This is important because it is the Department of Justice that enforces and prosecutes federal marijuana laws.
Another possibility for 2016 is that the acting head of the Drug Enforcement Administration, Chuck Rosenberg, could be replaced as well. Rosenberg is notorious for his gaffe last year when he called marijuana “probably” less dangerous than heroin.
On New Year’s Eve, officials from the Substance Abuse and Mental Health Services Administration posted a notice on the Federal Register that calls for a report “presenting the state of the science on substance use, addiction and health” to be released in 2016. Industry advocates are hopeful that this report could be the first sign of re- or de-scheduling cannabis from the Controlled Substances Act.
During 2016, NCIA will continue working with D.C.-based public affairs firms Heather Podesta + Partners, and Jochum Shore & Trossevin PC to magnify our efforts to address the industry’s top federal priorities: access to basic banking services and fair federal taxation.
In addition to NCIA’s lobbying and advocacy efforts, NCIA exists to connect and educate our members on all facets of the cannabis industry. Our industry supports tens of thousands of jobs, tens of millions in tax revenue, and billions in economic activity in the United States.Our core mission is to ensure that our members are treated like businesses in any other American industry. Join NCIA today to get involved and be a part of the cannabis revolution!
Or perhaps more appropriate for today, “Don’t judge all cannabis products by THC percentage.”
As the cannabis industry continues to develop, we will see more medical and recreational marijuana states require testing on cannabis and cannabis products. This means that potency, and THC percentages, are readily available for patients and consumers. As many know, the trend is to obtain cannabis products with the highest THC potency. But is this really the best product? Is this really the best choice for the consumer? Is a single THC percentage even accurate? In answering these questions we shall look specifically to the regulated industries of alcohol and analytical testing.
The alcohol industry requires that all alcohol products be tested for potency, which is called alcohol content. While alcohol content is required to be posted on labels, how often does alcohol percentage affect your drink selection? When a friend offers you a beer they may ask you if you want an IPA, Kolsch, Ale or Stout. Or, when you are shopping for wine you may think about whether you want a Merlot, Chardonnay, Zinfandel, Rose, or Pinot Noir. Rarely is alcohol percentage the deciding factor. No one asks whether the beverage has 4%, 13% or even 95% alcohol content. If that was the case malt liquor and Ever Clear would be the alcohol of choice. Instead, what we see is that enthusiasts look for a wide variety of qualities other than just potency. The same should be said for cannabis.
Traditionally, the choosing of cannabis depended on its appearance, scents, and flavors. Selection was a holistic process. Potency still played an important role, but it was only qualifiable, not quantifiable. No one knew what THC percentage was. They just knew how they felt after consuming their favorite cannabis product. With the new industry of laboratory-tested cannabis, many cannabis consumers are no longer relying upon scents, flavors, and appearances. They are choosing their cannabis based on a very specific number, and sadly, an extremely unreliable number.
There are multiple factors that affect a THC value.
First, a specific THC value is only a representation of the exact sample that was provided, not of every bud produced in the batch. This occurs because marijuana potency naturally has variation. This variance occurs in buds on the same plant, as well as in different plants of the same strain throughout the garden.
Another variable that affects the final THC value is the margin of error, also known as standard deviation, of the testing method. A margin of error is the window in which data falls within a range and is still considered valid. In the analytical testing industry this is represented in a plus or minus value. In analytics, a margin of error may have up to +30% and still be representative. This means that one laboratory can test THC around 18% and another one could test it around 24% and both could be considered valid numbers.
A third factor that may affect the final THC value is the sample matrix. A sample matrix is a type of cannabis product as well as any ingredients that may have been added to it. The sample matrix can make the cannabinoids, such as THC, harder to extract and analyze accurately.
This compounding of errors contributes to the inaccuracy of placing such value on a single number. Focusing on a specific THC value alone is not only scientifically inconsistent, but it also diminishes the total value of the cannabis plant.
The regulation of cannabis testing labs may not resolve all these issues. While regulating cannabis testing laboratories is necessary and important in controlling testing methods, the other, and more important issue, is acknowledging that the THC percentage has been overvalued and oversimplified. The attention on THC and not the appearance, flavor or scent of cannabis or its effects can hardly describe the true cannabis connoisseur’s experience.
What happened to the marijuana that everyone used to love and brag about? It would have tested around 8% or even 12% THC. Why is everyone racing for higher numbers instead of better quality? I would much rather have a quality, locally produced home brew that is brimming with flavors and subtle undertones than a shot of Everclear.
For further analysis on ways in which we can start having an in-depth conversation about the value of cannabis and not THC potency alone, please read our upcoming article in DOPE Magazine’s August edition.
Rowshawn Reordan, Green Leaf Labs
Rowshan Reordan is the founder of Green Leaf Lab, Oregon’s largest cannabis analytical laboratory, one of the first cannabis analytical laboratories to open in the nation, and members of NCIA since February 2014. Ms. Reordan received her law license in the State of Oregon in 2006 and practiced law in Southern Oregon. After opening Green Leaf Lab’s flagship location in Portland, she became more involved with legislative efforts to ensure legitimacy in cannabis safety testing. Ms. Reordan was on the subcommittee for testing for Oregon’s Medical Marijuana Law and was recently invited to be on the subcommittee for testing for Oregon’s recreational marijuana program. Ms. Reordan has presented at a variety of educational seminars and conferences. She recently worked in conjunction with the Oregonian and the University of Oregon in educating and discussing the proper direction of legislative efforts concerning Oregon’s cannabis industry.
NCIA Member Profile: MBank
In the course of less than a week at the end of January, Oregon-based MBank went from announcing that they would be doing business with cannabis companies in Colorado to breaking the news that they would be retreating from Colorado for the time being, unable to support the infrastructure required to offer these services in the state. As NCIA’s first bank member, we sat down with CEO Jef Baker to ask a few questions and get to know them better.
Cannabis Industry Sector:
Financial Services
NCIA Sustaining Member Since:
December 2014
One of MBank’s brick and mortar locations in Lake Grove, Oregon.
How does MBank uniquely serve the cannabis industry?
One of MBank’s goals is to serve the underserved. We recognize that serving the cannabis industry very much meets that objective. With that mission in mind, we set about figuring out how to provide banking services. We’re a little unique in that way as a bank has to be creative and innovative in order to go about solving problems.
Why should cannabis industry professionals looking for financial services use MBank?
While we recognize there are very few banks legitimately operating in this space and therefore few good choices for cannabis industry professionals, our hope is people choose to bank with us for the same reason anyone does. That means they understand what we’re about and hopefully appreciate wanting to partner with someone that has a vision they agree with. Beyond wanting to change the status quo with regards to banking, we also take great pride in customer service through treating people with respect.
NCIA’s primary mission includes advocating for equal access to banking, but many banks in this country are reluctant or not willing to work with cannabis business owners. What are your thoughts on the future of banking in the cannabis industry? How will this situation improve for the industry going forward?
Smaller banks will most likely lead the way as they tend to embrace innovation a little more than larger institutions. As banks successfully demonstrate their ability to serve this industry, more banks will follow. If there are additional changes at the federal level, that most likely would generate more banks entering this space.
What are some of the challenges that banks have to deal with to do business with the cannabis industry?
CEO Jef Baker inside one of MBank’s Oregon locations.
Our challenge is to make sure we support and serve customers who understand that compliance is critical. We feel it is extremely important to ensure we implement strong policies and procedures, especially for new lines of business. The systems created are not designed to be intrusive or overbearing, but they are developed to help us manage risk, as we interpret it, as well as those that regulate us.
Do you still want to do business in Colorado, or other states?
The reason we are one of the first banks to so aggressively enter this space is part of our mission is to serve a completely underserved market. We very much want to serve customers in Colorado but have discovered we need to build our program to better handle the huge volume there.
How do you characterize your relationship with regulators on marijuana banking?
It is our belief that regulators do not object to their banks providing services to the cannabis industry. We believe they do have a high expectation of their banks developing strong compliance programs in this area. This is new and we are all learning together. It is critical for us to have a strong relationship with our regulators.
Why did you join NCIA?
MBank currently offers banking services for the cannabis industry in Oregon.
We believe this organization wants to see the cannabis industry be treated fairly by helping ensure that quality banking services are available. That is right in line with our mission of serving the underserved. Our position is not one that supports legalization or advocacy for legal matters (that is for others), but rather a focus on providing an industry banking services they deserve, which means both access to services as well as treating people with respect. We believe NCIA is an organization that will allow us to further and pursue that vision.
If you are a member of NCIA and would like to contribute to the NCIA blog, please contact development officer Bethany Moore by emailing bethany@thecannabisindustry.org.
Guest Post: Marijuana Victory in Oregon! Now What?
Oregon passes Measure 91, legalizing cannabis for adults on November 4th, 2014
By Ford T. Pearson, Flip-Side Magazine
[Editor’s note: Congratulations to everyone who worked so hard on the Measure 91 campaign to pass legal cannabis laws for adults in Oregon. The initiative passed with 52% of the vote. Well done! – Bethany Moore, NCIA]
Measure 91, Oregon’s adult-use marijuana legalization initiative, is likely the most elegant articulation of US regulated marijuana enterprise to date.
To be fair, Flip-Side Magazine’s paradigm of what is a good piece of marijuana legislation is heavily skewed by the economic opportunity it presents for stakeholders. While it’s clear the authors of Measure 91 remedied many of the flaws within Colorado and Washington state’s still new marijuana programs, where the measure really excels is the astounding potential for commercial endeavor.
Wholesaler category
“’Marijuana wholesaler’ means a person who purchases marijuana items in this state for resale to a person other than a consumer in this state.” —Measure 91
Measure 91 includes four stakeholder categories for which you can apply for a license. Like Washington’s I-502 categories, Measure 91 categories include producer (grower), processor, and retailer licenses. But Measure 91 also includes an exciting new category: wholesaler. The wholesaler license category, missing from Washington’s marijuana program, will make life easier for Measure 91 producers/processors and expand employment within Oregon’s marijuana program. As Washington’s I-502 producer/processors are now learning, selling marijuana can be an extremely daunting task. Even with just 66 of the planned 334 retail stores open, many I-502 processors are surprised at how time-consuming it is to manage and reconcile the preferences of 66 different buyers. Under Washington’s I-502 rules, processors have to sell directly to retailers or hire third-party marijuana sales or strain acquisition consultants to facilitate sales activities for them. Those consultants have to provide their services within a very narrow definition of activity in order to keep the transactions compliant with I-502 rules. Among the restrictions they face is the inability to actually purchase and resell marijuana the way a traditional wholesaler would. Oregon’s Measure 91 wholesaler category provides a remedy for that specific limitation and adds an entirely new facet of economic opportunity to Oregon’s implementation of a regulated, legal marijuana industry.
No “tied house” prohibition
“The same person may hold one or more production licenses, one or more processor licenses, one or more wholesale licenses, and one or more retail licenses. ” —Measure 91
Measure 91 allows for a completely vertically integrated marijuana organization. For example, under its generous licensing scheme, Measure 91 stakeholders could own several producer/processor operations, a couple of wholesale operations, and dozens of retail outlets throughout the state. Allowing this kind of structure not only increases economic opportunity, but also creates an environment that can eliminate inventory volatility and would enable micro-chains to provide consistent and reliable access to the most marketable strains of marijuana and marijuana products.
No residency requirement!
Perhaps the most significant characteristic of Measure 91 is that it does not require stakeholders to be residents of Oregon. Both Colorado’s and Washington’s programs restricted engagement (including investment from speculators) of their legal marijuana industries to residents of the state. I have to admit, when I first learned of this characteristic of Measure 91, I was disappointed. I’ve spoken to literally hundreds of I-502 applicants and licensees, and every single one of those was a small, usually family-run, business. Once Washington’s cannabis program catches its stride, those families will lay claim to their share of a half-a-billion-dollar-a-year industry, and that’s a beautiful thing.
After considering it, I think the benefits the non-residency characteristic presents likely outweigh the negatives. True, one could worry about giant companies coming into Oregon and buying up all of the strategic locations and/or resources needed to grow Oregon’s new marijuana industry, and that’s certainly possible under Measure 91 rules. However, even if that did occur, those out-of-state entities would rely upon locals to implement their plans and this would create significant employment and economic opportunities for those people. Also, and quite ironically, legal marijuana’s primary nemesis, its status as a Schedule 1 drug per federal law, works against large companies investing heavily in Oregon’s program. Federally speaking, not only would those large, out-of-state corporations be breaking the law, but they would also be crossing state lines to do so. There’s a good chance that’s more stress than your typical VP of marketing and development can tolerate. Also, it’s possible that there are quite a few Oregonians with the proverbial rich uncle who lives out of state, so the no-residency requirement would prove beneficial should they decide to engage the industry.
Anthony Johnson celebrates the passing of Measure 91 on November 4th 2014. Photo courtesy of Sam Chapman.
Go with a pro
Consider hiring a cannabis-centric attorney such as Oregon’s Paul Loney or Canna Law Group, or a marijuana enterprise consultant (usually cheaper than attorneys), or both, to guide you through the startup and license application phase.
Know the numbers
Starting up a legal marijuana business ain’t cheap. Many of the mandatory regulatory aspects of a legal cannabis business, such as fencing, surveillance and security, insurance, zoning, etc., can be big-ticket items. In Washington, even a small, Tier 1 Producer operation is easily a $100,000 investment. And if you’re a wannabe retailer, don’t forget inventory cash! Right now in Washington state, there’s a retailer bank-wiring $230,000 to a producer/processor for what is likely a 10-day supply of marijuana. Make sure you’re clear on the cash requirements for implementing your business and make sure you can access that cash. Also, be prepared to show the OLCC precisely where that cash is, and where it came from.
Hang tough!
Enduring bureaucratic scrutiny can be exceedingly frustrating. The hoops through which Measure 91 stakeholders will have to jump are significant, and you may reach a point where you consider just bagging it. Don’t. I know people who’ve quit the I-502 process, and not a single one of them is content with that decision. Don’t forget that you’re fighting for an opportunity that represents potentially generations of prosperity for you and your family.
Ford T. Pearson is Publisher/Editor of Flip-Side Magazine, a sponsoring level member of NCIA since 2014. Ford has significant experience within the legal marijuana industry, including working as a publicist for cannabis-related businesses, and as a consultant helping applicants of Washington’s Initiative 502 legal adult-use marijuana program, Oregon’s HB3460 program, and Oregon’s Measure 91 program.Flip-Side Magazine provides news and resources for the northwest cannabis industry, and is the only marijuana trade publication serving Oregon and Washington cannabis professionals.
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by Elise Serbaroli of 
Elise Serbaroli leads Global Business Development at 
Gabriel Cross is a Founder and CEO at 
James Schwartz RN, BSN, LNC, is an experienced medical legal consultant and CEO of 
The alcohol industry requires that all alcohol products be tested for potency, which is called alcohol content. While alcohol content is required to be posted on labels, how often does alcohol percentage affect your drink selection? When a friend offers you a beer they may ask you if you want an IPA, Kolsch, Ale or Stout. Or, when you are shopping for wine you may think about whether you want a Merlot, Chardonnay, Zinfandel, Rose, or Pinot Noir. Rarely is alcohol percentage the deciding factor. No one asks whether the beverage has 4%, 13% or even 95% alcohol content. If that was the case malt liquor and Ever Clear would be the alcohol of choice. Instead, what we see is that enthusiasts look for a wide variety of qualities other than just potency. The same should be said for cannabis.
