Oregon October 1st Compliance Deadline: What You Need to Know

By Aaron G. Biros

Oregon cannabis regulators began enforcing new rules over the weekend when the October 1^st compliance deadline passed. Compared to the relatively cut-and-dried new Colorado regulations, the Oregon cannabis market faces more complex and changing regulatory compliance issues.

The new rules in Oregon address changes to testing, packaging and labeling regulations along with concentration and serving size limits, according to a bulletin published by the Oregon Health Authority (OHA) and the Oregon Medical Marijuana Program (OMMP) earlier this week. Most of the new rules are meant to add safeguards for public health and consumer safety, while putting an emphasis on keeping cannabis away from children.

Around the same time, the Oregon Liquor Control Commission (OLCC) published a bulletin with a new temporary rule that is meant to prevent marketing to children. The OLCC’s temporary rule clarifies “restrictions on product wording commonly associated with products marketed by or to children.” The OLCC reviewed around 500 strain names and found roughly 20 of them that could appeal to children. The OLCC will not approve labels that include strain names like Girl Scout Cookies, Candyland and Charlotte’s Web, among others. This means that breeders and growers have to change strain names on labels like Death Star, Skywalker and Jedi Kush because they contain a reference to the Star Wars franchise, which is marketed to children.

Oregon Marijuana Universal Symbol for Printing

The new testing regulations establish requirements for testing cannabis products for THC and CBD concentrations, water activity, moisture content, pesticides and solvents in concentrates. They also stipulate that ORELAP-accredited laboratories must perform the testing. In the time leading up to the compliance deadline, many lacked confidence that ORELAP would accredit enough laboratories to meet the demand for testing. “We have heard from existing accredited labs that they can meet demand for cannabis product testing,” says Jonathan Modie, spokesman for the OHA. “We don’t yet know how much product requires testing, so we can’t speculate on whether labs will indeed be able to meet demand.” It is still unclear at this time if there are enough laboratories to perform all of the testing for cannabis products in the state.

The universal symbol on a label of a cannabis product purchased after Oct. 1

At this time, 16 laboratories have been accredited for some form of testing, but only four labs have been accredited for pesticide testing. A list of the labs that ORELAP has accredited can be found here. Notably, only one lab is accredited for testing microbiological contaminants, such as E. coli. Testing for microbiological contaminants is not required for all cannabis products sold, rather it is only required upon written request by the OHA or OLCC.

The new labeling and packaging requirements concern testing, consumer education, childproofing and preventing marketing to minors. All cannabis products must contain a label that has been pre-approved by the OLCC. “Cannabis products have to be clearly labeled, showing that is has been tested, or if it has not been tested then it must display ‘does not meet new testing requirements’,” says Modie. “It [the label] must be clear, legible and readable, so they [the consumer] know exactly what it contains, including what cannabis product is inside the package, how much of it, how much THC, and where the product came from.”

According to Modie, it is particularly important that the packaging is not attractive to minors. Cartoons, designs and names that resemble non-cannabis products intended for, or marketed to children, should not be on the packaging or label. “Part of our education to the public and recreational cannabis users focuses on keeping these products out of reach of children in the first place, like storing cannabis in a locked area or an area where a child cannot reach or see,” says Modie. “Our goal is always to protect public health.”

October 5, 2016

Colorado Rule Changes Increase Costs for Edibles Producers

By Aaron G. Biros

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Cannabis processors and dispensaries in Colorado were hit with new rule changes over the weekend, going into effect on October 1^st. The rule changes affect those producing edibles and dispensaries that sell retail and medical cannabis products.

The universal symbol required on all cannabis products in Colorado

As of October 1^st, all cannabis edibles must be marked with the universal THC symbol, according to a bulletin posted by the Colorado Department of Revenue’s Marijuana Enforcement Division (MED). Both medical and retail cannabis products require labeling that includes a potency statement and a contaminant testing statement.

The rules also set “sales equivalency requirements” which essentially means a resident or non-resident at least 21 years of age can purchase up to one ounce of cannabis flower or up to 80 ten-milligram servings of THC or 8 grams of concentrate, according to the MED. The packaging must also include: “Contains Marijuana. Keep out of the reach of children.”

The universal symbol printed on products from Love's Oven. — The universal symbol printed on products from Love’s Oven.

It seems that cannabis edible manufacturers have two clear choices for complying with the new rule requiring the THC symbol: They can use a mold to imprint the symbol on their product or they can use edible ink. Peggy Moore, board chair of the Cannabis Business Alliance and owner of Love’s Oven, a Denver-based manufacturer of cannabis baked goods, uses edible ink to mark each individual serving. The printer uses similar technology and ink used to print on m&m’s, according to Moore. “Baked goods are difficult to find a solution for marking them because they are a porous product, not smooth.” Complying with the new rules almost certainly means added costs for processors and edibles producers.

Moore said she updated all of their labels to include the appropriate information in compliance with the rules. “In terms of regulatory compliance, there have been some disparities for labeling and testing requirements between medical and retail cannabis products, however they are coming into alignment now,” says Moore. “The testing statement rule has been in place for some time on the retail side, but now we are seeing this aligned with both medical and retail markets.” This new rule change could be seen as a baby step in making the different markets’ regulations more consistent.

September 14, 2016

Michigan House Approves Bills, State Set To Regulate Medical Cannabis

By Aaron G. Biros

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Update: On September 21, 2016, Governor Rick Snyder signed the bills into law, regulating the market officially.

The Michigan House of Representatives voted in concurrence with last week’s Senate vote, approving a series of bills that would establish a regulatory framework for the state’s medical cannabis industry, according to a Michigan Live article. Governor Rick Snyder is expected to sign the bills into law very soon.

The package of bills approved today includes provisions for a 3% tax on retail income, a licensing system for growers, dispensaries and patients as well as establishing a traceability system. The bills, if signed into law, would institute a regulatory framework akin to other states that have legalized cannabis recently. Packaging, labeling and testing requirements for THC, other cannabinoids and contaminants are included in the overhaul.

In 2008, voters approved the legalization of medical cannabis, since then however there has been little action from the state on regulating the safety, sale or distribution of cannabis. The bills are meant to eliminate the previous ambiguity in the laws surrounding the state’s patients, caregivers and dispensaries and establish a legitimate system for patients to access medical cannabis.

With over 203,000 registered medical cannabis patients, the passage of these bills could establish the second-largest medical cannabis market in the country, larger than the total number of Colorado and Oregon’s registered patients combined.

stevegoldner — Stephen Goldner, Esq, founder of Pinnacle Laboratory and Regulatory Affairs Associates

According to Stephen Goldner, founder of Pinnacle Laboratories in Michigan, the market will get regulated into five discrete categories for licensing: growers, dispensaries, testing labs, processors, and transporters. “The basic legislation that will become law is very sensible and almost completely mirrors what has already been passed by the Michigan House, thus rapid conformance is nearly guarantied,” says Goldner. “There is a clear intent to require all products to be tested before sale, and setting up an integrated reporting system by product batch code from production, through transport and to final sale.” Goldner believes this comes with an overriding intent to establish standardization across the board, and points to the Foundation of Cannabis Unified Standards (FOCUS) for ready-to-implement, vetted standards.

“Michigan requiring method validation and other requirements, such as adverse event reporting, thereby builds in greater assurance of product safety and compliance,” says Goldner. Pinnacle Labs has been preparing for this day for quite some time. “We have invested the past 18 months preparing for exactly this legislation,” says Goldner. “We look forward to helping the medical cannabis patients in Michigan get cost-effective, desirable products delivered legally and easily.”

If passed, this kind of legislation will present a litany of challenges for the state and all stakeholders involved. Growers dealing with contamination issues previously will now have to navigate legally mandated testing requirements. According to Goldner, the greatest challenges are those that other states already deal with. “The greatest challenge for dispensaries and other business in the chain of distribution is the lack of adequate banking services,” says Goldner. The state will have to hire inspectors, establish robust oversight and review applications while maintaining a smooth transition to a regulated market.

Until Gov. Snyder signs them into law, the state’s cannabis industry and the 203,000 patients remain in a state of uncertainty.

September 12, 2016

Oregon Cannabis Lab Accreditation Program Gets Help, Problems Addressed

By Aaron G. Biros

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Last week, news of problems facing Oregon’s cannabis laboratory accreditation program surfaced, leading some to speculate about possible delays for the recreational cannabis market. According to The Register-Guard, ORELAP administrator Gary Ward believed the program was “on the precipice of collapse.”

According to Jonathan Modie, spokesman for the Oregon Health Authority (OHA), the Oregon Environmental Laboratory Accreditation Program (ORELAP) was anticipating over 30 cannabis laboratories applying for accreditation and they doubled their staff from two to four to prepare for the uptick in applications.

In June, the agency had zero labs applying for accreditation but within two months, 37 labs applied. However, the Oregon Department of Environmental Quality (DEQ) just provided three additional staff members on Monday to help with the application process, says Modie.

Some believe the issues could mean the state may not have enough accredited labs by October 1^st, when the recreational cannabis market is expected to go into full swing. “It is difficult to say exactly how many labs we can accredit by October 1,” says Modie. “We have seven labs today which would bring it to nine labs waiting for assessment, but our goal is to get as many labs assessed and hopefully accredited as soon as possible.”

With the additional staff members, Modie is hopeful this will jumpstart the program. “We really appreciate our collaboration with the DEQ and look forward to boosting our capacity a bit to help us get through this busy time,” says Modie.

Part of the reason some laboratories might have trouble meeting prerequisites is simply because the requirements are very strict. “The process involves submitting a quality manual, standard operating procedures, method validation, submitting proficiency testing data and finally undergoing an ORELAP assessment by our staff, so it is a very rigorous process,” says Modie. “This speaks to our concern for making sure they have the right systems in place so public health is protected.” Modie said there were at least three labs that did not pass the assessment.

Roger Voelker, lab director at OG Analytical

Bethany Sherman, chief executive officer of OG Analytical, believes the hardest part of the process involves getting accredited for testing pesticides. OG Analytical, based in Eugene, Oregon, has already received their accreditation, one of the first to do so. “The pesticide testing requires our most expensive instrumentation and the sample preparation for testing pesticides is the most time consuming,” says Sherman. “Not only does it require very specific instrumentation, it also requires a real know-how and expertise to ensure we are cleaning samples appropriately, minimizing background noise and looking at the pesticides in trace quantities.” According to Sherman, laboratories are also left to their own devices to develop methodologies specifically for the cannabis matrix, adding to the difficulties.

Rodger Voelker, Ph.D., lab director at OG Analytical, seems confident that the state will be able to handle it. “It is a relief they were able to get some resources from the DEQ and I think the state will not allow a program with this kind of importance to fall apart,” says Voelker. He believes after this initial phase of putting the program in place, the workload will go down. “It is easier to maintain a program than it is to implement,“ adds Voelker. In his eyes, it is crucial for the program to require rigorous science. “People are forced to reconcile that there is a tremendous amount of controls to be considered to produce legally defensible data and I think it is great that the requirements are so strict.”

The OHA’s job is to essentially safeguard public health and they do not want to leave any stone unturned when it comes to potential contamination, says Modie. “This is not just about getting as many labs accredited as possible, this is about protecting public health.”

August 24, 2016

Greenhouse Ventures Names Lindy Snider Lead Advisor

By Aaron G. Biros

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Greenhouse Ventures (GHV), a cannabis business accelerator based in Philadelphia, PA, announced they are bringing on Lindy Snider as the lead advisor to the organization. GHV helps seed-stage startups through a ten-week, 90-hour curriculum-based program. Using industry mentors and staff, the accelerator trains founders on emerging best practices of building sustainable cannabis businesses and helping them to raise up to $5 million in seed or growth capital, according to a press release.

Lindy Snider, lead advisor at Greenhouse Ventures

Snider is the founder and chief executive officer of a Philadelphia-based skin therapy company, LindiSkin, as well as an investor in KIND Financial and Poseidon Asset Management. According to Snider, she is involved in a number of cannabis related ventures at the moment. “In a nascent industry like cannabis, early stage companies require hands-on training reinforced with constant mentorship and continuing education,” says Snider. “Greenhouse Ventures is taking a unique education-technology approach towards early- stage venture development, which stands to benefit entrepreneurs who get accepted into their accelerator, as well as investors who are evaluating accelerator graduates for a potential investment.” Snider’s late father, Ed Snider, was the chairman of Comcast Spectacor, a Philadelphia-based sports and entertainment company that owns the Philadelphia Flyers.

According to Tyler Dautrich, co-founder of Greenhouse Ventures, Lindy Snider is an extraordinarily valuable asset. “Lindy has been essential in the early success that Greenhouse Ventures has experienced to date and we are fortunate to name such an active and respected member of the investment community as our lead advisor,” says Dautrich. The company will be hosting two ten-week semesters in February and September every year. Applicants that are accepted into the program typically receive an average of $60,000 in professional services in exchange for a minor equity stake in their venture. Those accepted applicants are not required to relocate, as virtual participation is available.

Kevin Provost, Greenhouse Ventures co-founder and chief operating officer, believes Snider has played an instrumental role in the company’s growth. “From day one, Lindy has supported Greenhouse Ventures’ goal of positioning Pennsylvania as the east-coast cannabis and industrial hemp capital of the country, and with the recent passing of SB3, Greenhouse Ventures is in a unique position to make Philadelphia the epicenter of medical research and ancillary technology innovation,” says Provost. The organization is currently accepting applications for its Fall 2016 semester in Philadelphia beginning October 3^rd and culminating with Demo Day on December 8^th.

August 18, 2016

Emerald Scientific Names Industry Veteran Amanda Rigdon Chief Technology Officer

By Aaron G. Biros

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Emerald Scientific, a supplier of reagents, supplies, equipment and services to cannabis testing and extraction facilities, recently named Amanda Rigdon as the company’s chief technology officer. Rigdon previously worked at Restek Corporation, a manufacturer of chromatography supplies, as an applications chemist and a member of their gas chromatography columns product marketing team.

Before working in the cannabis space, Rigdon began her career in the pharmaceutical and clinical/forensics industries. She spent seven years in Restek’s applications lab where she was responsible for the development and application of chromatography products for the pharmaceutical and clinical/forensics arenas. In recent years, she has been an outspoken advocate in the science of cannabis while with Restek.

As a strong proponent for scientific progress in cannabis, she brings extensive technical expertise and marketing experience related to cannabis testing and research. Presenting at numerous cannabis science conferences and seminars, she regularly provides education on analytical methods and best practices in the lab.

As a contributing author to CannabisIndustryJournal.com and member of the editorial advisory board, she writes a column addressing challenges in the lab and providing technical advice. “I’m thrilled to be a part of the Emerald Scientific team and a member of the cannabis community as a whole,” says Rigdon. “I’ve known the folks at Emerald [Scientific] for years; they’re among the best in the business, and they’ve been supporting the cannabis community since the early days of cannabis analytics.” Rigdon’s mantra in the cannabis testing space has long been to support sound science in the interest of protecting patient and consumer health.

“I’m really looking forward to using my technical skills in conjunction with Emerald’s position and reach in the market to make work easier for cannabis labs through education, applications and new products,” adds Rigdon. Emerald Scientific is widely known in the cannabis testing community for The Emerald Test, an inter- laboratory comparison proficiency test, organized twice per year. It also hosts The Emerald Conference, an annual scientific meeting for scientists, policy makers, producers, and other key members of the cannabis industry. ˇThe Emerald Conference is the first scientifically focused conference for the cannabis industry, now coming up on its third annual conference in February 2017.

August 15, 2016

A2LA Accredits TEQ Analytical Laboratories

By Aaron G. Biros

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The American Association for Laboratory Accreditation (A2LA) recently announced the accreditation of TEQ Analytical Laboratories, based in Aurora, Colorado. The laboratory is now accredited to ISO 17025:2005, the first recreational cannabis-testing lab to do so in North America.

“By achieving ISO/IEC 17025 accreditation, TEQ Analytical Labs believes that we can address the concerns throughout the cannabis industry regarding insufficient and unreliable scientific analysis by providing our clients with state-required tests that are accredited by an international standard,” says Seth Wong, president of TEQ Analytical Laboratories. According to a TEQ Analytical press release, accreditation to this standard confirms that laboratories have the management, quality, and technical systems in place to ensure accurate and reliable analyses, as well as proper administrative processes to confirm that all aspects related to the sample, analysis and reporting are standardized, measured and monitored.

By implementing ISO 17025 accreditation, the laboratory monitors systems and processes central to analyses in an effort to minimize discrepancies and variability in test results. According to Roger Brauninger, biosafety program manager at A2LA, this type of accreditation demonstrates their competence and commitment to rigorous science. “It is encouraging to have testing laboratories taking ownership of the quality of the work performed,” says Brauninger. “Reliable testing will be imperative to insure safety of the products out on the market as this industry continues to expand.” As the first accreditation of its kind in North America, Brauninger hopes this will open the doors for more cannabis laboratories to acknowledge their role in demonstrating scientific competency for the industry.

Tripp Keber, president and chief executive officer of Dixie Brands, Inc., commends the achievement. “At Dixie Brands, we believe that cannabis is powerful, that quality is important, and that accurate dosing is of supreme importance,” says Keber. “Because Dixie is committed to delivering a safe, consistent, and accurately dosed product, lab testing is a vital component to our manufacturing processes.”

“TEQ’s achievement of ISO 17025 accreditation instills great confidence to Dixie Brands that our consumers’ health and safety is ensured and that they will enjoy a reliable and predictable experience with our product each and every time,” adds Keber. “Dixie’s strategic relationship with TEQ continues to build long-term brand value.” This kind of accreditation helps build trust in laboratories’ clients knowing they can provide accurate results repeatedly.

July 12, 2016

NCIA and BDS Analytics Partnership: Analyzing the Market Data Tool

By Aaron G. Biros

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In May, the National Cannabis Industry Association (NCIA) announced a partnership with BDS Analytics, a cannabis market intelligence and data firm, according to a press release. Beginning in June of this year, NCIA members received access to market and sales data via BDS Analytics’ GreenEdge sales tracking software.

According to Aaron Smith, executive director of NCIA, market intelligence was previously very scarce in the emerging cannabis industry. “We hear from our members all the time that one of their biggest challenges is the scarcity of reliable market intelligence and data in the industry,” says Smith. “Being able to offer this kind of data as an included benefit of NCIA membership is incredibly valuable. We’re proud to partner with BDS and grateful for their support of NCIA’s mission.”

The GreenEdge reports span numerous product categories as well as high-level market reporting. According to Roy Bingham, chief executive officer of BDS Analytics, NCIA member-businesses can take part in a tutorial to familiarize them with the interface. Bingham says they have extraordinarily comprehensive data on Colorado and Washington; they will have Oregon’s data ready in less than three months and roll out nationally to all major markets during the rest of 2016 and 2017.

Through using the interactive GreenEdge reports, we were able to identify key market figures and growth percentages, such as percent of the market share held by dry flower, average infused chocolate bar prices and much more. We found that Colorado’s recreational and medical markets totaled $996.5 million in 2015, just shy of a billion dollars. 28% of that market was held by infused products and concentrates, which grew by 111% over the previous twelve months. The average infused chocolate bar sold at retail in Colorado was priced at $14.47 last year. Overall, Colorado’s cannabis marketplace grew by over 41% between 2014 and 2015.

According to Bingham, for most mature industries, a ten percent transaction value of the market is sufficient to scale data so that it speaks to the entire market. “However, this is not a stable, mature industry so we are more comfortable with a sample size of around twenty percent of the total market,” says Bingham. “We are well over those numbers in Colorado and Washington.” In order to get the data, BDS Analytics makes direct arrangements with dispensaries on their panel to get access to their point-of-sale data, which can be done in almost real time or in a download at the end of each month. “It is then standardized with a learning software system, assisted by personnel, that gets better over time at categorizing data points,” says Bingham. “We use algorithms to scale the data to the total industry size, and there are a number of adjustments made to those algorithms to make sure the data is normalized.” The program has recorded more than 20 million transactions to date.

Dispensaries provide their data because they get the full service that comes with being a member of the panel, including details down to the brand level, according to Bingham. “This enables dispensaries to offer consumers what they are purchasing on average in their market,” says Bingham. “You get to see a breakdown of the most popular brands and items if you join the panel and submit data.” They have categorized more than 20,000 unique products, such as a number of different types of concentrates, different types of infused products and more.

The interactive data tool holds tremendous value for NCIA members and business owners in the cannabis space, giving them access to market data previously unavailable or difficult to find.

June 24, 2016

NCIA Brings Cannabis Business Summit to Oakland

By Aaron G. Biros

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The National Cannabis Industry Association (NCIA) with their California affiliate, California Cannabis Industry Association (CCIA), hosted over 3,000 business professionals at this week’s Cannabis Business Summit in Oakland, CA. According to Aaron Smith, executive director of the NCIA, this event drew their largest-ever gathering of attendees and well over 100 sponsors on the expo floor. In an exclusive interview prior to the event, Smith expected this would be a wildly successful year. “Last year we had just over 2,000 attendees in Colorado and we are expecting over 3,000 this year in California,” says Smith. “There is tremendous interest in the California market and it is so great to be here with all of the excitement leading up to the ballot initiatives in November.”

aaronsmithncia — Aaron Smith, executive director of NCIA

The theme of the conference was set early on from industry progress to sustainable growth. “I am really proud that NCIA’s events always bring out the best and brightest in the industry,” says Smith. “It is mostly members of NCIA attending, which are the folks invested in the future of the industry and not just in it to make a quick buck; they are here to build a new business sector.” On Tuesday morning, Smith gave his opening remarks and introduced the first keynote delivered by Ahmed Rahim, co-founder and chief executive officer of Numi Organic Tea alongside Kayvan Khalatbari, founding partner of Denver Relief Consulting, to discuss the triple bottom line in business, emphasizing the need for social responsibility, which includes environmental stewardship, fair labor and trade laws and community integration among cannabis businesses. California Lieutenant Governor Gavin Newsom also delivered a keynote address that was received with a standing ovation after discussing the November ballot initiative, which would legalize, regulate and tax the adult use of cannabis in the state.

businessummit — The first keynote panel of the Cannabis Business Summit

Newsom’s speech highlighted the state’s opportunity to make considerable progress in the cannabis legalization arena this November. The substance of his speech echoed that of many attendees focused on moving the industry forward sustainably. “We need to right the wrong of the failed war on drugs in America,” says Newsom. Boisterous cheers and applause followed almost every sentence as he continued to emphasize the need for social and criminal justice reform. “We are not doing this to be the next California gold rush or to make tax revenue; our purpose and focus is social justice,” adds Newsom.

Gavin Newsom, Lieutenant Governor of California, delivering the keynote

The Lieutenant Governor also mentioned the sheer massive size of California’s market opportunity and their pragmatic regulatory framework in development. “The entire retail of recreational and medical [cannabis sales] in Colorado was just shy of $1 billion last year; we are talking about our 58 counties up in the northern part of this state that produce anywhere from $9-13 billion [sic] of wholesale cannabis- it’s a game changer,” says Newsom. “We have had the benefit of seeing where other states have fallen short or struggled [in regulatory frameworks] and will present that to voters this November.” Newsom also mentioned that members of the cannabis industry need to act as stewards of the environment and protect the small farmers.

Panel discussions throughout the afternoon and following day deliberated a wide variety of topics from laboratory testing standards to the state of affairs in education, training and certification across the country. John MacKay, senior director of strategic technologies at Waters Corporation, led a panel titled Validation of Analytical Methods, Lab Certifications and Standard Methods with Cynthia Ludwig, director of technical services at the American Oil Chemists’ Society (AOCS), Shawn Kassner, senior scientist at Neptune and Company, Inc. and David Egerton, vice president of technical services at CW Analytical Laboratories.

The panel: Validation of Analytical Methods, Lab Certifications and Standard Methods

The panel addressed many of the current problems facing the cannabis testing space. “It is a very difficult plant to work with and labs are doing their best to provide reproducible results,” says Mackay. Cynthia Ludwig emphasized the need for collaborative studies and method validation in cannabis labs. “We [AOCS] provide official, validated laboratory testing methods, but the cannabis industry really has no official methods to work with,” says Ludwig. Egerton echoed Mackay’s concerns over difficult sample preparation and the difficulty of working with cannabis in the lab. “The problem is the matrix of the cannabis sample; the matrix is a critical aspect of method validation- ensuring we find the signal through the noise,” says David. “In the absence of official methods, cannabis labs need to perform method validation in-house for each type of sample, ranging from dry flower to different types of infused products and concentrates.” In addition to those difficulties of providing robust and reproducible lab tests, the panel emphasized that there is currently no laboratory accreditation program required by California regulators.

The cannabis industry in California is still rather unregulated and lacks consistency in safety standards across the market in almost every sector. Attendees seemed to look forward to the November 8^th vote on the ballot initiative in California as a solution for the state’s current problems, hoping consumers and patients alike will find solace in a more regulated, standardized and safe market. The NCIA will be hosting a “Seed To Sale Show” focused on best practices and case studies January 31^st and February 1^st, 2017 in Denver. The next Cannabis Business Summit will be held from June 12^th to the 14^th of 2017 in Oakland, CA.

June 17, 2016

Microsoft Enters Cannabis Compliance Software Market; Industry Outlooks

By Aaron G. Biros

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In a New York Times article published yesterday, news broke of Microsoft’s entry into the cannabis marketplace, teaming up with KIND Financial to launch its Microsoft Health and Human Services Pod for Managed Service Providers, which is essentially a seed-to-sale tracking technology. Their goal is to provide local and state governments with software solutions for traceability in the burgeoning cannabis industry.

In a press release yesterday, Kimberly Nelson, executive director of state and local government solutions from Microsoft said, “KIND’s strategic industry positioning, experienced team and top-notch-technology running in the Microsoft Azure Government cloud, made for an easy decision to align efforts.” According to KIND Financial founder and chief executive officer, David Dinenberg, the cannabis marketplace will continue to have strict oversight and government regulations. “I am delighted that Microsoft supports KIND’s mission to build the backbone for cannabis compliance,” says Dinenberg.

This move could represent an opening of the floodgates for corporate interest in the space. According to Matt Karnes, founder of GreenWave Advisors, a cannabis financial data analysis firm, this could potentially result in an increase in capital flow into the cannabis industry. “This signals a wider acceptance of cannabis and perhaps that changes to national policies are more likely now that we see a large corporation stepping in,” says Karnes. “This could certainly mean an inflow of capital from larger, mainstream enterprises that were previously unwilling to take the risk.” Microsoft also made news recently for the acquisition of LinkedIn for $26.2 billion. The move to get into the cannabis space could represent a diminishing stigma associated with the market and a wider mainstream acceptance in business.

According to Nic Easley, chief executive officer at Comprehensive Cannabis Consulting (3C), this is another legitimizing factor for the cannabis industry. “It shows that cannabis is here to stay, and the fact that Microsoft is now spending resources on software, further validates that,” says Easley. “Many of the first mover seed-to-sale companies, entered the industry too early, had problems with their technology and lacked quality customer service, which created opportunities for new companies to emerge to dominate and capitalize upon the first ‘Netscapes’ of the cannabis industry’s failures.” Additionally, this could rationalize the market for other quality software companies such as Compliant Cannabis, according to Easley.

While Microsoft publicly announced their entrance into the cannabis marketplace, one can speculate that other large companies are planning their entrance as well. “We are fielding inquiries from Fortune 500 companies, Wall Street investors and even major foreign investors on a weekly basis,” says Easley. “In the past week alone, we received calls from three different Fortune 500 companies asking us how they can get into the industry.” It appears that because Microsoft is in the cloud business and they are offering this ancillary service that not only does this further legitimize the industry, but it could be quelling the dated stigma associated with cannabis.