Tag Archives: business

Leaders in Infused Products Manufacturing: Part 3

By Aaron Green
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Cannabis infused products manufacturing is quickly becoming a massive new market. With companies producing everything from gummies to lotions, there is a lot of room for growth as consumer data is showing a larger shift away from smokable products to ingestible or infused products.

This is the third article in a series where we interview leaders in the national infused products market. In this third piece, we talk with Liz Conway, Regional President of Florida at Parallel. Liz started with Parallel in 2019 after transitioning from her healthcare IT consulting practice. She now heads up Florida operations for Parallel which runs the Surterra Wellness brand.

Next week, we’ll sit down with Stephanie Gorecki, vice president of product development at Cresco Labs. Stay tuned for more!

Aaron Green: Liz, very nice to meet you. Can you tell me how did you get involved at Parallel?

Liz Conway: Well, I’ll give a little bit of background. Previously, I was working in healthcare technology and in that field, really coming out of health care reform. I was also living in Northern California and so was conscious of a bunch of startups that needed help with highly regulated spaces and policy and how to navigate both the today and the tomorrow of “Hey, we’re trying to build something super fast, but we’re not interfacing with government well enough to know how to build what we’re building and not be set back again.”

And so cannabis actually came to me. I started working with some early stage cannabis IT companies and I was the principal where I founded a firm to do this very thing, which was to help highly regulated companies get through what is today, what is tomorrow, and what can we change. I was really fortunate to be living in Northern California, and I started to help them navigate the California rules.

Then in 2016, when California went adult use, that was just a major time to turn everything on its head and see what we could get. From there, it was history. I started to work with companies, both nationally and in Canada, and met some of the folks with Parallel and was a consultant with them for a while and then joined the team.

Liz Conway, Regional President of Florida at Parallel

Aaron: So, are you in Florida now?

Liz: I relocated to Florida in January 2019.

Aaron: At Parallel, how do you think about differentiating in the market?

Liz: I think that we differentiate in terms of the quality of our product, of course, and I will speak specifically to Florida where our focus is still a medical market. Every day we are trying to manage the vertical from end-to-end so that we can get the products that our people want as quickly as possible over a vast territory. Well-being is such a critical ethos that everything we do comes down to, “alright, what does this mean for well-being and how are we delivering that both in the customer experience as well as in the product?”

Aaron: With regards to differentiation, can you speak to any products in particular that you feel are differentiated in the Florida market?

Liz: In the Florida market, I think that we were the first to launch thera-gels, and the thera-gels really are medicated jelly. You can use it sublingually, or take it as an oral to swallow. From that we developed thera-chews. That line, it’s really great tasting, it’s long lasting, and the effects are getting great reviews from the patients. So that’s one area that I think we distinguish ourselves and we’re a forerunner in the Florida market.

Aaron: So, if you take one of those products as an example, can you walk us through your process for creating a new product like that?

Liz: Well, so remembering that we’re part of companies in other states, because Parallel operates in Nevada, Massachusetts and in Texas. So, we’re not developing products on our own, but we certainly are doing Florida market analysis to say, what should come next, we are listening to our customers, we listen to our people, we’ve got 39 stores across the state. We have a number of employees who are always listening. We also have employees who are part of the medical program who are using the products to address different needs and they are looking at our competitors.

So, we’re doing some competitive analysis. We’re also knowing what it is that we’re really good at, and we take it through a product development lifecycle that involves testing because we are fully vertical. In Florida, we have to always ask ourselves are we able to do this end-to-end and thus far, we’ve been fortunate enough to either build or buy that capability.

Aaron: You mentioned there’s 39 stores in Florida? Are those dispensaries?

Liz: Yeah, they are our stores. There are other stores that other companies have, but we’re the second largest footprint in the state and all over from the very edges of Pensacola down to the Florida Keys, and then over to Miami and up through Tallahassee. So, covering really all corners in the state.

Aaron: Now, with those stores do you also market your products in other people’s stores?

Liz: No. The vertical really means that our stores only carry our own products. We’re marketed in Florida as Surterra Wellness and that’s the name of our stores. Anywhere you go that there’s a Surterra Wellness, you have the same product sets and we’re not allowed to sell other folks’ products. It’s a big difference between Florida and other states.

I’ll tell you one of the nice things is, when I have a product, I know that we grew it. I know every single quality step along the way. I don’t have to go and then look at other vendors and constantly monitor their quality. Everything that we do, we touched it from the very first moment hitting the ground. So it’s nice.

Aaron: Can you walk me through one of your most recent product launches? And if you can, the full lifecycle from the initial marketing briefing up to commercialization?

Liz: Well, I can do some of that. Speaking specifically about those thera-chews – that oral dosing mechanism – we’ve got it in a couple of different flavors. We said to ourselves, “hey, there’s a real need in this market for people to experience something that was like an edible, because Florida just launched edibles.” But we didn’t consider this as an edible because they weren’t allowed at that point. We knew from other states that particularly patients like to dose, you know, with something that is long lasting and flavorful. And so we said, “how can we bring this to market as an oral-dosing product?” And so we conceived the machinery that was able to do it. We had to do quite a bit of tooling.

Prior to that, we did some market testing from our customers and our associates as well as our brand team to say “is this going to be right? Can we bring it to market?” We did the projections around anticipated demand and program growth as well as the cost. We had to figure out what it would it take to adjust the machinery. Will it work? We did some pretty significant testing on that machinery and a lot of flavor testing.

We’re fortunate enough to have one of only four licensed kitchens that can do this kind of R&D in Florida. We’re licensed by the Department of Health for cannabis R&D on an edibles-type kitchen. So we were really fortunate to be able to do that to bring it to market. And from there, it really took on a life of its own. The flavors were tested across all of us (non-dosed flavors, obviously) and we voted on the best products to hit the shelves.

Aaron: When you’re making that decision, how much of the decision was weighted by market demand from your existing customers, and just observing other markets and seeing how products perform in other markets?

Liz: Data is not as prolific as I’d like it to be in cannabis. When you hit the edge of that state line, your consumer is very different, your stores are very different, your marketing capability is very different. So we really had to look across the US and say, “how are products like this performing? Is that how Florida is going to perform?” We did use that state-by-state evidence as well as our own evidence — the response to therapy gels — if we have thera-gels, what type are we selling in terms of dosage and flavors. There are slight differences there in effect-states. And so it was a little bit of both.

Aaron: Next question gets more into like the supply chain. How do you go about sourcing ingredients for your products?

Liz: So again, in a fully verticalized state, we have to source 100% of the active cannabinoid ingredients. Then we have an authorized vendor list that we’ve worked with for other things in terms of flavors and terpenes. Then we have to go back to the DoH to make sure that the other ingredients, whether that be sweeteners, or the kind of wrapping on those thera-gels are okay — the gelatin elements in particular.

“The Florida environment all day long is the biggest hurdle that I think we face.”We use an authorized vendor list. One of the great things that we’ve done recently is to focus our vendor list on minority women and veteran-owned businesses, and so really looking deep in the supply chain to source whatever we can from a diversity of suppliers. I love that original ethos of cannabis to be of the people, by the people and for the people, as well homegrown.

Aaron: Can you give me an example of a challenge that you run into frequently?

Liz: Well, I’ll say in Florida, if you’re growing your own cannabis, it’s way different than if you’re growing it in Colorado or California. So, I’m going to start there. The great news is that after Florida allowed us to start selling smokable flower last fall, we’ve come such a long way. We’ve got new indoor grow facilities. It’s making the environmental issues much, much lower.

“I think that the best thing that we can do is try to look five years ahead and ask what could this look like?”Bringing those on-line is going to bring a much more consistent consumer experience because while I know consumers have a lot of tolerance for variations in their cannabis, but as the industry matures, they’re going to treat us much more like other CPG companies. They’re not going to want that variation. Between that and then Florida’s new testing regulations which also are making sure that the product that’s delivered only meets what’s on the label.

The Florida environment all day long is the biggest hurdle that I think we face. The humidity is much higher here than in other states.

We’re also looking at live resin. What I am watching is the next generation. A lot of live products get us really close to the plant. We’ve done so much to pull out of the plant but where are we going to preserve that original plant in all of its most original formats without having to necessarily smoke the flower itself. We’re working with the Florida Department of Health to help them understand live resin products from a health standpoint.

Aaron: What trends are you following in the industry?

Liz: As you can imagine, as the regional president of a division that goes really end-to-end on monitoring trends in edibles and infused products, medical and recreational, I’m watching the election pretty closely. It will impact banking. It could potentially impact interstate commerce and it could potentially impact research.

I’m also watching things like HR trends, what’s happening in who we employ, our leadership, and how we deal with some of the emerging union issues around the country. I think that the best thing that we can do is try to look five years ahead and ask what could this look like? Where do we put our investment dollars now to meet the future, as well as where do we put our regulatory efforts for the best public policy to have the outcomes that we want consumers to trust us with? I know that’s a really broad answer, but from where I sit, it really is what I’m looking at, across a universe of excitement, but it includes challenges also.

Aaron: The last question is, what would you like to learn more about in the cannabis industry?

Liz: Well, of course, if I had a crystal ball, that would be great. I think the data is always missing. The more data that we could get, there’s so much out there that people are using cannabis for and we just don’t understand the impacts on how is this wonderful well-being product helping so many people because a lot of people don’t like to talk about it. So the more data about our consumers and what they like and what they don’t like, even across state lines, as we could aggregate that in a uniform way. I think it would help a lot of the people who are fearful of cannabis and it would help a lot of us who are in the business, get the consumers exactly spot on what they want, which at the end of the day is why we’re all here.

Aaron: Thank you Liz, that’s the end of the interview.

Soapbox

Being an American Cannabis Entrepreneur in Europe

By Michael Sassano
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I have heard everything from “No one in their right mind would spend the energy in Europe when the U.S. has the most developed infrastructure in the world and $13 billion in sales” to “Is it even legal there?”. And yes, when you come from the West Coast cannabis world, it’s hard to imagine anywhere else but the West Coast of the U.S.A. 

Europe has taken an infrastructural leap forward by starting off the pharmaceutical, medical and GMP supplements path. As an American-European from the West Coast cannabis world, remembering how the U.S. started/progressed, remaining patient and stretching the grey matter crossing the thresholds of pharmaceutical manufacturing, is serious.

Costs to Do Business

Which country you choose to begin operations in decides if cannabis is more or less expensive cap-x and opp-x to the U.S. And don’t forget the Euro conversion. Clearly, working near main cities like Berlin and Geneva will be expensive both for land and competition for talented staff. I chose Portugal, which greatly reminds me in terms of geography to a mini-California on the coast of Europe. Portugal also boasts the most progressive cannabis rules and is home to large cannabis producers like Tilray and Clever Leaves paving the way in the EU market. Greece is also one of our top locations, due to being cannabis friendly and another coastal country with great talent and reasonable costs to live and operate. 

Excitement

The coast of Portugal

All of Europe is buzzing with cannabis. Somai Pharmaceuticals tracks over 387 star-ups in cannabis around Europe, South America, Australia and Asia. The excitement when Colorado first announced cannabis legalization in 2014 is the same feeling in Europe now. Most groups are collaborative yet guarded at the same time with the uncertainty of how EU cannabis plays out. Patient demand exists, and similar government wills are at play, but all in the direct backyard of big pharma. 

Right now you see huge companies that will always exist and small companies that will always be a part of competition. It’s likely that Europe will shake out to be 30% large to medium company mix and 70% medium to small companies. So, the feeling of room for everyone exists there. This is not surprising considering the legal market in the world is $17B in sales while the illegal market is estimated at ten times that market. And new demographics from around the world are opening up to cannabis for pain relief, sleep and other ailments for new age groups. 

Brand New Infrastructure

european union states
Member states of the European Union

Conforming to standard guidelines like pharmaceutical manufacturing, GMP supplement manufacturing and GACP farming is just plain normal. U.S. state-by-state expansions really missed the boat on this, and state rules without federal guidelines aren’t good for businesses left guessing or consumers. Eventually, with federal legalization, some infrastructure rebuilding will be needed to conform to standard procedures. I am unsure if the systems are even capable of handling tens of thousands of operating facilities with or without regulation, but starting off at the highest level of pharmaceutical grade is a good way to build consumer and regulator confidence. Learning pharmaceutical and supplement GMP manufacturing is a precise and studied endeavor coming from the U.S. cannabis market. The US hemp industry is embracing this on a supplement level. I now curl up to online courses and formulation books.

In time, all of Europe’s 741 million population will have access to cannabis related products. With standardized processes, new infrastructures and good-old fashioned entrepreneur energy Europe will be a massive market. Sure, the early adopters will need to struggle through regulations and rule creation, but the lifestyle in Southern Europe is the envy of West Coast USA, where laid-back lifestyle and organic food is the minimum standard. 

The Brand Marketing Byte

Spotlight on Aster Farms

By Cannabis Industry Journal Staff
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The Brand Marketing Byte showcases highlights from Pioneer Intelligence’s Cannabis Brand Marketing Snapshots, featuring data-led case studies covering marketing and business development activities of U.S. licensed cannabis companies.

Here is a data-led, shallow dive on Aster Farms:

Aster Farms is based in Lake County, California and operates with an ethos of environmental sustainability. They call themselves the “cleanest, meanest and greenest around” and produce sungrown cannabis with “good genetics, clean cultivation and the power of nature.”

According to Pioneer Intelligence, Aster Farms is showing increased strength in each of the pillars they track: social media, earned media and web-related activities. The reason for such an improvement in performance? It starts with a number of earned media placements driving greater awareness for the brand, like this piece in SFWeekly or this one on Benzinga.

Engagement rates for Aster’s Instagram account have been growing for about two months and received a recent boost in the form of a sweepstakes giveaway. Their web activity performance improved as a result of keyword growth on their site.

All of these factors helped Aster Farms get on Pioneer’s list of Top 100 hottest U.S. cannabis brands for October, coming in at Number 60.

Shimadzu Announces Partnership with Missouri Lab

By Cannabis Industry Journal Staff
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In a press release published last week, Shimadzu Scientific Instruments announced a partnership with MoCann Testing, a division of EKG Labs. MoCann Testing is the first state-certified medical cannabis testing lab in Missori.

It sounds like the partnership involves Shimadzu supplying MoCann with instruments and supporting their testing efforts with training, method development and maintenance, though the press release does not mention any details.

“We are excited to support MoCann’s mission to help individuals across the state of Missouri have access to safe medical marijuana through accurate sample testing and quality results,” says Bob Clifford, Ph.D., general manager of marketing at Shimadzu. “Because selecting the right analytical solutions is a critical investment, we provide more than just advanced instrumentation and software. We assist with method development, instrument training and maintenance that keep systems operating at the highest level.”

MoCann Testing is certified by Missouri, accredited to ISO 17025 and they offer the full gamut of testing services for growers and manufacturers in Missouri.

european union states

Shades Of Cannabis Reform & Confusion Across Europe Seem To Mirror US Progress

By Marguerite Arnold
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european union states

Cannabis reform is proceeding globally right now in some interesting places, and in an oddly syncopated schedule yet again.

Namely, in the last few weeks, change has been moving forward not only in the U.S., but Europe too. That this effort in the EU came literally weeks before the American presidential election where as of now, no matter who will occupy the White House, even more states move into the adult use camp is also surely no accident. Particularly given the results.

In South Dakota’s case, voters agreed to legalize both a medical and recreational market in a single election. In New Jersey, the referendum that passed authorized a market that is moving quickly to get implemented. This is equally intriguing. Namely that to the average person right now, no matter where they are, the continued delays and gridlock to get going, no matter the problems along the way, are increasingly unpopular politically. That too, is showing up at the ballot box.

Indeed, cannabis reform is now absolutely one of the most pressing and yet unaddressed issues in several countries at present. See New Zealand (where the voter mandate for adult use reform failed during their Presidential election last week).

Europe Seems To Be Following New Zealand’s Caution As Germany Delays Further Reform But…

Last week, a proposal on adult use cannabis reform failed in the German Bundestag (Parliament). With the exception of the far right Alternativ für Deutschland (AfD), every other political party agrees that there needs to be forward motion on the topic, but nobody seems to want to fully address it. This is no surprise. Indeed, the recent appointment of a former German minister last month to a Swiss cannabis company seems, certainly in retrospect, to presage the same. As well as the many protest votes on the topic emanating from Berlin, one way or the other.

However, in the aftermath of what is expected to be a widely influential medical case here (namely the regional approvers may not interfere with a doctor’s right to prescribe to qualified patients), it may be that the government wants more time to grow its medical program while Denmark, Holland and Luxembourg (if not Spain) figure out the logistics on the ground.

French flags blowing in the wind in Le Havre
French medical trials expected to begin Q2 of 2021

Given that France has finally committed to a national medical trial to begin no later than the second quarter of next year, and further one where it punts the majority of the cost onto the industry itself, this would create a solid “medical cannabis” bloc in Europe’s most affluent states. Not to mention the first real, nationally authorized patient trial in Europe that is not commercial.

But even this is not the whole story. While dickering about the certifications and scheduling of the plant go on now at the highest international levels, let alone federal ones domestically, hemp products are clearly entering the consumer market here – from upscale CBD stores in city centers to hemp seed oil and hemp-infused mayonnaise appearing on the shelves of German mainstream grocery stores. Not to mention hemp infused alcohol of at least the vodka, gin and rum varieties.

And then of course there is Italy.

The Italian Market May Be The Dark Horse In Europe Everyone Has Been Waiting For

Within literally the month of October, all in public view, the Italian government circled on the topic of legalizing the CBD/hemp market. As of last week, the Ministry of Health finally decided that cannabidiol sourced from hemp is not a narcotic.

CBD in Italy went from widely available to banned and back to available again.

Given the fact that home grow now is not illegal, and medical cannabis is technically available, it would seem that Italy is positioning its hemp market to survive if not thrive at least domestically and further thread the needle of industry continuity against fluid and further rapidly changing European and international regulation right now.

In the meantime, like Germany, however, the country is clearly angling to create an industry infrastructure – and further beyond the pharmaceutical vertical – via “other” channels before taking the final plunge. Cannabis Lite fits that bill perfectly.

What Does This Mean For 2021 And Beyond?

No matter the official denials, it is very clear that recreational cannabis reform at the American and Canadian ballot box is moving the conversation forward globally, even if at a different pace.

With the WHO now poised to weigh in on the issue, more American states signing up, an expanding medical market across the world and adult use upstarts everywhere, 2021 is absolutely sure to be a meaningful year just about everywhere on the cannabis front.

Cannabis Won Big: A Post-Election Analysis

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Editor’s Note: This article has been updated to include the presidential and congressional election results.

While the votes continue to come in for the presidential and congressional elections and we have some concrete results materializing, cannabis legalization has emerged as a clear winner across the board. Five states had initiatives on the ballot to legalize cannabis in one form or another and voters in all five states approved those measures by wide margins.

As of this writing, 15 states now have legalized adult use cannabis and 36 states have legalized medical cannabis. That is a significant portion of the United States with some form of legal cannabis, even without counting the emergent hemp markets across the country.

After a tight race and mail-in vote counts diminishing President Trump’s lead days following the election, Joe Biden has won the White House. Most cannabis industry stakeholders see this as a win for cannabis as both Biden and Vice President-Elect Kamala Harris have voiced support for federal decriminalization of cannabis. The vocal support is very much so tied to their campaign on ending racial injustices and systemic racism, citing the failed war on drugs for disproportionately harming communities of color.

While it is looking like the Democrats will retain control of the House of Representatives, it is still unclear which party will control the Senate. That  question likely won’t be answered until January 2021, when voters in Georgia will decide on two Senate seats in runoff elections that will decide which party gets the majority. With a Democratic majority in the House and Senate, it is entirely possible that the Biden administration could decriminalize cannabis on a federal level within the next four years. Without that majority, however, it is possible reform could come at a much slower pace.

As more states legalize cannabis, their neighbors see the potential economic benefits and want to cash in on the movement. Just take a look at the West Coast.

Comments made by politicians leading up to the election in the Northeast also shed some light on the alleged domino effect coming to the United States. In late October, about two weeks before the election, New York Governor Andrew Cuomo was asked when his state will legalize adult use cannabis. His answer: “Soon, because now we need the money.” Back in September, Pennsylvania Governor Tom wolf specifically asked the state legislature to legalize adult use cannabis. Governor Wolf said “people will go to New Jersey” to purchase cannabis once it becomes legal in the neighboring state.

Question 1 in NJ won by a very wide margin

Well, New Jersey legalized adult use cannabis. So now it appears we are in a waiting game to see which neighboring state will move forward before the other. Alyssa Jank, consulting services manager at Brightfield Group, predicts cannabis sales in New Jersey to reach about $460 million in 2021, up from about $94 million this year. She says the market could reach $1.5 billion by 2025.

Sam D’Arcangelo, director of the Cannabis Voter Project, a division of HeadCount, says the New Jersey measure is pretty bare-bones, so the legislature will need to pass enabling legislation that actually creates the adult-use program. “It’s tough to tell exactly what that legislation will look like or how long it will take to pass, but it’s possible it will be approved pretty quickly,” says D’Arcangelo. “Tonight’s results could set off a domino effect that inspires lawmakers to move forward with legalization in a number of states throughout the region.”

Let’s take a closer look at Arizona: Back in 2016, Arizona had a measure on the ballot to legalize adult use cannabis that failed to get enough votes. Things have clearly changed in the state in the last four years because Prop. 207 (the 2020 ballot initiative to legalize adult use cannabis) won 59.8% to 40.2%. Arizona now joins a massive West Coast bloc of states slowly creeping inland that have legalized adult use cannabis, including, Washington, Oregon, California, Nevada and now Arizona, not to mention Montana. Drug Policy Alliance’s Emily Kaltenbach believes that New Mexico will follow suit as well, with three out of four voters in the state in favor of it.

Voters in Mississippi approved a medical cannabis program by a wide margin with almost 74% in favor. Even more encouraging, voters in the state rejected the legislature’s attempt to hijack the initiative with their own alternative measure that would have involved developing their own program as they see fit without any sort of deadline.

While Montana can tend to lean slightly Democrat, it is surrounded by heavily Republican-dominated states like Wyoming and Idaho. With both Montana and South Dakota voters approving adult use legalization measures, this presents a potential inroad for cannabis to reach far more conservative states in the Northern Rockies and beyond.

Greg Kaufman Partner at Eversheds Sutherland and frequent Cannabis Industry Journal contributor, says this election puts considerable pressure on Congress to take some action on one or more of the cannabis-related bills currently pending. “In several states, cannabis was more popular than the winning presidential candidate, regardless of the party of the winning candidate,” says Kaufman. “This suggests that cannabis is not a partisan issue, nor should it be.”

The 15 states that have legal adult use cannabis now represents about 34% of the population in our country. “During the most divisive election in modern U.S. history, Americans demonstrated unity around at least one issue – cannabis policy reform,” says Aaron Smith, co-founder and chief executive officer of the National Cannabis Industry Association. He says the victories we saw this week are commendable and will lead to a lot of new jobs, tax revenue and thousands of fewer arrests, but there is still a lot of work to be done. “We look forward to building on this progress as we continue to work with Congress to end the conflict between outdated federal laws and the growing number of states with regulated cannabis markets, and help undo the racially and economically disparate harms caused by prohibition.”

While we wait to hear who will control the Senate in 2021, which will have a massive impact on cannabis reform, we leave you with this great quote from Aaron Smith: “There is still a lot of work to do, but the wind is at our backs.”

To see the details and results of each cannabis measure on the ballot in this election, click here. 

Cannabis Sweeps: AZ, MS, MT, NJ & SD Approve Legalization

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Five states had cannabis reform on the ballot yesterday for the 2020 election: Arizona, Mississippi, Montana, New Jersey and South Dakota. All five ballot initiatives won by a clear margin, with some races ending in landslides. Stay tuned for coverage on congressional and presidential elections and the impact on the future of the cannabis industry.

For now, here are which states legalized cannabis last night, as well as some details on the five (well, technically eight) state ballot initiatives:

Arizona – Prop. 207 (Adult Use)

Results: 59.8% Yes, 40.2% No

Details:

  • Legalizes cannabis for adults over 21
  • Puts a 16% tax on retail sales of cannabis and cannabis products
  • Develops a process for expunging records of cannabis-related drug offenses
  • Arizona already has an established medical cannabis program

Mississippi – Initiative Measure 65 & Alternative Measure 65A (Medical)

Results: 67.9% Yes for either, 32.1% No against both

Details:

  • Both initiatives theoretically legalize medical cannabis in the state.
  • There is a legislature-proposed alternative on the ballot, which makes things a bit confusing and gives voters the option of voting for both, neither or one of the two.
  • Initiative 65 would give the state’s department of health a mandate and authority to establish regulations for a medical cannabis program by August 2021. This initiative lists 22 qualifying conditions.
  • Initiative 65A gives the legislature the power to come up with their own program as they see fit and does not include any sort of deadline.

Montana – Initiative 190 (Adult Use) & Initiative 118

Results: 56.6% Yes, 43.4% No

Details:

  • Legalizes, taxes and regulates cannabis for adults over 21
  • Requires the state’s department of revenue to license and regulate cannabis businesses
  • Puts a 20% tax on retail sales of cannabis and cannabis products
  • Develops a process for expunging records of cannabis-related drug offenses
  • Montana already has an established medical cannabis program

Initiative 118:

  • This just allows the language of the initiative to call an adult over 21, instead of 18 as it is stated in the Montana constitution. 

New Jersey – Question 1 (Adult Use)

Results: 66.9% Yes, 33.1% No

Details:

  • Legalizes, taxes and regulates cannabis for adults over 21
  • New Jersey already has an established medical cannabis program – this ballot measure gives authority to the regulatory body currently overseeing the medical program, the five-member Cannabis Regulatory Commission.
  • Only applies the 6.625% state sales tax and prohibits additional sales taxes.
  • This made it to the ballot by way of legislature after New Jersey lawmakers failed to pass it in 2019, instead passing the question on to voters. New Jersey does not have a ballot initiative process.

South Dakota – Constitutional Amendment A & Initiated Measure 26 (Adult Use & Medical)

Details:

Constitutional Amendment A Results: 53.4% Yes, 46.6% No

  • Legalizes, taxes and regulates cannabis for adults over 21
  • This also requires the state legislature to set up a medical program as well as a hemp program by April 2022.
  • Puts a 15% tax on retail sales of cannabis and cannabis products
  • Gives local governments authority to allow or ban cannabis businesses

Initiated Measure 26 Results: 69.2% Yes, 30.8% No

  • Establishes a medical cannabis program in South Dakota
  • It does list a few qualifying conditions like severe nausea, chronic pain, seizures and more, but it gives the state’s department of health the power to add more conditions to that list.
  • SD Department of health would have 120 days to set up regulatory framework.

Surprise! A Major Cannabis Stakeholder Pushes for Ethical Marketing Standards

By Jeff Baerwalde
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As more nations across the globe embrace the benefits of legal cannabis, to say the business is booming is an understatement. But with cannabis going corporate in a big way and marketing standards still hit or miss, the reality of unethical marketing practices that manipulate consumers and run roughshod over small businesses threatens to do harm if not brought under control.

Enter Cresco Labs, a major player in the international cannabis industry. Contrary to what you might expect, and bringing in a breath of fresh air, this giant is pushing to install marketing standards that protect the ethical interests of all cannabis businesses.

In this article, we will take a look at some key elements of ethical advertising in the cannabis industry and explore the Cresco Labs proposal.

This dispensary ad appeared on Variety.com

The Power of Advertising

Advertising is a powerful medium for rebranding and influencing public perception. The messages conveyed by ads reflect the changing moral, ethical, and consumer opinions of society – and often create them in the first place. For cannabis, an industry rife with stereotypes, ads present a strong opportunity to change the popular face and perception of cannabis as nothing more than a vehicle to get high.

Today’s numbers tell a different story with a full 19% using it for pain relief and another 37% to relax. Even one successful ad campaign can change the mind of a skeptical consumer. So how to ethically harness this power?

Cannabis rebranding generally works best when it draws on four main elements:

  • Emphasize health and wellness benefits. Most new customers who are interested in cannabis these days are attracted by the inspiring health and wellness possibilities that cannabis products present. By redefining cannabis as a medical product suitable for families, the elderly and patients suffering from various ailments, and not simply as a way to get high, cannabis companies can target the audiences that will most benefit from their products.
  • Replace typical “juvenile” imagery with sophisticated graphic design approaches. With so many options for how to use and consume cannabis these days, it is no wonder that brands are embracing trendy, sophisticated, contemporary design techniques. Logos featuring minimalist and elegant fonts more accurately express the narrative behind products such as cannabis teas, cannabis-infused oils and edibles.
  • Highlight the science behind the products. For those naysayers still determined to limit cannabis to its recreational usages only, to the exclusion of its many health benefits, exploring the science is vital. By citing legitimate research studies and findings, and explaining the scientific processes at play when using cannabis, ads can debunk false myths while educating the public.
  • Tell a compelling, relatable story. Like all good advertising, the narrative is key to engaging audiences. Framing cannabis within the powerful context of a compelling story is a strong approach to making a memorable impact on consumers.

Wild West Advertising

Because cannabis is such a new industry, only recently becoming legal in many states (and countries), advertising agencies have been reticent to sign on with these companies. The lack of regular advertising standards means that cannabis advertising has been compared to the “wild west,” where anything goes. While some companies struggle to promote a more wholesome, consumer-friendly image of cannabis, marketing to broad audiences, other companies embrace stoner stereotypes and industry myths, often resulting in ads that depict unethical content.

An example of a warning letter the FDA sent to a CBD company making health claims

Unofficial social media ads may target underage customers, with slogans featuring symbols like Santa Clause, or presenting underage people in their ads next to cannabis products, as in a recent Instagram ad from one brand, Dogwalkers. The ad shows a person holding a pre-rolled joint on the beach with a caption that reads “let the good times (pre) roll.” The image also features young-looking surfers in the background, an implied invitation to underage consumers to sample these products.

Without regulation, businesses are also free to create advertisements rife with false claims. Vulnerable people, patients with chronic illnesses, senior citizens and others may be susceptible to the claims presented in these ads. The FDA has recently begun to crack down on this spread of misinformation, but putting in place industry-wide advertising standards would also have a strong effect.

Cresco Standards

Operating in nine states in the U.S., Cresco Labs is a vertically integrated, publicly traded company that has recently released a proposal for establishing marketing rules for the cannabis industry. The proposal, entitled “Responsible Advertising and Marketing Standards for the U.S. Cannabis Industry” outlines a vision to hold the U.S. cannabis industry to a higher professional and ethical standard than is the current norm, thus legitimizing the industry.

Some specific rules in the proposal stipulate that ads depicting over-consumption as a fun or desirable outcome should violate industry standards. Additionally, the widespread adoption of this proposal would ban any marketing approaches that target underage consumers, ensuring that companies are better able to enforce legal age restrictions.

The company, alongside other large cannabis organizations, has released this proposal as part of an attempt to normalize the industry, allowing it to bring in top ad companies to help promote their brands. While cannabis retains the pop culture imagery of stoner culture and its associations with reckless behavior and teenage cannabis usage, regular advertising sources will remain skeptical about getting involved.

Changing Tides

As the industry continues to evolve and expand, more regulation will be useful in terms of establishing dominant narratives to help redefine how cannabis appears in the popular imagination and what kind of clientele is attracted to cannabis products. But by redefining the acceptable standards of advertising, there is also a risk that cannabis will lose some of the intrigue and novelty that currently makes it a popular, trending topic.

Still, if rebranding campaigns can shift the story so that cannabis appeals to the masses, then everyone in the cannabis industry ultimately benefits.

2021 Trends: Nine Developments in California’s Cannabis Market

By Amy Steinfeld, Jack Ucciferri
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While we’re pleased to report that 2020 is almost over, 2021 will be a mixed bag. New jurisdictions will open their doors to cannabis and consumption will continue to rise, but competition from new operators and illicit supplies will increase. As California’s cannabis industry matures and turns the page on a bizarre year, market uncertainty will linger as the pandemic drags on and overtaxation and regulation strangle profits. But let’s remember, cannabis has been cultivated for over 6,000 years and has withstood far worse—this market isn’t going anywhere and will continue to grow and become more impactful.

Access to Traditional Finance Services

The U.S. Senate will likely pass legislation providing cannabis businesses access to traditional banking and financing services. This will be a game changer for the industry. Valuations will go up. Increased liquidity will smooth transactions. Companies will look to affordable debt to expand their footprints and capacity to compete on a new scale. Full federal legalization could be a game changer if 280E tax restrictions are lifted and interstate and international cannabis trade open up, but the timing of this is hard to predict.

Continued Quarantine-Induced Consumption

Cannabis consumption will continue to increase as Californians seek to ease pandemic-related stress, temper quarantine conditions, and sample an eye-popping array of new products. Sophisticated consumers will be open to spending more on unique and niche products. But hemp-derived cannabinoids may present a new source of competition, especially if CBD remains unregulated. By the end of 2021, cannabis beverages will begin to compete with mainstream alcohol categories. Pharmaceuticals will increasingly take notice of this industry and the increasing share of consumers turning to plant-based remedies.

Ever More Cultivation Opportunities 

In pursuit of revenue, agricultural counties will liberalize their policies on cannabis cultivation by permitting more acreage and streamlining permit processes. Neighborhood groups will push back, but policymaker concerns will be assuaged when they see cannabis farms operating innocuously (and sustainably) around the state. Advances in seed breeding, pest-and-disease control, outdoor growing techniques and odor abatement technology will help too.

New Retail

Cities and counties will revisit opening their borders to cannabis retail storefront and delivery as they attempt to fill budget gaps. Many cities will allow cannabis retail for the first time and/or expand the number of licenses available. These new dispensaries will provide a much-needed outlet for the influx of licensed flower and will continue to spur innovation and consumer education. But a “second wave” of retail speculators seems poised to let optimism override judgement, setting themselves up for failure or acquisition by incumbents.

Getting Social Equity Right

2021 will be a pivotal year for social equity, which will establish a foundation for a just cannabis economy. The industry will have to grapple with how to ensure that those most impacted by the criminalization of cannabis and most often excluded from traditional financing exposure are provided with equitable access to meaningful opportunities. As California’s regulated cannabis market grows, getting social equity right will be important if the industry is to firmly establish itself as an inclusive industry that addresses impacts on marginalized communities and responds to customer demands.

Formalizing Appellations  

California’s new CalCannabis Appellations Program will provide cultivators and brands a way to credibly market the value of their unique growing regions and cultivation methods. These distinctions only apply to cannabis planted in the ground, excluding greenhouse and warehouse grows. The expectation is that high-end consumers, trained to recognize place-based designations and quality certifications in other products, will reward products that boast these designations. How many consumers will be willing to pay the premium and how long full implementation of the program will take, remains to be seen.

Prices May Begin to Drop

2020 was a great year for the few fully licensed cultivators in California permitted to sell to the regulated market. 2021 may be different. Numerous licensed cultivation projects will complete the permitting processes and come online next year. While growing demand may outpace supply at first, by Q3 supplies could swamp the market. Premium flower is perhaps an exception. Adding to the pricing pain, as always, is California’s illicit market, which will continue to undercut prices, as legal growers toil to comply with a labyrinth of state and local regulations. Nonetheless, cannabis will remain the most profitable crop on a per acre basis for some time.

Business Turmoil

The drop in prices coupled with continued high taxes and regulatory burdens will result in turnover of assets and businesses. Less efficient and inexperienced cultivators will struggle, many unable to ultimately withstand pricing pressure. Others will be hit by enforcement actions for failing to comply with California’s myriad regulations. Retailers, already burdened by punitive tax structures, real estate finance commitments and onerous local regulations, will need to be disciplined and have a clear strategy to address new competition.

Consolidation

Driven by business failures and renewed investor interest, California’s regulated cannabis industry may consolidate rapidly in the second half of 2021. Institutional finance will enter the space with a much more disciplined approach than prior capital sources. Traditional agricultural interests will invest in cannabis cultivation projects. Well-run retail chains will begin to outcompete, and then acquire, mom-and-pop competitors. Big brands will continue to expand their shelf space, relegating smaller competitors to niche and novelty status.

In short, the cannabis industry will continue to be highly dynamic, exciting, enticing and risky.

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How to Vote for Cannabis Research on November 3rd

By Dr. Jordan Zager
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It was 1996. I was four years old. California Proposition 215 passed and for the first time, legal medical cannabis became available. I don’t remember it honestly, but that moment triggered a reckoning of outdated and ineffective efforts to control cannabis, which continues on November 3rd.

The moment in 1996 created for me and my generation of millennials a new, decriminalized lens for which to view cannabis and its potential. In my lifetime, from first experimenting with cannabis after high school and then earning my PhD in plant biochemistry, advancing cannabis research, to starting an agtech company dedicated to the genetic improvement of cannabis, we continue this march toward legalization. But another march hasn’t started yet.

The cannabis we consume today is still largely the same (albeit more potent today) as the cannabis that was legalized in 1996. There’s been little advancement in our scientific understanding of the plant. This can and should change. I believe the future and legitimacy of the cannabis crop in the medical field and in farmers’ fields is on the ballot this November.

Five states have cannabis on the ballot for November 3rd

In 33 states, medical cannabis is currently legal and in eleven of those, including my home states of Nevada and Washington, legalized adult-use recreational cannabis is generating millions in tax revenue every month. But compared to every other commercial crop, cannabis is still decades behind.

We are seeing a glacial cadence with cannabis research. As voters in five more states consider this November whether to legalize cannabis, that same tipping point we reached in 1996 comes closer to being triggered for cannabis research.

Here’s what cannabis scientists, like me, face as we work to apply real scientific methods to the long-neglected crop: I published one of the most cited papers on cannabis research last year, titled, Gene Networks Underlying Cannabinoid and Terpenoid Accumulation in Cannabis. But, as per university policy, we were unable to touch the plant during any of our research. We could not study the physical cannabis plant, extracts or any other substantive physical properties from the plant on campus or as a representative of the university. Instead we studied cannabis DNA processed through a third-party. Funding for the research came from private donors who were required to be unassociated with the cannabis industry.

While we were conducting our heavily restricted, bootstrapped cannabis research, the university lab in the next building over was experimenting with less restrictions on mice using other drugs: cocaine, opioids and amphetamines. (Quick note, marijuana is listed as more dangerous than cocaine, which is a Schedule II drug.)

I get it. Due to the federal prohibition on cannabis as a heavily regulated Schedule I drug, universities cannot fund research without the risk of losing all of their federal funding. While the USDA does not support research and SBIR grants are all but impossible, one government agency does allow research, from cannabis grown only in Mississippi. It’s the Drug Enforcement Agency (DEA) and any research conducted using its crop is as ineffective as you’re imagining. Relevant research is likely impossible using the crop which dates back to a 1970’s strain with a potency that’s about 30 percent of today’s commercial cannabis offerings.

To change this anti-research climate, do what those in California did with Prop 215 in 1996. Vote.

Dr. Jordan Zager, author and CEO of Dewey Scientific

Vote for legalization of cannabis if you’re in those five states where legalization is on the ballot; that’s Arizona, New Jersey, Montana, South Dakota and Mississippi. The more states that align with cannabis legalization, the stronger the case becomes for the federal government to reschedule the drug from a Schedule I controlled substance. Currently cannabis is listed as a Schedule I alongside heroin. The DEA claims cannabis has no currently accepted medical use and a high potential for abuse. Both are not true, just listen to the scientists.

Those outside of the five states putting cannabis on the ballot can still play a role in creating a Congress that is more receptive to cannabis reform. This Congress is the oldest, one of the most conservative and least effective in our country’s history. Younger, more progressive representation will increase our odds of advancing cannabis research.

Cannabis holds far too much possibility for us to allow it to be an unstudied “ditch weed.” THC and CBD are just two of nearly 500 compounds found in cannabis which, when scientifically scrutinized will harvest – I believe – vast medicinal and commercial benefits and the tax windfalls that accompany both. But first you have to vote.

If cannabis and your representatives are not on the ballot, do something millennials have built somewhat of a reputation for failing to do; pick up a phone and call your current representative. Tell them cannabis deserves scientific attention and investment. There’s too much potential in the cannabis plant to wait any longer.