Tag Archives: California

Cannabis in Texas: A Look Ahead to Legalization and Beyond

By Abraham Finberg, Rachel Wright, Simon Menkes
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A Uniquely Texas Approach to Cannabis

The last few decades have seen the United States move forward state-by-state with the legalization of cannabis. Every state is charting its own unique path, and nowhere is this truer than with the state of Texas.

The Lone Star State has made its way from being staunchly anti-cannabis to expressing its own blend of temperance and careful action, combined with a medical cannabis program that’s expanding.

Any predictions regarding the future of cannabis in Texas must take into consideration both the state’s past and its values. In the end, it’s clear that Texas will embrace cannabis in its own individual way and at its own pace, but with a timeframe that appears to be arriving sooner rather than later.

The Debate Continues

108 years after Texas first banned cannabis and the debate continues. Even though Texas has a medical cannabis program, cannabis is still illegal in the state, with possession of less than two ounces a misdemeanor. Possession of more than four ounces is a felony punishable by a $10,000 fine and from 2-99 years in jail.

Texas’s 2015 Compassionate Use Act created the state’s medicinal cannabis program, which now makes treatment available only in the form of low-THC oil of a maximum strength of 1%, and only to a small list of serious conditions: epilepsy, terminal cancer, autism, multiple sclerosis, amyotrophic lateral sclerosis (ALS), seizure disorders, incurable neurological disorders such as Alzheimer’s, Parkinson’s, Huntington’s Disease and PTSD.

Support for a Stronger Medicinal Cannabis Program Comes from Prominent Politicians

Texas Department of Agriculture Commissioner Sid Miller, a leader in Texas politics and one of the architects of Texas’s burgeoning hemp industry, has encouraged Texas legislators to create a more complete medical cannabis program.

Texas Department of Agriculture Commissioner Sid Miller

“I am for medical use,” Miller said in an August 2023 interview. “We have so much good science now. And we know what diseases it can treat, yet our legislature picks winners [and] losers. If you’ve got this disease, you can get treated, but if you’ve got this disease and cannabis will help you, you can’t get treated. We need to let the doctor-patient relationship make those medical decisions and not some bureaucrat or some politician … I’m not a supporter of recreational marijuana, but if someone has a condition that this chemical will help, they should be able to use it.”

Texas Representative Joe Moody from El Paso has worked for many years to promote adult-use cannabis. He recently co-authored two pro-cannabis bills, HB 1805, which would have expanded covered medical conditions and defined a per-doze THC limit instead of a percentage limit on cannabis products, and HB 218, which would have decriminalized cannabis.

Although both bills passed the House of Representatives, they were stopped in the Senate. The next session of the state legislature, which happens every two years, won’t begin until January 2025, so that is the earliest any change in cannabis statutes could take place.

The Future of Medicinal Cannabis

There are currently only three dispensaries in Texas. They appear to be servicing the state’s 268,000 square miles through a series of weekly drop-offs to satellite “partner locations,” which are open an average of only two days per week. This is not exactly a corner-CVS type of arrangement, and the need for new dispensaries for the state’s 61,000 registered patients is high.

The Texas Department of Public Safety took applications for new medical dispensary licenses between January and April 2023. Tony Gallo, managing partner of Sapphire Risk Advisory Group, which helped twelve licensees prepare their applications during this round, anticipates around ten new dispensaries being approved.

All licensees must be vertically integrated – product must go from seed-to-sale under one license – and each applicant paid $7,356 to apply. If approved, the applicants will owe another $488,520.00 for a two-year period.

Many knowledgeable Texans, including Agriculture Commissioner Sid Miller, predict a fully-functioning medicinal cannabis market is just a few years away. “If you can get it to the floor, probably 70% or 80% of the legislative body will vote in favor of it because we have such good science on it. [Originally] we thought, ‘Well, that’ll lead to recreational use or more drug use,’ but it’s not. It’s a plant derivative. Medical marijuana is not nearly as addictive as some of the prescription drugs we use now.”

The Push is On for Adult-Use

Representative Joe Moody believes that adult-use is not too far away in Texas’s future either, and that the way to speed its arrival is through education. He recently sponsored HB 3652, the Texas Regulation & Taxation of Cannabis Act, in order to start a dialogue on what a retail cannabis market will look like in Texas.

Texas Representative Joe Moody

On April 26, 2023, Moody and his bill received a public hearing in the House Committee for Licensing and Administrative Procedures in which many points about setting up a retail market in Texas were discussed. A 10% cannabis tax was proposed by Moody, to be split evenly between the state and local government. Licenses would be required for those growing, selling, transporting or testing cannabis, although individuals would be allowed to grow or possess it in small amounts for personal use. Legal sale and consumption would be limited to adults 21 years of age and older, like alcohol. And of course, cannabis possession would be decriminalized.

How Strong is the Market Potential for Cannabis?

One indication of how strong even a fully-open medical cannabis market might be in Texas came during Moody’s hearing from the testimony of Estella Castro. Castro owns two medical dispensaries in Oklahoma just across the state line from Texas and suspects most her buyers are from Texas. “They have a Texas plate and they come in and buy $500 to $600 worth of product,” she said. Her two shops generated $158,000 in taxes to Oklahoma, most of which she believes should have gone to Texas.

New Mexico recently legalized adult-use cannabis, and the small towns along the Texas-New Mexico border are seeing a lot of traffic from Texas. In the first week of adult-use sales, the New Mexico did adult-use sales totaling $6 million. Of those sales, $1.5 million came from dispensaries in 5 small border towns.

Florida and California Suggest the Scope of a Mature Cannabis Market in Texas

The potential for a fully developed medical cannabis market can be gleaned by studying the next smaller state, Florida, which has an open, mature, medical cannabis market. Florida, with 20 million people, is about two-thirds the size of Texas, which has 30 million inhabitants. Right now, Florida boasts 700,000 cannabis patients whereas Texas only has 61,000. Simple math suggests a fully open, mature, medical cannabis market in Texas could see over a million patients gain relief.

California is the nation’s most populous state with 39 million inhabitants, and its cannabis revenue gives some perspective as to the size of a Texas adult-use market. 2024 estimates of California’s cannabis revenue suggest the Golden State will see $7.2 billion legal cannabis sales while the illegal market will generate another $6.4 billion for a total of $13.6 billion. With a reduction for Texas’s smaller size, these numbers suggest a fully-mature Texas adult-use cannabis market could generate close to $10 billion in annual revenue.

Large adult-use states like California and New York are notorious for having an illicit market that threatens to derail their legal, tax-paying cannabis license holders. Texas’s strong business-friendly focus should help deter such an illicit marketplace from gaining too significant a foothold.

The Back-Door Cannabis Industry

Meanwhile, an extensive “back door” cannabis industry is in full swing in Texas. CBD shops now sell delta-9 (fully psychoactive) THC/CBD gummies and tinctures made from the hemp plant, which is the low THC-version of the cannabis plant. These THC/CBD products adhere to the 0.3% definition of hemp as required by the federal 2018 Farm Bill and are legal and available for over-the-counter or online purchase in Texas’s CBD stores.

Gummies, tinctures and other products made form them hemp plant

Current estimates are that there are over 5,000 hemp, CBD and cannabinoid retailers, manufacturers and distributors in Texas that employ more than 50,000 workers and generate more than $8 billion in annual revenue. With these numbers, the 1,100+ licensed Texas hemp growers are sitting well where they are and are poised to take advantage of a legal adult-use market if and when Texas decides it is ready to go down that path.

Next Steps for Texas’s Cannabis Market

People familiar with Texas’s cannabis market believe that adult-use is a ways down the road for the Lone Star State, and that the near-term focus needs to be on decriminalization and achieving an unincumbered medical cannabis system. Tony Gallo of Sapphire Risk Advisory Group advises the Texas cannabis community to concentrate on “increasing what conditions are allowed for medicinal use” and “increasing what areas of the state it’s allowed to be sold.”

There is a groundswell of public support for decriminalizing cannabis as well as for allowing adult-use. A December 2022 poll showed 55% of Texans support legalizing at least small amounts of cannabis for recreational purposes, and another 28% said it should be legal for medicinal purposes.

A February 2023 poll by the University of Houston found that 82% of Texans support the Legislature passing a bill that would allow people to use marijuana for a wide range of medical purposes with a prescription. The belief that cannabis is a “gateway drug” that would make people more likely to use other illegal drugs is losing traction as well – 70% said it would make people less likely to do so or would have no impact.

Final Thoughts

The demand for cannabis in the Lone Star State is strong. With the likelihood of a fully-functioning medical cannabis market coming soon, and the possibility of decriminalization not too far behind, it’s clear that the future of cannabis is bright in Texas.

While the legalities around adult-use will take longer to work out, and the place of hallucinogenic hemp in the mix needs to be examined and clarified, one fact is certain. The path forward that Texas cannabis takes will certainly be a unique one, as unique and as individual as the Texan people themselves.

Alternatives to Bankruptcy for Cannabis Companies: Part 2

By Brent Salmons, Yuefan Wang
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Part 1 of this series discussed the lack of bankruptcy protections for cannabis companies, since bankruptcy in the U.S. is an exclusively federal procedure and cannabis remains illegal under federal law and proposed a number of alternative options for businesses struggling in the current environment. Part 2 of this series focuses on one of these alternatives: state law receiverships.

Background

A cannabis operation facing financial difficulties may try to avail itself, on the one hand, of the contractual remedies described in Part 1 of this series, but these remedies may be flimsy given their narrow scope and reliance on voluntary negotiation between parties whose relationship is already likely tense; on the other hand, the statutory remedies described in Part 1 of this series may be too rigid and absolute, necessitating the disposition of a business as a collection of assets, instead of its continued operation as a going concern. An alternative is receivership, a flexible but powerful quasi-judicial approach paralleling federal bankruptcy able to be administered by state courts. Compared to federal bankruptcy, state receivership is both over and under-inclusive: while receivership can be used in many more situations than insolvency, such as a financially healthy business that is nonetheless subject to regulatory action, receivership provides less comprehensive protection for an insolvent business.

Receiverships have their roots in English and Welsh courts of equity, which were seen as offering fairer remedies than their contemporary common law courts, bound as they were by ponderous precedent. In contrast, courts of equity had more discretion to apply remedies which could be more tailored and “equitable” to an individual petitioner, even if such remedies were not codified. While this separation of equitable and common law courts does not generally exist in the modern U.S. legal system (except for a few hold-out states, most notably, Delaware), the legacy remains in the type of civil remedy available: while most remedies are awarded as monetary redress for a past wrong suffered by a plaintiff (e.g. liquidated damages for the discloser of confidential information or the “benefit of the bargain” for the seller of a company), equitable remedies often require prospective action (or forbearance of an action) by the defendant (e.g. an injunction on disclosure by a recipient of confidential information or specific performance by a purchaser of a company). To draw the analogy out, bankruptcy is a “legal” process to address insolvency since it is governed by a comprehensive regime of federal statutes and rules in the Bankruptcy Code (which is, ironically, applied by specialized federal courts), while receivership is the “equitable” side of the same coin: a judicially-created remedy to manage or liquidate a business, among other actions, where it would not be equitable (or, most importantly for cannabis businesses, not possible) for a bankruptcy action.

Some states with legalized cannabis have cannabis-specific receivership statutes, usually providing that the receiver either be temporarily or fully licensed similar to any other operator of a cannabis business.As an equitable remedy used by various states and federal entities, generalizations about the receivership process are difficult to make. However, broadly speaking, a typical receivership process begins with a complaint filed against the entity for which receivership is sought in state court. This filing can be made by a variety of parties outside of the standard debtor-creditor relationship (reflecting the equitable nature of receiverships), including by regulators and disputing owners of a business. After this filing, a motion to appoint the receiver (which is usually but not always a third party) is filed with the court; consent of the opposing party is generally not required in appointing a receiver but can often make the process easier. The complainant must then establish standing and the occurrence of certain events, including insolvency, but also mismanagement of a corporation or a foreclosure. The requirements of such events are fact-specific and may often be governed by statute or the contractual relationship between parties. The order appointing the receiver usually sets out the specific powers the receiver has in any given case to oversee the disposition or operation of the assets subject to the receivership (called the “receivership estate”) for the benefit of its’s creditors.

Receivership laws generally fall into two categories: some states provide for a broad general statute, sometimes accompanied by statutes specific to industries which are heavily regulated, entity types, or process, while in other states the power is an extension of the court’s powers, set forth in the state’s rules of civil procedure. States also differ as to whether a receivership is considered an independent remedy, a standalone legal action which can be pursued in and of itself (e.g. a petition by a creditor to appoint a receiver to resolve settle an unpaid debt), or an ancillary remedy, a legal action that supports a primary claim (e.g. a request to appoint a receiver in connection with a dispute over the ownership of a business). Some states provide for general receiverships, which allows receivers to take control of an entire business, while other states also allow limited receiverships, which allows the receiver take control of a portion of a business, while the owner operates the remainder. Some states with legalized cannabis have cannabis-specific receivership statutes, usually providing that the receiver either be temporarily or fully licensed similar to any other operator of a cannabis business.1

Below is an overview of the laws and rules governing receiverships in certain states which have legalized cannabis.

Arizona
In Arizona, receivership is governed by statute, with a general statute and specific statutes for certain industries and type of receivership. Arizona law recognizes that principles of equity apply to all matters relating to receivers, providing the court overseeing the receivership with additional power to decide the remedies available to the receiver. In addition, Arizona has enacted a specific statutory framework for the appointment of receivers for commercial real property and personal property related to or used in operating the real property. Arizona also uses a separate receivership statute to provide for corporate dissolution receiverships, in which a court in a judicial corporate dissolution proceeding may appoint one or more receivers to wind-up, liquidate, or manage the business and affairs of the corporation.

There are no specific statutes governing receiverships of cannabis businesses, so the general receivership statute applies to cannabis businesses, subject to Arizona’s rules governing the operation of a cannabis business. For example, Arizona cannabis regulations that require anyone volunteering or working at a medical or recreational cannabis dispensary to be registered with the cannabis regulator similarly apply to a receiver appointed over a licensed cannabis business.

California

California does not have significant entity-specific or industry-specific statutes for receiverships; rather a California court’s power to appoint a receiver is granted under the state’s rules of civil procedure. Receiverships in California are solely an ancillary remedy; a receivership is commenced once a complaint is filed and any party to the action may seek to appoint a receiver. Circumstances that allow for the appointment of a receiver are fact-specific and at the discretion of a judge, although contractual provisions for the appointment of a receiver are given weight under the rules. Sales of assets in the receivership estate must be submitted to, and approved by, the appointing court.

While the rules of civil procedure provide for the general powers of a receiver, the specific powers a receiver possesses in any given case is granted by the judicial order appointing the receiver; this appointment order is therefore, along with the court itself, the primary authority for the parties in any given receivership. California explicitly disqualifies certain persons, such as parties to the lawsuit, an attorney of a party, a person interested in an action, or any person related to any judge of the court within the third degree, as receivers.

While California’s receivership rules do not explicitly contemplate cannabis businesses, receiverships for cannabis companies have taken place, but in our experience are less common in California than assignments for the benefit of creditors (which we will address in a later article). Like other licensed businesses in California, cannabis companies must provide notice to the state regulatory agency which granted the license. It is up to the agency’s discretion whether the business may be operated under the existing license or whether the receiver must secure a new or temporary license.

Colorado

Like California, no generally applicable receivership statute exists in Colorado; instead, receiverships are governed by the state’s rules of civil procedure. Under these rules, a receiver can be appointed under a court’s general equitable powers. Appointment of a receiver is an independent remedy in Colorado, but is contingent on a lawsuit having commenced and the court having deemed the receivership as necessary and proper. In addition to the court’s general equitable powers to appoint a receiver, and unlike California, Colorado has receivership statutes that are entity and industry specific. The entity-specific statutes permit the appointment of a receiver for the judicial dissolution of for-profit corporations, non-profit corporations, limited liability companies, and cooperatives, and the industry-specific statutes permit the appointment of a receiver for the windup of failed insurance companies and the closure of long-term care facilities.

Similar to California, the court order appointing a receiver governs the entire receivership process and any disposition of the assets of the receivership estate must be submitted to and approved by the court.

As befitting the first state to legalize adult-use cannabis, Colorado’s cannabis regulations specifically address receiverships: the rules create a notice and application requirement for all court appointees, including receiverships, and require receivers to register with the regulator as a “temporary appointee” of the court.

Illinois

Illinois does not have a comprehensive receivership statute; instead, the state has industry-specific statutes, including for regulated industries such as nursing home facilities and telecommunication carriers. Illinois also provides for “equity receiverships”, which are used as an ancillary remedy in business disputes in order to stabilize a business that is adversely affected by fraud, neglect, waste, dissipation, or other misconduct during the pendency of the underlying proceeding. If the underlying matter is within the general or statutory jurisdiction of the court, then such court has jurisdiction over the receivership.

There are no specific statutes governing receiverships of cannabis businesses, but the governing statute does contemplate operation of a cannabis business by a receiver, so regulations promulgated thereunder should apply to receivers as well, including with respect to licensing.

Maryland

Adult-use cannabis sales only began in Maryland July 1, 2023. Maryland has a general receivership statute.

Receivers in Maryland are generally appointed by the person seeking appointment, including the court, and must meet certain qualifications, such as not having any material financial interest in the outcome of the receivership, and not having any debtor-creditor relationship with or equity interest in any party to the receivership. While the general receivership statute provides for broad powers of the receiver, including general management of receivership property, hiring professionals, and issuing subpoenas, the court may modify or expand the powers of the receiver via the appointment order.

While there is no cannabis-specific receivership statute, Maryland’s medical cannabis rules contemplate and authorize the transfer of licenses to a receivership; similar rules have been proposed for adult-use cannabis licenses as well.

Nevada

Nevada has a broad receivership statute, in addition to both entity and industry specific statutes. Case law is not well-developed and mostly predates the current statutory scheme, but there is support for a receiver being appointed outside of a statutory context, specifically when the situation is governed by contractual agreement.

The general receivership statute provides that a receiver may be appointed in a variety of situations, such as fraudulent property purchases, foreclosure of mortgages, or the dissolution or insolvency of a corporation.

Nevada has a statutory regime for receiverships for cannabis companies. Unlike the general statute, there are significant requirements for who can be a receiver for a cannabis business. A receiver must first secure a cannabis establishment agent registration card for a cannabis receiver issued by Nevada’s cannabis regulator. In addition, the receiver must submit an application to the regulator accompanied by, among other requirements, a statement saying the receiver has not previously had an agent registration card revoked. The receiver must also provide proof that she has (1) experience or knowledge of the cannabis industry, (2) experience as a receiver appointed by a court, (3) knowledge and skills necessary to make reasonable financial decisions, and (4) adequate financial capacity to fulfill the duties of a receiver. If the regulator is satisfied with the receiver’s application, it will issue the receiver an agent registration card which must be renewed two years after issuance. It is worth noting that Nevada’s statute governing the non-transferability of certain agent registration cards for cannabis allows the regulator to adopt regulations that give priority in the processing of transfers of licenses for transferors subject to receivership. To date, however, no such regulations allowing priority for receivership processing have been adopted.

Washington

Washington has a general receivership statute, but not any entity or industry-specific receivership statutes. Washington’s receivership structure with overhauled in 2004 with the passage of a new law, so it is not completely settled whether receivership is now an independent or ancillary remedy; however, the language of the statute language suggests that it is an independent remedy.

To be appointed a receiver in Washington, the individual must meet certain requirements, including not being a party to, or be closely controlled by a party to, the underlying action and not having materially adverse interest to the person against whom receivership is sought. The general statute specifically outlines the powers of the receiver. Certain actions by the receiver require court approval before being finalized, including the assumption or rejection of executory contracts, and sales of property outside the ordinary course of business.

Washington law specifically provides for receiverships for cannabis companies. To be a receiver, the person must satisfy the requirements of Washington’s receivership law, and either be preapproved by the cannabis regulator or else be approved post-application. In order to qualify for the regulator’s preapproved receiver list, or be approved post-application, the putative receiver must (1) submit an application, (2) have been a Washington resident for at least six months prior to submission, (3) submit to and pass a criminal background check, (4) provide financial disclosures as requested by the regulator, and (5) disclose any interests in the cannabis licensees. Once a person is appointed as receiver for a cannabis licensee, she shall not have a financial interest in, or simultaneously serve as receiver for, another licensed cannabis retailer. The receiver may not also serve as a receiver for, or be a party of interest in, more than five cannabis retail licensees or more than three cannabis producer and/or processor licensees at the same time. Finally, any person who files a receivership action involving a cannabis licensee must provide notice to the regulator.

Part 3 of this series on Alternatives to Bankruptcy for Cannabis Companies continue our review of receivership in various states and other bankruptcy alternatives, including assignments for the benefit of creditors.

Reference

  1.  As cannabis legalization continues to spread, more robust industry-specific receivership rules may be promising given the heavily regulated and specialized nature of the business, similar to how a number of states have industry-specific rules for other heavily regulated industries.

California’s Social Equity Fee Waiver – Late Is Better Than Never

By Abraham Finberg, Rachel Wright, Simon Menkes
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In a move that Old Guard California Cannabis viewed with bittersweet appreciation, the Department of Cannabis Control on January 1, 2022 announced it would waive license fees for those cannabis companies impacted by the War on Cannabis. Many pre-2017 operators experienced persecution by law enforcement including confiscation of inventory. For those who refused to admit defeat and remained in or returned to the business of cannabis, this significant fee waiver feels something like an apology.

As we move through Year 2 of the Equity Fee Waiver, it’s important for all cannabis companies to review their history and their current operations to see if they qualify for this significant reduction in expense. Instead of arrest or conviction, a cannabis business may also qualify through its eligible owner’s income level or location of residence. Since this is a fee waiver for small businesses, a maximum yearly revenue level of $5 million is also a requirement.

For those Qualified Equity Licensees who have already received a fee waiver, it’s important to remember that this is a yearly process, and that they must continue to submit a request for equity fee relief at least 60 calendar days before the annual expiration date of their license.

Who Qualifies for the Equity Fee Waiver?

Gross Revenue: Your cannabis business must have no more than $5 Million gross revenue per year.

Equity Ownership: At least 50% of your business must be owned by people who have only ONE of these three characteristics:

  • Have experienced a cannabis conviction or arrest, or
  • Have a lower income level, or
  • Reside in a neighborhood affected by the criminalization of cannabis (as defined by the DCC)

Arrest or Conviction

The DCC requires that the equity individual have been convicted or arrested for cannabis crimes before November 8, 2016. Crimes must have been sale, possession, use, manufacture or cultivation. The equity individual may also be eligible if an immediate family member was convicted or arrested for cannabis crimes and the equity individual themselves lived in a California county with drug arrest rates that were higher than the state average drug arrest rates.

Lower Income Level

In order to qualify under income level, the equity individual must have household income no more than 60% of the area’s median income (see DCC charts showing county, number of people in household, and eligible income levels) or prove eligibility for financial aid like CalFresh or Medi-Cal or Supplemental Security Income.

Residence in a Neighborhood Affected by Criminalization of Cannabis

If an equity individual seeks to qualify by location of residence, they must have lived in the qualified location for at least 5 years between 1980 and 2016. The location must have higher than state average drug arrests and be in the top 25% nationally for unemployment and poverty. The DCC provides an interactive map to check your location for these requirements.

Worth the Trouble

Again, your business needs to be below $5 million annual gross revenue, and at least 50% of the ownership needs to have only 1 of 3 disadvantaged characteristics: cannabis arrest or conviction, or lower income level, or residence in an affected neighborhood.

While it will definitely take time to apply for the Equity Fee Waiver, the savings in zeroed-out license fees can certainly make it worthwhile. In addition, qualifying for the Equity Fee Waiver makes a business eligible for other state equity tax advantages including the California Equity Tax Credit. (See our article on the CETC here.)

The state’s application for the Equity Fee Waiver is available online, and more info is available as well.

Desperate California Cannabis Vendors Seek Credit Protection

By Abraham Finberg, Rachel Wright, Simon Menkes
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Cannabis companies representing 45% of California’s cannabis sales are pushing a bill that will crack down on non-paying customers. Well known operators, including Kiva, Lowell Farms, Nabis and Sunderstorm, recently formed Financial Stability for California Cannabis (FSCC) and moved to support Assembly Bill 766.”

The bill, nicknamed “The Cannabis Credit Protection Act,” would require a cannabis licensee to pay for goods and services sold or transferred by another licensee no later than 15 days following the final date set forth in the invoice. If full payment is not received by that date, the seller would be required to report this to the Department of Cannabis Control (DCC), which in turn would notify the delinquent buyer and begin disciplinary proceedings. The buyer would be prohibited from purchasing any other cannabis products on credit until the delinquent invoice was paid. In addition, the DCC would be empowered to issue a penalty (unspecified), taking into account “the frequency and gravity of the licensee’s [past] failure to pay outstanding invoices”.

In a letter of support for AB 766, the FSCC stated, “This culture of nonpayment that has emerged in California’s cannabis market leaves businesses across the entire industry and supply chain – as well as ancillary businesses that support legal cannabis operators – with outstanding balances and unpaid invoices sometimes totaling hundreds of thousands of dollars…This ballooning debt bubble in the cannabis industry will only continue to grow without proper oversight, putting the entirety of the state’s supply chain at risk of collapse and impacting state revenue decline even further.”

Opponents of the bill acknowledge the problem of non-payment in the industry, but feel AB 766 is too heavy handed and is “ripe for abuse.” In a blog post for the international legal firm Harris Bricken, cannabis attorney Griffen Thorne writes, “[L]icensees who are reported would be legally prohibited from buying goods or services on credit from other licensees until they pay the invoices for which they were reported in full … The person making the report has to give the DCC almost no information in order to make the report. There is no hearing. There does not even seem to be an opportunity to contest the report. The second a report is made, the other side loses its rights to buy goods on credit – presumably even under preexisting contractual arrangements with third parties. This seems like an obvious due process concern and ripe for abuse.”

The number and amounts of unpaid cannabis product invoices have ballooned over time and have driven California cannabis vendors to take such extreme measures. Collections and outstanding receivables are a symptom of an industry struggling under heavy taxes and competition from illegal operations that pay no taxes whatsoever, and which now account for over 60% of all cannabis sales within the state.

In order to ascertain the current status of AB 766, 420CPA reached out to Assemblymember Phil Ting (D-San Francisco), co-sponsor of the bill along with FSCC, the Cannabis Distribution Association, California Cannabis Industry Association and the California Cannabis Manufacturers Association. We corresponded with Tania Dikho, Ting’s Legislative Director. Ms. Dikho informed us that the bill was heard in the Assembly Appropriations Committee on May 18, but it was not passed.

“It’s a 2-year bill meaning we can’t act on it until this legislative year is over, so the bill will not have another hearing [and we] can’t make any changes to it until next year,” explained Ms. Dikho.

The 2-year status is a tenuous one. The bill must be approved by the Assembly and make its way to the Senate between early January 2024 and January 31, 2024 or it may no longer be acted upon and will die a legislative death.

Businesses that would like to voice their opinion for or against AB 766 should contact their state legislative representatives.

SC Labs Expands, Acquires C4 Laboratories

By Cannabis Industry Journal Staff
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According to a press release published on Monday, SC Labs has acquired C4 Laboratories, a cannabis testing lab located in Scottsdale, Arizona. The acquisition means SC Labs has expanded their footprint into five states total. Originally based in California, the cannabis testing company now has locations in Arizona, California, Colorado, Michigan and Oregon.

Ryan Tracy, Founder/CEO of C4 Labs.

Ryan Treacy founded C4 Laboratories and has been a vocal advocate for product safety testing since 2016. As CEO of the company, he led the laboratory through regulatory upheaval and a lot of changes the state has seen since legalization.  He also co-founded the Arizona Cannabis Laboratory Association and led lobbying efforts on behalf of patients and stakeholders to require lab testing.

He says they are excited to join forces, becoming the largest cannabis testing platform in the US. “Our combined leverage of top scientists with specialized cannabis testing knowledge and a leadership team of industry experts will allow us to do everything from harmonizing R&D efforts to improving the data experience to pushing for positive regulatory change,” says Treacy. All current employees of the C4 team will stay on, joining the new SC Labs team.

Jeff Journey, CEO of SC Labs

This acquisition represents another important milestone for the SC Labs expansion plan. Last year, they hired a new CEO, Jeff Journey, and launched their national hemp testing partnership based in Colorado. That, coupled with the expansion through Can-Lab into Michigan last year along with the C4 acquisition, SC Labs has expanded into three new states within the last twelve months.

Journey says they’re thrilled to acquire the C4 team and that they have shared values, a proven track record and good expertise. “With this acquisition, we can continue to expand best-in-market cannabis testing services and the opportunity to service multi-state growers and manufacturers,” says Journey. “It is truly an exciting time for growth, and we know that the C4 team will be an invaluable addition to our team, culture and operations.”

The Importance of Regulatory Compliance for Cannabis Delivery Providers

By Katherine Lehman
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Cannabis retail is becoming more and more commonplace in the United States. According to a consumer trends survey by North Hollywood-based cannabis brand Ganja Goddess Inc., 90% of respondents said they used online ordering and delivery services to purchase cannabis. Around 60% reported that online ordering and delivery would continue to be their preferred method of purchase post-pandemic. The pandemic hugely impacted the delivery market, pushing sales up 300% by the end of 2020. However, in a lot of states, brick-and-mortar stores remain illegal. Delivery services allow cannabis companies to reach customers in areas where dispensaries are not allowed. While cannabis delivery is an incredible opportunity for companies to reach new customers they would not otherwise be able to, following the law can be difficult in an environment with a patchwork of local laws and changing regulations. So, what do you need to know about regulatory adherence to stay ahead of the curve?

Delivery services allow cannabis companies to reach customers in areas where dispensaries are not allowed.

The short answer is it’s complicated. Each state has dramatically different laws regarding cannabis delivery, and laws can vary by jurisdiction. Some states allow full access to adult use cannabis, some only allow medical cannabis and some completely ban delivery, making it tricky to adhere to the law. There are currently 6 states that allow cannabis delivery: California, Colorado, Massachusetts, Michigan, Nevada and Oregon. Others like New York are taking the steps to allow delivery with careful regulation. With more states legalizing cannabis sales every year, delivery laws in existing delivery states are evolving and adapting to licensing changes. California introduced major changes to laws on January 1, 2023. These changes included allowing drivers to carry double the amount of product (up to $10,000 worth), no longer requiring vehicle inventory to be allocated or pre-purchased, and allowing curbside delivery for all licensed retailers. These changes to the largest cannabis market in the world showcase how much delivery is still changing and being regulated, and stresses the value of staying up to date on the latest laws and regulations.

Another aspect of delivery to consider is licensing specifically for delivery. Like regulations, licensing varies state to state and jurisdiction to jurisdiction. For example, in Massachusetts there are two types of licenses. Licensed providers must register as either a Marijuana Courier or as a Marijuana Delivery Operator. Couriers are allowed to earn a fee for delivering cannabis products from licensed retailers to consumers, and operators may buy and sell cannabis products wholesale, as well as deliver them. In Colorado, delivery requires two permits, however, a holder of both permits can still get in trouble if they deliver to an area or jurisdiction that has not affirmatively permitted delivery.

Although highly dependent on local, state and federal laws, the cannabis delivery space shows no signs of slowing down anytime soon.

A big win for delivery services came when Apple allowed cannabis delivery apps on iPhones in June 2021, with downloads restricted to states that allow adult use cannabis. Even then, a lot of individual counties or cities within adult use states still prohibit the delivery of cannabis. This patchwork of regulation makes adherence tricky, and makes certain software features like real-time driver tracking and proof-of-age verification crucial to delivery operations. With competition increasing it’s even more important for cannabis delivery operators to provide an outstanding experience for customers every time. One way they can achieve this is by improving their cannabis delivery software. According to cannabis last mile delivery management software provider Onfleet’s study, 72% of cannabis delivery operators said a delivery management tool was “critical to running delivery operations.” Delivery software also helps companies stay compliant with local regulations. Route planning allows your drivers to stay within legal zones. These platforms can also capture images of state-issued ID for age verification and record customer signatures so drivers can focus on ensuring customers are getting the best experience.

Although highly dependent on local, state and federal laws, the cannabis delivery space shows no signs of slowing down anytime soon. And if (or when) cannabis is legalized on a federal level, it would pave the way for major corporations like Uber and Amazon to enter the space – Uber is already taking steps in Canada. Whether that’s a good thing is up for debate, but delivery certainly isn’t going anywhere anytime soon. Depending on regulations and the market’s next moves, we will see a variety of delivery models and services in the coming years. Delivery services are the future of cannabis, providing customers with ease of access and personalized deliveries as well as benefiting retailers by lowering overhead costs and providing options for easy, quick customer service. Just make sure to check local laws before you confirm a delivery order, even in states where cannabis is legal.

California’s DCC Requests AG Opinion on Interstate Cannabis Commerce

By Abraham Finberg, Simon Menkes, Rachel Wright
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On January 27 this year, Matthew Lee, General Counsel for the Department of Cannabis Control, sent a letter to Senior Assistant Attorney General Mollie Lee requesting an opinion on whether “medicinal or adult-use commercial cannabis activity … between out-of-state licensees and California licensees, will result in significant legal risk to the State of California under the federal Controlled Substances Act.”

The eight-page letter, itself a detailed legal opinion in favor of interstate cannabis commerce, states strongly that the legal risk to California of such commerce is insignificant. The DCC hopes the AG will help authorize the state to negotiate agreements with other states, allowing their cannabis companies to do business with each other. Such agreements, the letter says, “would represent an important step to expand and strengthen California’s state-licensed cannabis market.”

Prices for wholesale cannabis in California have plummeted in the last year: a pound of packaged flower is wholesaling in the $1,200 to $1,400 per pound range compared with $1,700-$1,900 a pound at the beginning of 2022, a year-over-year decrease of about 25%-30%. With many growers struggling and many others forced to enter the illicit market to get a sustainable price for their product, the DCC believes opening up interstate opportunities for California growers will provide much-needed support for their large cultivation industry.

Additionally, this request by the DCC should serve as a roadmap for other states to follow in order to move interstate cannabis commerce forward through state legislatures since it appears that federal progress in legalizing cannabis has become mired in inaction.

The DCC cited new state legislation, Senate Bill 1326, which took effect on January 1, 2023, and which allows interstate agreements for both export AND import of cannabis. This is important because other states would not be inclined to enter an agreement with California if they could only receive (import) cannabis into what may be an already glutted market.

In drafting their letter, the DCC chose to side-step some “thorny” issues, including avoiding having the Attorney General delve into any discussion regarding the federal illegality of cannabis.

While many states to the east, including New York, New Jersey and Connecticut, are opening up their states to adult-use cannabis consumption, California is paving the way forward for the future of interstate cannabis commerce. The DCC’s letter is a bold move to support and strengthen California’s cannabis industry and will likely be watched closely by other cannabis states and the nation as a whole. 

Cannabis in 2023: Here to Stay, but Major Challenges Remain

By Joshua Weiss, Osiris Morel
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2022 brought more change and visibility to the cannabis industry than nearly any year before. Two of five legalization ballot measures passed, bringing the total number of states with legal medical or medical and recreational laws to 39. President Biden issued an executive order pardoning nonviolent offenders and directing a review into rescheduling cannabis. The Medical Marijuana and Cannabidiol Research Expansion Act was enacted. Cannabis arose prominently in legislatures across the country, with over 50 federal bills and hundreds of state-level measures introduced.

We’ve yet to see the full impact from Biden’s October 6 announcement

But as 2022 came to a close, only a handful of actions are being carried into the new year, and the industry faces more hardship and turmoil than it has since the inception of legalization. Legal cannabis retailers and cultivators in markets across the country continue to struggle with onerous regulations and competition from the illicit market, and oversupply in these markets is driving down prices as West Coast growers and manufacturers anxiously await interstate commerce.

Looking ahead to the coming year, industry watchers can anticipate certain issues and legislation: further investigation into cannabis’ classification on the Controlled Substances Act (CSA) from federal agencies, federal cannabis pardons coming to fruition, a follow-up from the Department of Justice’s technical report, and the reintroduction of high-profile federal legislation, like the Cannabis Opportunity Act (CAOA), the States Reform Act, Marijuana Opportunity Reinvestment and Expungement (MORE) Act, Harnessing Opportunities by Pursuing Expungement (HOPE) Act and the Secure and Fair (SAFE) Banking Act.

Below, we recap some of the big moments of 2022 and what to expect in 2023.

A Presidential Pardon for Simple Possession

On Oct. 6, President Biden made a historic announcement to “grant a full, complete, and unconditional pardon to all current United States citizens and lawful permanent residents who committed the offense of simple possession of marijuana in violation of the Controlled Substances Act” and “all current United States citizens and lawful permanent residents who have been convicted of the offense of simple possession of marijuana in violation of the Controlled Substances Act.” His executive order also encouraged governors to follow suit for cases regarding state offenses and requested that the secretary of Health and Human Services and the attorney general “expeditiously” review how cannabis is scheduled under federal law.

Biden signing his executive order back in October of 2022

The president’s strategic plan attempts to at least partly address some of the adverse impacts of the United States’ war on drugs on certain populations like low-income and Black and Latinx Americans. While an admirable and important effort, certain portions of his executive order will take much longer than others to yield tangible impact. A federal pardoning can take anywhere between two to five years, and the laws and duration of state-level pardoning vary—depending on the state and its governing practices. Additionally, since governors are not required to pardon individuals following the president’s executive order, some convicted persons may never see or be able to seek justice. And the most uncertain timeline relates to the review of cannabis’ classification on the CSA. Rescheduling or descheduling a substance under the CSA can be tedious and grueling, and, as seen with other substances, the process can range from four to ten years. However, the exercise is ongoing, and although results may not be shared in time for the 118th Congress, it is to be expected that the issue will be discussed at length in 2023 and beyond.

Descheduling, Decriminalizing & Banking Legislative Efforts  

1. CAOA.

When it comes to legislation, there is no question that Majority Leader Chuck Schumer (D-NY) and Sens. Ron Wyden (D-OR) and Cory Booker (D-NJ) will reintroduce the CAOA in 2023. The comprehensive legislation aims to decriminalize cannabis by removing the drug from the CSA and tackles issues related to research, public safety, restorative justice and equity, taxation and regulation, public health and industry practices.

2. States Reform Act.

Sen. Schumer unveiling the Cannabis Administration and Opportunity Act

Another piece of legislation we anticipate seeing in the 118th Congress is Rep. Nancy Mace’s (R-SC) States Reform Act. Coming from a state without any cannabis laws, the freshman congresswoman introduced a measure that would federally decriminalize cannabis by fully deferring to state powers over prohibition and commercial regulation and regulate cannabis products like alcohol. In 2022, the bill received positive feedback from the industry and dominated the discussions during the Developments in State Cannabis Laws and Bipartisan Cannabis Reforms congressional hearing. With its bold cannabis sponsor, who will now serve as the House Oversight Subcommittee on Civil Rights and Civil Liberties chair, the States Reform Act will undoubtedly take center stage in 2023.

3. MORE Act.

Sponsored by Rep. Jerry Nadler (D-NY), the MORE Act will also be reintroduced in 2023; however, it remains to be seen how much attention the bill will receive. The MORE Act aims to decriminalize cannabis by removing the drug from the CSA and eliminating criminal penalties for anyone who manufactures, distributes or possesses cannabis. In the 117th Congress, Rep. Nadler served as the chair to the House Judiciary Committee and was able to advance his measure through the chamber with ease. But since the House majority has flipped, and Rep. Jim Jordan (R-OH) is likely to serve as the chair, getting the MORE Act to the floor for a vote may be challenging—especially given Rep. Jordan’s opposition to the cannabis sector.

The House passing the MORE Act back in 2020

4. HOPE Act.

The HOPE Act often flies under the radar, but this Republican-sponsored bill made headlines during the 117th Congress. Sponsored by Co-Chair of the Congressional Cannabis Caucus (CCC), Rep. Dave Joyce (OH), the bipartisan legislation aims to help states with expunging cannabis offenses by reducing the financial and administrative burden of such efforts through federal grants. Although it was not considered in the House, the language of the bill was heavily debated by the Senate, particularly toward the end of the year when the chamber was negotiating the final text for end-of-year must-pass packages, like the National Defense Authorization Act (NDAA), the Omnibus and the Continuing Resolution (CR). Alongside the SAFE Banking Act, the HOPE Act was one of the only cannabis bills that had a realistic chance of advancing as part of a larger legislative vehicle, so there is no question that the congressman will reintroduce the measure in the upcoming congressional session.

5. SAFE Banking Act.

And last, but certainly not least, is the most discussed cannabis bill this year: the SAFE Banking Act. The legislation aims to create a safe harbor for financial institutions to provide traditional banking services to cannabis businesses in states that have legalized the drug. It also allows cannabis businesses to access lines of credit, loans and wealth management. It has now passed in the House seven times, with bipartisan support. And although the SAFE Banking Act was debated by the House several times throughout the year, the Senate did not tackle the bill until November. By the time discussions for the bill’s language had taken off, Sen. Booker remained firm that he would only support a cannabis bill if it included criminal justice and social equity reform language. In an attempt to satisfy the senator’s demands, Majority Leader Schumer considered marrying the SAFE Banking Act and the HOPE Act as part of a larger package.

However, and much to the cannabis industry’s detriment, not only was the timeline for those bills a little too late, but Democrats were, unfortunately, unable to fix the money laundering and cash legacy concerns of Sen. Chuck Grassley (R-IA) and other Republicans.

Sen. Cory Booker (D-NJ)
Photo: Nick Fisher, Flickr

After attempting to attach the SAFE Banking Act to multiple vehicles, retiring Congressman Ed Perlmutter (D-CO), sponsor of the legislation, and Sen. Schumer were unsuccessful in getting the bill over the finish line. In a final Hail Mary, Sen. Schumer attempted to include the language to the Omnibus, but compounded with the technical assistance report from the Department of Justice (DOJ) and ongoing media flurry, he and the Democratic party yet again came up empty-handed.

The question now is: who will carry the SAFE Banking Act and Rep. Perlmutter’s legacy in 2023? Many will look toward cannabis industry champions like Reps. Joyce, Mace, Earl Blumenauer (D-OR) and Brian Mast (R-FL). However, it would be worth considering other members of the CCC and some of the incoming freshmen, particularly those from a state with legal cannabis laws. It is also entirely possible that Sen. Jeff Merkley (D-OR) finds his own sponsor to carry his companion bill in the House since he has already announced that he looks forward to working on the legislation in the upcoming year. Regardless, it is highly likely that the SAFE Banking Act will be reintroduced in 2023 and considered throughout the year.

6. Other Measures

Other measures that are likely to reappear in 2023 are the Capital Lending and Investment for Marijuana Businesses (CLIMB) Act, Veterans Equal Access Act, the GRAM Act, Common Sense Cannabis Reform for Veterans, Small Businesses and Medical Professionals Act, VA Medicinal Cannabis Research Act and the Homegrown Act. Additionally, the passage of the Medical Marijuana and Cannabidiol Research Expansion Act and the advancement of many of these federal bills have opened the gates for new legislation related to medical and recreational cannabis, research, veterans’ access, financial services, criminal justice reform and social equity, and public health and safety to emerge.

For states with legal cannabis laws, bills related to enhancing the state’s medical or medical and recreational programs, preventing industry oversaturation and price gouging, expanding licensing opportunities, criminal justice reform, youth and advertising protections and impaired driving are likely to be introduced. States where cannabis ballot measures failed will likely see those measures resurface.

The continued growth of legalization across the country is all but inevitable. In the nearer term, the industry will focus on how to remain viable in the face of high taxes and oversupply in 2023. New Congressional leadership could lead to bipartisan cannabis legalization if enough members are willing to rally behind their colleagues who are pushing for cannabis legislation. While the road is long before we will see the full impact from President Biden’s Oct. 6 announcement, the action proves those in power cannot ignore the ever-growing numbers of Americans across party lines and demographics who agree that cannabis use should be legal and regulated.

Catching up with Jushi Creativity: A Q&A with Dre Neumann

By Cannabis Industry Journal Staff
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Jushi Holdings is a large multi-state operator with a massive national footprint and a presence in key markets, including Pennsylvania, Illinois, Virginia, Massachusetts, Nevada, Ohio and California. 

About a year and a half ago, Aaron Green interviewed Andreas “Dre” Neumann, Chief Creative Director of Jushi Holdings to learn about his journey to the cannabis industry, Jushi’s market presence, brand development and key trends in the marketplace. 

This time around, we’re checking in with Neumann to hear about his progress since the last time we spoke. In this interview, we delve deep into the world of creative influence, brand building, technology, what Neumann is working on now and what he is excited about in the future. 

Cannabis Industry Journal: It’s been a while since our readers have heard from you. What’s new at Jushi? What Are you currently working on? 

Dre Neumann: When I joined Jushi, we were building the foundation and laying the groundwork for a lot of the things we’re doing right now. One of them of course is our online pre-order platform. We have been focused on connecting all the dots in our vertically integrated markets to make sure our retail experience is really fine-tuned and represents what a diverse range of cannabis consumers find helpful and truly enjoy. In my time at Jushi, I have gained a much better understanding of the average cannabis consumer through constantly analyzing data from our retail spaces, and I very much look forward to analyzing more robust data that’s coming in through our new smartphone app. 

Andreas Neumann, Chief Creative Director of Jushi Holdings

The data we have now is allowing us to look at what product developments are most important for us to move forward with and what product categories we should be focusing most on. Because we may be on the cusp of a recession, the consumer value of our product is that much more crucial. With the introduction of new categories of fast-acting edibles and unique and exciting genetics and types of flower, we are paying close attention to how we can innovate in ways that will both excite our current customers and attract new customers to our brands. 

Jushi is interesting because the company really came together from two key pieces: the first being our strong financial and management backbone, and the second, the powerful creative team that I am a part of. We have such a special focus on the quality of products, with the goal of creating high-quality and consistency across our house of brands.

We have had a lot of acquisitions, which have played out very successfully over time, but early on, through these acquisitions, we found there were products and procedures that weren’t up to our standards. It takes time to fix those things from a quality, genetics and consistency perspective, and I’m thrilled to say we’re really getting there. Notably, we felt the need to improve our edible fruit chew brand, and we poured a ton of time into reinventing and relaunching simple, but high-quality, organic, 100% real-fruit chews. 

Now, we are really seeing the value in our three retail brands and the unique attributes of our branded flower, pre rolls, vapes and edibles. Also, we have been really focusing on improving sustainability as we move towards using much more sustainable, standardized mylar packaging across our product suite. This packaging not only reduces our carbon footprint, as mylar is a much more sustainable, recyclable and lightweight material, but also offers us more real estate to express Jushi’s personality through artwork on packaging and allows us to display our products with a larger presence in stores. 

CIJ: You mentioned Jushi’s new app and you sound so excited about it. Tell us more: how are you using the data to analyze what your customers want? 

The Jushi app, The Hello Club (THC)

Neumann: When we were building our online platform, we knew we needed to better understand our customers. What we found was that the most important marketing tools in cannabis are promos – specifically promos through text messaging. Our loyalty program has become our biggest channel to reach consumers, as we have over 200,000 people we can reach with a simple text message. The big problem with texting campaigns, however, is that mobile phone carriers can limit your deliverability if you don’t have the right verbiage and messaging. So working with and figuring out how to deliver the right message to our customers can be very challenging. 

Our smartphone app, The Hello Club (THC), came about as a natural progression of our customer loyalty program. Our team has a lot of experience working in UX and UI, so we were able to dive right in and build the app through Apple. We really took our time to build something that would add value to our customer, and it’s paid off. For instance, starting out we launched an exclusive weekly deal only available in the app. So, guess what happens? Just yesterday, on the 15th of November alone, 11,000 people downloaded the app. 

Their retail location in Alexandria, Virginia

The app will be something that we play around and experiment with as more and more customers download it. It provides us with a platform to be creative and have fun with our customers, where we can launch exclusive events and strain drops and grant exclusive access to our products before they’re available to the general public. 

The Hello Club was completely designed from scratch. It allows customers to choose their local, preferred store, with the ultimate goal of it becoming the central hub of their cannabis needs. The data we get from the app is so vast and there are so many opportunities on the horizon – we have only just scratched the surface. In the future, as we look to enter new markets, we’re excited to utilize the customer data from our app to guide us in deciding what to sell and where and create unique retail experiences tailored to each market. As we’re just in version 1.0, there’s tons of untapped potential ready to be unearthed and applied. 

CIJ: Around this time last year you said that PA was the most important market for y’all. Tell me about the states that Jushi does business in. Are you paying particular attention to any market more now given the midterm elections?

Neumann: Yes, so Pennsylvania is still our most important market today, mainly because we have so many retail locations in the state (18). Pennsylvania is interesting because it’s also the site of Jushi’s first acquisition ever. I think the inevitable move from medical to recreational in the state will be extremely significant; it will be one of the greatest transitions in cannabis history. Because of our footprint and brand presence in Pennsylvania, we are in an excellent position for when adult use comes online.

The Palm Springs retail location

We call Virginia the sleeping giant because it’s a market we have really cornered. We will have six stores in northern Virginia, close to Washington D.C., in areas with large populations, very diverse demographics and a lot of young people. Our retail locations in the state are freestanding buildings with ample parking – key attributes that benefit customers and lift sales, as we found from the data we collected in Pennsylvania. Virginia has incredible potential because we have made such a formidable early presence with our vertically integrated, IKEA-sized grow operation there. We have applied our findings from other states to Virginia, and we’re thrilled about the opportunity for us to showcase high-quality products in this market. 

California is such a tough market to be in, as it’s the most competitive cannabis market in the world, with some of the most discerning customers, so operators often fear entering the market. But it’s proven to be great for R&D for us, and we continue to learn how to navigate and work in this competitive market through our Palm Springs, Grover Beach and Santa Barbara retail locations. By necessity, we’ve been particularly creative with our marketing and operational strategies to carve a place in the market; we have to show people we have better products and a better experience, which is very difficult with stringent regulations in places like Palm Springs. So California, for us, continues to be a proving ground where we are learning how to be as competitive as possible, and this benefits Jushi as a whole.

2022 Cannabis Supply Chain Virtual Conference

By Cannabis Industry Journal Staff
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2022 Cannabis Supply Chain Virtual Conference

Sponsored by CannaSpyGlass

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Click here to see all available CIJ events and webinars

Agenda

A Smarter Cannabis Beverage Distribution Model

  • Jason Vegotsky, Chief Executive Officer, Petalfast

Current cannabis distribution models make it hard for emerging cannabis beverage brands to launch and scale their businesses successfully. Instead, the wine & beverage sector could provide a model that would allow these brands to build relationships with retailers, foster competition, and improve brand diversity for consumers. In this presentation, Jason Vegotsky will delve into the cannabis sales and distribution model, examine how current models hurt emerging brands and products, and analyze how other CPG models, specifically in food & beverage industries, can be applied to cannabis to build relationships and improve sales.

Track-and-Trace Technology: Building Resilience in the Cannabis Supply Chain

  • Michael Johnson, CEO, Metrc

Building resilience in supply chains is a goal for all parties involved in a given market. Governments have an interest in protecting the health of consumers while safeguarding the flow of goods; businesses want to stay compliant while efficiently moving products; and consumers want and should expect that the products they buy are safe and effective. With heightened awareness around transparency and consumer safety in the cannabis industry, track-and-trace technologies have been central to building broad trust by ensuring more secure supply chains. In this presentation, Michael Johnson will discuss how these tools will continue to be deeply transformational in the sector.

Improve Your Operations through Cannabis Industry Analytics – CannaSpyGlass Sponsored Tech Talk

  • Adam Hutchinson, Co-Founder, CannaSupplyGlass

As new markets legalize and additional business licenses are distributed, competition between cannabis operators is intensifying in every stage of the supply chain from seed-to-sale. It is now tougher than ever to carve out a piece of this increasingly saturated market and cannabis operators aiming to succeed must incorporate industry analytics into their decision-making process. With data analytics, cannabis is no longer an industry of trial and error, and in this session, cannabis operators will learn how to obtain and utilize data analytics to improve their businesses and sustain long-term growth.

Quality and Safety and the Edibles Supply Chain

  • Steven Gendel, Ph.D., Principal, Gendel Food Safety

As the number and variety of cannabis and hemp-containing edibles continues to increase, the supply chains for these products have become complex and diverse. This means that manufacturers must understand how to develop and apply supply chain controls that protect consumers and ensure product quality and safety.  For example, a simple cannabis-infused baked product might contain more than 20 non-cannabis ingredients sourced from multiple suppliers.  The manufacturer of this product must ensure that each of these ingredients meets specifications every time a new batch or lot is received and used.  Unfortunately, there is little guidance available to the cannabis industry (especially those who are not familiar with food manufacturing) on how to identify and evaluate supply chain risks or on what controls will be most effective in mitigating these risks.  This talk will look at the steps that cannabis manufacturers can take to evaluate their supply chain, monitor and control identified risks, and respond to changes in the industry landscape.

Managing Cash Flow in the Cannabis Supply Chain

  • Nohtal Partansky, Co-Founder & CEO, Sorting Robotics

The cannabis supply chain has pitfalls and landmines that can severely hurt a business if navigated improperly. The balance between branding, packaging, growing, distribution, testing, and quality is difficult to achieve. If one of aforementioned topics fails to deliver, it can mean huge financial losses or the death of a brand. In this presentation, we will cover how managing cash flow throughout the supply chain is critical to running a successful operation. There will be several case studies in improperly managed supply chains and their consequences on the balance sheet. There will also be an exploration of what the ideal supply chain would look like in the California market, how that correlates to other adjacent industries, and how it manifests into liquidity.

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